World Bank projects growth for 2013

By David Mugabe

Uganda’s economic growth will rebound to 6.2% in 2013, according to the World Bank January 2013 global economic forecast, putting projections at par with those made by other major institutions like the International Monetary Fund.

The GDP growth projected at 6.2% explains the average growth of investment, government expenditure and the difference between export and income. This is also the total sum of all the economic activities in the country for that period.

Sporadic aid cuts that had signalled a reduction in government spending had by the end of 2012 brought forecasts down to under 5%, but a major improvement in the general economic environment could see growth bouncing back to the pre-meltdown average of about 7%.

In East Africa, Tanzania and Rwanda are projected to have the strongest growth at 6.8% and 7.5% respectively. Kenya and Burundi will post the slowest growth at 4.9% and 4.3% respectively. But Uganda will have some of the strongest rebounds, bouncing back from 3.4% in the 2011/2012 to 6.2%, largely with credit to the private sector beginning to rise while inflation has been brought under control.

Inflation has dropped from 30% in October 2011 to 5.5%, boosted by earlier monetary policy tightening in Kenya and Uganda. Overall, interest rates and the  currency battering continue to be affected by a heavily importing economy that has a smaller export base.

For sub-Sahara, the World Bank says the ongoing increase in export volumes from several countries that have discovered mineral deposits in recent years including Ghana, Kenya, Mozambique, Niger, Sierra Leone, Tanzania and Uganda should boost growth prospects.

The sub-Saharan region, according to the bank, is projected to grow at its pre-crisis average rate of 5% over the 2013-15 period (4.9% in 2013, gradually strengthening to 5.2% in 2015). Excluding South Africa, the region’s growth will average 6% over the 2013-15 period.

“GDP growth in sub-Saharan Africa remained robust at 4.6% in 2012, notwithstanding the slowdown in the global economy,”  Excluding the region’s largest and most globally integrated economy, South Africa, GDP growth in the region was strong at 5.8% in 2012, with a third of countries in the region growing by at least 6%,” said the World Bank in a post over the weekend.

Robust domestic demand, steady remittance flows, still high commodity prices and increased export volumes (thanks to increased investment flows to the natural resource sector in recent years) were supportive of the region’s growth in 2012.