Africa’s economic growth is seen rising in 2017 on the back of a rebound in global commodity prices.
This according to the The African Economic Outlook report, co-authored by the African Development Bank(AfDB), the OECD and the United Nations Development Programme.
The report says Africa’s economy will grow by 3.4 percent in 2017, and 4.3 percent in 2018.
The report however noted that Africa’s economic growth in 2016 slowed down to 2.2 percent in from 3.4 percent the previous year.
The reports says that domestic factors will be behind economic growth in Africa but the expected increase in commodity prices will provide a much-needed cushion to bridge budget deficits and act as a growth catalyst.
Prices of most commodities are expected to maintain an upward trajectory in 2017 and 2018 after the beginning of recovery in 2016.
Oil prices are projected to rise to $55 per barrel this year from $43 in 2016 due to output cuts from both OPEC and non-OPEC oil producers.
The report however cautioned that the recent rise in oil crude prices may not endure over the long term.
Domestic demand is becoming an increasingly important driver of growth in Africa and plays a significant role in maintaining the resilience of African economies.
The report also urged an increase of intra-African trade which provides opportunities to strengthen economic resilience. It noted that even thought intra-regional trade has increased steadily to the current 18 percent, the figure still remains low compared to other regions in the world.
It stressed the need for African countries to diversify their economies especially those that are heavily reliant on natural resources as economic diversification provides buffers to external shocks.
The report highlighted foreign direct investment (FDI) inflows to Africa are estimated to have bounced back in 2016,reflecting increasing diversification of investment into services, manufacturing and infrastructure-related projects. FDI is expected to reach USD 57.5 billion in 2017.