Southern Africa likely to see GDP growth above 2% in the next two years
12th March 2018
By: Anine Kilian
Contributing Editor Online
SAVE THIS ARTICLE EMAIL THIS ARTICLE
Font size: -+
The’Southern Africa Economic Outlook Report 2018′, released by the AfDB, in Pretoria, on Monday, states that there is cautious optimism for the economic outlook for the Southern African region, but warns that there are diverging growth patterns for the region’s economies.
“South Africa, the largest economy in the region, turned in low and declining rates of growth,” AfDB Southern Africa regional development and business office lead economist Stefan Muller said while presenting the key findings of the report.
“Southern Africa is the [worst] performing region on the continent with GDP growth of 1.6% in 2017, owing to South Africa’s economy, which has not been performing well in recent years,” he said.
“The drought in South Africa resulted in dismal sector performance; however, this trend is expected to reverse in 2018, with more favourable rain patterns.”
Muller added that the outlook for services were also favourable, led by Madagascar and Mozambique, which are expected to record higher growth, in line with an improvement in external demand, especially for tourism.
“In the post 2008 economic crisis era, services and industry have been the main engines of growth. Traditional agricultural intensive economies have shifted and Malawi, Zambia and Zimbabwe have shifted domestic resources from agricultural to services, albeit at differing rates,” he noted.
Muller further said that services have seen the highest average growth rate in the Southern African region since 2000.
“On the other hand, an overall declining trend has been recorded in industry and agriculture over the same period,” he stated.
He highlighted that in Zimbabwe, a redistribution of land took place in the early to mid 2000s, and the years that followed with new owners saw declining investments and productivity.
From 2007 to 2016, the contribution of agriculture to GDP declined by nearly half from 21.6% to 11%.
“In 2017, there was some recovery in agricultural output, which helped improve food security in the country, but as a share of GDP, it remains low. To revitalise agriculture and boost domestic maize production, the Zimbabwe government instituted a large-scale systematic import substitution programme.
“Financing this ambitious policy initiative is likely to further swell the country’s fiscal deficit. In contrast, at the close of 2016, the service sector contributed more than 64.4% of Zimbabwe‘s GDP, a 19.1 percentage point increase over the previous ten years,” he said.