East Africa’s Economy to Grow by 4 Percent in 2022
A report by the Africa Development Bank (ADB) now says East African economies are expected to grow by four percent in this year. The African Development Bank forecasts the region’s GDP at four per cent this year, before recovering to 4.7 per cent in 2023, helped by the reopening of the economies after the Covid-19 containment measures.
In the ADB East Africa Regional Economic Outlook 2022, the region recorded a robust economic recovery in 2021, but most members are yet to achieve their pre-COVID-19 growth levels.
The report also points out several policy interventions needed to boost East Africa’s post-COVID-19 recovery and build resilience against emerging vulnerabilities as well as the short, medium, and long-term policy options for supporting climate resilience.
In the report, the projected strong growth is not uniform across the wider eastern African region, with top performers being Ethiopia, Kenya, Rwanda, Seychelles, Tanzania, and Uganda. The report reviews economic performance of 13 countries (Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Rwanda, Seychelles, Somalia, South Sudan, Sudan, Tanzania, and Uganda) over the past year with short to medium-term projections.
In the report, lingering political instability in Ethiopia, Somalia, South Sudan, and Sudan, could weigh down on the region’s outlook, while several countries are equally faced with different climate change vulnerabilities. According to the IMF review of fuel taxes remains an option for countries seeking to deal with the high fuel prices and surging inflation in the region but this will depend on the countries’ internal revenue and expenditure policies.
“These impacts are becoming dynamic and are compounded by other shocks including commodity prices, health, and insecurity which calls for enhanced contextual risk and vulnerability assessments to inform clear adaptation and mitigation measures,” the report stated.
The fund has also backed elimination of fuel subsidies, prudent management of public resources, complete reforms of inefficient and loss-making state-owned enterprises and balanced funding plan tilted towards concessional loans to help navigate the biting economic crisis.
“The options to consider those taxes (fuel taxes) are things that countries can consider. Countries have the option to consider the domestic tax systems and reform measures taking into account the specific government policies. It is a sovereign decision they can make,” said Catherine Pattillo, the fund’s Deputy Director-in-charge of the African Department.