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Sierra Leone News: Recovery will be bumpy – World Bank report

Albert Zeufack, Chief Economist for Africa Region

Sierra Leone is in for a bumpy ride to economic recovery said Albert Zeufack, Chief Economist for Africa Region, yesterday, Wednesday 3 October 2018. The World Bank launched its Africa’s Pulse report, a bi-annual analysis of the state of African economies through a VC link at the Sierra Leone Country Office, on Spur Road in Freetown. The theme of the report is “The Role of Human Capital in Boosting Productivity”. According to the Report Sub-Saharan African economies are still recovering from the slowdown in 2015 and 2016, but growth is slower than expected. The slower pace of the recovery in Sub-Saharan Africa (0.4 percentage points lower than the April forecast) is explained by the sluggish expansion in the region’s three largest economies in Nigeria, Angola, and South Africa. Also, heightened political uncertainty (Democratic Republic of Congo), weak fiscal dynamics (Zambia), and mine closures (Sierra Leone) weighed on growth in several countries. “The region’s economic recovery is in progress, but at a slower pace than expected,” said Albert Zeufack, World Bank Chief Economist for Africa. “To accelerate and sustain an inclusive growth momentum, policy makers must continue to focus on investments that foster human capital, reduce resource misallocation and boost productivity. Policymakers in the region must equip themselves to manage new risks arising from changes in the composition of capital flows and debt.” According to the report, low growth is partially a reflection of a less favorable external environment for the region, with global trade and industrial activity losing momentum, as metals and agricultural prices fell due to concerns about trade tariffs and weakening demand prospects. Inflation receded among metals exporters and non-resource-rich countries.
In South Africa, inflation remained well within the 3 to 6% target range, despite the recent weakening of the South African rand, helped by lower food price inflation. At its recent monetary policy meeting, the central bank left interest rates unchanged. Sierra Leone continued to have inflation well over 10%, as their currencies depreciated rapidly against the U.S. dollar amid falling export revenues. The Bank of Sierra Leone raised interest rates to contain inflationary pressures. Meanwhile, the report observed that economic activity remained solid in the fast-growing non-resource-rich countries, such as Côte d’Ivoire, Kenya, and Rwanda, supported by agricultural production and services on the production side, and household consumption and public investment on the demand side. Public debt remained high and continues to rise in some countries, noted the World Bank adding that vulnerability to weaker currencies and rising interest rates associated with the changing composition of debt may put the region’s public debt sustainability further at risk. The report further points out sub-Saharan Africa’s lower labour productivity and potentials for improvement. “Reforms should include policies which encourage investments in non-resource sectors, generate jobs and improve the efficiency of firms and workers,” said Cesar Calderon, lead economist and lead author of the report.


By Ophaniel Gooding

Thursday October 04, 2018.

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