According to the World Bank Global Economic Prospects report, developing countries are therefore headed for a year of low growth.
“When we’re looking at sub-Saharan Africa, we’re expecting growth of about 4.7 per cent this year, picking up slightly to 5.1 per cent in 2015, 5.1 per cent in 2016. The story in sub-Saharan Africa is complex, the region’s very different,” Andrew Burns, lead author of the report, told CNBC Africa.
“You have some parts of the economy, Eastern Africa in particular [which] we expect to accelerate, driven by new natural gas finds, new oil finds coming on stream. Other parts of the region, [we expect] a more steady profile.”
Burns added that raw materials also play a key role in driving sub-Saharan Africa’s growth, but due to toughening external condition and easing commodity prices, this could offset pressure on developing economies.
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“We also have some of these longer term structural impediments to growth being felt more closely: lack of electricity, particularly in South Africa but elsewhere as well, [and] regulatory issues also becoming an issue,” Burns explained.
“What we’re really arguing for in the report is perhaps to come back a little bit from the emphasis that’s been on infrastructure investment and the government deficit financing, and push a little bit harder now on some of these more in-depth regulatory reforms.”
As the second largest economy in the continent, South Africa plays a crucial role in sub-Saharan Africa. Due to issues such as labour unrest in the mining sector, slowed economic growth and a fragile rand, growth for 2014 is now expected at a mere two per cent and three per cent in 2015.
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“The structural nature of the challenges facing South Africa, we’re expecting growth of about two per cent this year, three per cent next in the following year, that’s okay but it’s a far cry from what the rest of the region is going,” said Burns.
“Part of the problems lie in the mining sector, in the labour disputes that have plagued [the country] over the last couple of years. There are some more fundamental and deeper issues in terms of regulatory reform.”