According to the Institute of Chartered Accountants in England and Wales (ICAEW) latest report, Economic Insight: Africa Q2 2019, the diverse economies of most African countries projects a positive economic outlook.
East Africa, was estimated to have experienced the most rapid real GDP growth in 2018 and is forecast to continue doing so over the next two years, with a projected growth rate of 6.1%. EA’s growth is mainly driven by strong performances in the two major economies which are Kenya and Ethiopia with the banking sector supporting the GDP growth of Kenya’s economy through diversification.
The dynamic banking sector in Kenya has brought about a resilient GDP growth projected at 5.5% estimated to be worth about KES 9 trillion. Ongoing economic diversification and the growing influence in the banking sector in Kenya is accounted for by the planned merger between Kenya’s biggest lender by assets, KCB Group, and the National Bank of Kenya (NBK), in addition to the planned one between NIC Bank and the Commercial Bank of Africa.
Michael Armstrong, ICAEW’s Regional Director for the Middle East, Africa and South Asia said that the macroeconomic benefits of diversification are evident from a comparison of real GDP growth rates between the regions of Africa.
“As a global trade war rages, East African economies have minimal fears of contagion from lower commodity prices. Their diversified economies will be best placed to weather the storm caused by the instability of oil prices. This, in addition to a well-regulated, mainly private banking sector are key to financing the economies,” he said.
Overall, East Africa’s growth has also been fortified by the growth of Ethiopia’s economy; an eight trillion-shilling economy which is forecast to grow by 7.9%, while Rwanda’s projected real GDP growth rate for 2019 is 7.4%. North Africa presents quite a mix; Egypt, Morocco and Tunisia have diversified economies, whereas Algeria and Libya are extremely dependent on oil and gas. Southern Africa is the slowest-growing region on the continent, with GDP growth forecast at barely 1.8% this year, with South Africa, the regions dominant economy, dragging it down.