African growth may exceed 5% in 2015-16, but Ebola, terrorism and other risks pose concern, according to the World Bank’s Africa Pulse analysis of the issues shaping economic prospects in the region.

African economies continue to expand at a moderately rapid pace, with regional GDP growth projected to strengthen to 5.2% yearly in 2015-16 from 4.6% in 2014.

Significant public investment in infrastructure, increased agricultural production and expanding services in African retail, telecoms, transportation, and finance, are expected to continue to boost growth in the region.

This pick-up in growth is expected to occur in a context of lower commodity prices and lower foreign direct investment as a result of subdued global economic conditions, according to the report.

Commodity prices remain highly significant to Africa’s outlook since “primary commodities continue to account for three-quarters of Sub-Saharan Africa’s total goods exports, and the share of the region’s top five exports in total exports has climbed to 60% in 2013 from 41% in 1995”.

Francisco Ferreira, the World Bank’s Chief Economist for Africa, said: “Overall, Africa is forecast to remain one of the world’s three fastest growing regions and to maintain its impressive 20 years of continuous expansion.”

“Downside risks that require enhanced preparedness include rising fiscal deficits in a number of countries; economic fallouts from the activities of terrorist groups such as Boko Haram and Al Shabaab and, most urgently, the onslaught of the Ebola epidemic in West Africa,” he added.

A World Bank study of the likely economic impact of Ebola, released last month, suggested that if the virus continues to spread in the three worst-affected countries, its economic impact could grow eight-fold, dealing a potentially catastrophic blow to the already fragile states of Guinea, Liberia and Sierra Leone.

“Economic spillovers could also affect neighboring countries,” noted the report.

Nevertheless, according to the World Bank, prospects for the region remain favorable, despite headwinds.
External risks of higher global financial market volatility and lower growth in emerging market economies weigh on the downside.

In several Sub-Saharan African countries, large budgetary imbalances are a source of vulnerability to exogenous shocks and underscore the need for rebuilding fiscal buffers in these countries, said the report.