Mozambique leads as World Bank sees PALOP accelerate growth in 2024

Login

Register

http://www.clubofmozambique.com/

Mozambique leads as World Bank sees PALOP accelerate growth in 2024

8:24 CAT | 12 Jun 2023

File photo: Reuters

According to the World Bank’s Global Economic Prospects publication recently released in Washington, Mozambique will be the Portuguese-speaking African economy with the fastest growth, projected to be 8% next year, and cementing the 5% growth forecast for this year.

The economies of the Portuguese Speaking African Countries (PALOP) will grow faster in 2024 compared to this year, with the exception of Equatorial Guinea, which is sinking into recession, and Guinea-Bissau, which however continues to expand this year.

Cape Verde, still recovering from the significant drop in tourism revenues due to the Covid-19 pandemic, is expected to register growth of 4.8% this year and 5.4% in 2024, confirming the robustness of the economic recovery.

Guinea-Bissau is expected to maintain growth of 4.5% this year and the next.

Angola, in turn, is unlikely to be able to maintain last year’s growth which followed five years of economic recession. The largest Portuguese-speaking African economy is therefore expected to expand by 2.6% this year and 3.3% in 2024, more or less in line with population growth, which will not be enough to increase the level of wealth per capita.

Growth in São Tomé and Príncipe is expected to accelerate from 2.1% this year to 3.4% next year, just slightly above the growth recorded in the first year of the Covid-19 pandemic, 2020, when the economy grew by 3.1%.

At the opposite extreme is Equatorial Guinea, which remains unable to grow its economy. The most recent Portuguese-speaking African country has been in recession since the middle of the last decade, having only interrupted this negative cycle last year with a growth of 2.9%.

For 2023 and 2024, the World Bank predicts a recession of 3.7% and 6% for Equatorial Guinea, and in 2025 the estimate is for a new contraction, in the order of 3.1%.

At regional level, the World Bank forecasts economic growth to slow to 3.2% this year before accelerating to 3.9% in 2024, with economic recovery being threatened by several factors.

READ: World Bank cuts 2024 global growth forecast as rate hikes bite but lifts 2023 outlook

“The recovery of economies from adverse economic and climate shocks, already fragile and incomplete in many countries, has been weakened by high and persistent inflation, greater tightening in global financial conditions and domestic policies, and outbreaks of violence and social unrest in some countries,” the chapter on Sub-Saharan Africa in the Global Economic Prospects report reads.

According to the document, sub-Saharan Africa entered 2023 with 35 million more people in a situation of acute food insecurity than in the previous year, a situation aggravated by high inflation, which was above 10% in nearly 70% of countries.

In April, the World Bank forecast the region’s economy to slow to 3.1% this year, after growing 3.6% in 2022.

Among the main risks presented, the World Bank highlights that “the forecasts are subject to multiple downside risks, as global economic activity could slow down even more than expected if the reopening of the Chinese economy fails, or if global financial conditions deteriorate”, and points out that inflation continues to be a cause for concern.

“If inflationary pressures continue to persist longer than we anticipate, or if there are banking sector difficulties in the most advanced economies that spill over into the global financial system, then financial conditions in sub-Saharan African countries could worsen further, triggering new currency depreciations and capital outflows, increasing the risk debt distress,” the report adds.

Painting the macroeconomic scenario in sombre tones, the World Bank says that “many economies in the region, already lacking in fiscal space for manoeuvre to mitigate the new macroeconomic shocks, are dealing with formidable internal challenges such as persistent poverty, outbreaks of violence and conflict, and adverse impacts of climate change”.

The economists at the multilateral financial institution also warn that if there are more extreme weather events with an increase in insecurity in several countries, this could “further worsen growth and result in major humanitarian crises”.

Source: Lusa