Eastern Africa will outpace its regional peers to record the highest regional economic growth in the continent in the 2023/24 period, largely driven by a rebound in the service industry.
A report published by African Development Bank highlighting the 2023 Economic Outlook for the region shows that Eastern Africa will record a growth of five percent in the said period.
Eastern Africa will register the highest regional economic performance on the continent with growth figures at over five percent, according to the report.
The report projects mid-term economic growth in the region to accelerate to 5.1 percent in 2023 and 5.8 percent in 2024, beating all the other regional blocs.
The bank says East Africa’s real GDP was propelled by its services sector, contributing almost half of the economic growth in 2022.
“The sector contributed 2.0 percentage points to GDP growth… the region’s natural and cultural attractions draw tourists from around the world, creating a demand for services like accommodation, food, and entertainment,” it said.
At the peak of Covid-19 in 2020, the region suffered a huge loss following restrictions on travelling as countries prohibited the movement of people to curb the virus.
The East Africa region, however, faces several external and domestic downside risks that could affect the positive economic outlook. These include a global economic slowdown, rising commodity prices, the continued Russian invasion of Ukraine, international trade policies, tightening of global financial conditions, exchange rate depreciation, and a resurgence of Covid-19.
“The domestic risks include gaps in infrastructure, domestic conflicts and political instability, macroeconomic imbalances, and adverse impacts of climate change,” the report states.
Despite contributing less than four percent to total global carbon emissions, African countries face significant climate financing challenges to respond to mitigation and adaptation measures required to tackle climate change effects.
Kenyan Cabinet Secretary for National Treasury and Economic Planning, Prof Njuguna Ndung’u, keynote speaker at the report launch, called on regional governments to work with development partners and meet their end of the bargain to accelerate the pace of transformation in a region that is riddled with debt.
“The growing debt burden is holding back the growth potential of our countries, thereby elevating poverty rates and inequality,” he said.
East Africa Regional Office Lead Economist, Marcellin Ndong Ntah, noted that the region will continue to post the highest inflation rates in Africa in the medium term, due to the debt situation, global shocks and internal conflicts.