Africa’s economy is forecast to grow and exit recession at a healthy pace of 3.8% in 2021, driven by rising global demand as restrictions are eased, untapped market opportunities, a rebound in commodity prices, and a rise in oil prices, and the fastest-growing economies in the region will be Morocco, Kenya, Ghana, Egypt, and South Africa, which are all forecast to register above 4% real GDP (Gross Domestic Product) growth in 2021. This is successfully making Africa an attraction for global investors as the UK has pledged to invest US$4.5bn in Africa by 2022, which is expected to create jobs and accelerate economic activities.
Gargi Rao, the economic research analyst at GlobalData, says Morocco has been moving ahead in leaps and bounds in recent years, has provided the world with produce following promising agricultural seasons. He also added that the country’s expected growth of 5.19% was also influenced by its effective vaccination drive, accommodative monetary policies, and fiscal stimuli.
FDI inflows declined by 20% in the African region in 2020 due to subdued commodity prices and pessimistic investor sentiment amid the COVID-19 pandemic. However, untapped markets and structural transformation are likely to speed up the momentum in FDI flows in the coming years. With an increase in energy demand anticipated, resource-seeking investments may increase in H2 2021.
According to Rao, “The need of the hour is to continue support to health sectors to cope with the resurgence of COVID-19 cases along with sustained fiscal and monetary support. To avoid reversing the progress made on poverty reduction, governments need to expand their social safety nets and make growth inclusive and more equitable. To achieve a faster economic recovery in H2 2021, Africa’s policymakers need to accelerate structural transformation through digitalization, industrialization, and diversification.”
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