The economies of Sub-Saharan Africa are expected to grow 4.8 percent overall in 2012, the World Bank said on Thursday, cutting its forecast from the 5.2 percent projected earlier in the year.
High commodity prices and an increase in exports from countries that have made mineral discoveries are likely to underpin growth for the rest of 2012, but Africa is still vulnerable to a fragile global economy and a slowdown in China, the World Bank said in its bi-annual Africa’s Pulse report.
As investor interest in the continent increases, foreign direct investment is projected to reach $48.7 billion by 2014 from $31 billion in 2012, the study said.
The majority of sub-Saharan Africa’s 48 countries could also achieve middle income status by 2025 though their dependency on natural resources is likely to continue in the medium term, it added.
This highlights the need for governments to spend their resource wealth wisely and focus on public investment, said Shantayanan Devarajan, the World Bank’s chief Africa economist.
“Resource-rich African countries have to make the conscious choice to invest in better health, education and jobs, and less poverty for their people because it will not happen automatically when countries strike it rich,” he said.
The 2012 growth forecast is barely changed from the 4.9 percent Africa achieved in 2011. However, in the April edition of Africa Pulse, the World Bank predicted growth of 5.2 percent.
Excluding South Africa, the continent’s biggest economy, growth is likely to hit 6 percent in 2012. Countries such as Mozambique, home to some of the world’s biggest untapped natural gas reserves, and iron-ore exporting Sierra Leone are expected to perform strongly.
After ten years of economic advancement, 22 of Africa’s 48 countries have officially achieved middle-income status, the World Bank said, while another 10 could reach middle-income status by 2025 if current growth trends continue.
Recent spikes in wheat and corn prices after the worst U.S. drought in half a century were also a cause for concern, the World Bank said.