Africa will record a 4.4 percent economic growth this year, up from 3.7 percent in 2015 buoyed by increasing domestic demand and improved investment in infrastructure, the United Nations has predicated.
According to the latest UN World Economic Situation Prospects Report released on Tuesday by the world body's Economic Commission for Africa (UNECA) in Addis Ababa, Ethiopia, an improved regional business environment and increasing public investment especially in infrastructure will also drive growth.
increase in growth rate is expected to be mainly driven by the increased inflow of FDI, increased public spending on infrastructure and growing domestic markets
Other factors would include improved macroeconomics management, a buoyant service sector, and increasing trade and investment ties with emerging economies. Adam Elhiraika, UNECA's macroeconomic policy division director said the same factors would support regional growth in 2017, which is forecast to remain at 4.4 percent.
The report says East African economies would grow faster than the rest of the continent at 6.8 percent. East African countries also maintained the highest growth rate in Africa with 6.2 percent growth rate last year.
"The increase in growth rate is expected to be mainly driven by the increased inflow of foreign direct investment, increased public spending on infrastructure and growing domestic markets," the report says.
However, the UN warns that political uncertainty in South Sudan and Burundi, together with terrorism threats in Kenya and Somalia, "have been weighing on the sub region's growth".
West Africa is expected to have the second highest growth rate at 5.2 percent, followed by Central Africa its projected growth rate expected to reach 4.3 percent. North Africa and Southern Africa would register a 4.1 percent and 3.3 percent growth, respectively.
The report also forecasts the African inflation rate to decrease to 6.7 percent in 2016 and 6.3 percent in 2017, respectively. Regional inflation was pegged at 7.5 percent in 2015.
"Inflationary pressure was reduced by lower global oil prices and the continuing fall of food prices, while currency depreciations have increased the risk of imported inflation," the report added.