Markets react to IMF downgrade on SSA 2024 growth forecast

East African markets are poised to record a mild slowdown in economic growth numbers for 2024 according to the latest International Monetary Fund (IMF) World Economic Outlook. While the overall sub-Saharan Africa growth has been downgraded to 3.8 percent from the previous projection of 4 percent, a closer look at the region reveals a contrasting picture. CNBC Africa recently sat down with Daisy Anthea Nitwe, the Country Lead for Derivatives and Structured Solutions at Standard Bank Group Uganda, to discuss the key market developments across East Africa. In the interview, Nitwe highlighted that despite the overall downgrade in growth, all East African countries are expected to deliver above 5 percent growth. Kenya, for instance, is projected to grow from 5.2 to 5.9 percent, Tanzania between 5.7 to 6 percent, and Uganda is set to see growth driven by investments in the oil sector, among other factors. While Kenya is experiencing a slight decline due to weather vulnerabilities and debt challenges, the region as a whole is on a growth trajectory. One of the key drivers of this growth is the investments in various sectors. Uganda, for example, is benefiting from the oil sector investments, while Tanzania sees growth in construction, mining, and agriculture. Kenya, on the other hand, is witnessing growth in agriculture and tourism. These sectors are expected to anchor the economic performance of the respective countries in East Africa. In terms of financial stability, there have been concerns about Kenya's ability to repay its maturing Eurobond in June this year. However, Nitwe expressed confidence in Kenya's ability to meet its obligations, citing the support from international agencies and potential capital market opportunities. With commitments from the IMF, World Bank, and other financial institutions, Kenya is well-positioned to honor its debts and maintain its financial credibility. Moving closer to home in Uganda, the economic performance looks promising with growth expected from the oil sector and a stable macroeconomic environment. Recent inflation figures below the Bank of Uganda's target and stable interest rates indicate a sound economic practice in the country. Despite some currency volatility and upcoming auctions, the market remains optimistic about Uganda's economic outlook. Looking ahead into 2024, from a Standard Bank Group perspective, Nitwe sees investment opportunities in fixed income, especially for long tenors. With the confluence of factors such as potential rate cuts in advanced economies, foreign exchange dynamics, and high interest rates in East Africa, fixed income investments could be a promising avenue for investors. Overall, despite the IMF's downgrade on sub-Saharan Africa's growth forecast, East African markets continue to show resilience and promise for the year ahead. With strategic investments, stable macroeconomic environments, and support from international partners, the region is well-positioned to navigate any economic challenges and sustain its growth momentum.