Strong Economic Growth in East Africa

Nairobi, April 13 (Xinhua) – Economic growth in East Africa remains strong, despite the adverse effects of severe drought across the region, said a report by an accounting and finance agency released on Thursday.

The latest report by the Institute of Chartered Accountants in England and Wales (ICAEW) said the economy is being helped by growth in infrastructure in the region.

Infrastructure development continues to stimulate industry across the region, while expanding services to underserved markets remains the main driver of growth

— Michael Armstrong, regional director for ICAEW Middle East, Asia, Africa and South Africa

The Economic Insight: Africa Q1 report found that officials in several East African countries have tried to mitigate the effects of drought by stimulating economic activity through other channels, such as substantial fiscal stimulus and more flexible monetary policy.

According to the report, Tanzania is expected to achieve real GDP growth at 6.9, followed by Uganda at 6.8, Ethiopia at 6.7 and Rwanda and Kenya at 6.6 and 6.4, despite the drought.

Both Rwanda and Uganda were said to have loosened monetary policy during the first quarter of the year, while Ethiopia balanced the effects of the drought through substantial fiscal stimulus – the construction sector would have grown 25% during the fiscal year.

ICAEW said the adverse effects of drought were most felt in Uganda, with agriculture falling in the first three quarters of last year. The Commission notes that weak agricultural production has also had a significant impact on food price inflation in the region. Agriculture in most East African nations is highly dependent on the climate, and rainfall is directly reflected in agricultural production and food prices.

Meanwhile, the report says that Botswana and South Africa are still struggling to recover after the fall in commodity prices, despite the drought. Real GDP growth of 1.2% is expected for both countries.

According to ICAEW, South Africa’s growth will be helped by widespread rainfall, an improvement in consumer demand prospects and a recovery in commodity prices, while Angola remains optimistic about improving oil production and the start of projects infrastructure.

Botswana, on the other hand, expects record growth of 4.1% due to demand in the international diamond market.

ICAEW said that Senegal’s strong growth in its primary and secondary sectors, as well as the government’s collaborative efforts to improve infrastructure, particularly in the supply of electricity, have tremendously spurred the country’s economic growth.