The World Economic Outlook issued by the International Monetary Fund (IMF), says the EAC is poised for 5.9 percent economic growth this year but Tanzania will top the bloc in inflation reduction for 2024
Arusha. Tanzania will record the lowest inflation rate among the East African Community (EAC) member countries this year.
The country is set to maintain stability with a projected inflation rate of four percent.
In fact, all the EAC states are expected to witness reductions in inflation this year, indicating a positive outlook for price stability.
This is according to the World Economic Outlook issued by the International Monetary Fund (IMF), which says the eight-nation bloc is poised for 5.9 percent economic growth this year.
But Tanzania, as the report noted, will top the EAC states in inflation reduction for 2024.
The projected inflation for the country this year, according to the World Economic Outlook, is four percent down from 4.4 percent last year.
Tanzania is followed by Uganda and Kenya, whose inflation rates are projected at 5 and 6.5 percent, down from 5.6 and 7.5 percent, respectively.
The Democratic Republic of Congo (DRC) and South Sudan tie with a projected 7.5 percent inflation rate for 2024.
Inflation is also projected to tumble significantly in the EAC’s tiny states of Burundi and Rwanda, although it will be higher than in other states.
For Burundi, it is projected to be 10 percent and nine percent for Rwanda. Burundi anticipates a decline from 13.1 percent to 10 percent.
With the lowest inflation this year, the report indicated that Tanzania is set to maintain stability. No statistics are available for Somalia, the new entrant to the bloc.
Rwanda and the DRC will, on the other hand, lead the rest of the EAC states in projected GDP growth for this year.
“DRC will lead the charge, continuing its stride with a robust projected growth of seven percent, up from 6.7 percent last year,” the report said.
Rwanda follows closely, maintaining its steady growth trajectory with a projected growth rate of seven percent.
The other EAC countries are set to exhibit moderate yet significant increases, with projections ranging from four to 6.1 percent.
Of the five remaining countries, Tanzania leads the pack with a projected 6.1 percent growth, followed by Burundi (six percent), Kenya and Uganda (both six percent) and Uganda (5.7 percent).
Notably, the EAC economic growth surpasses the sub-Saharan average growth rate of four percent, showcasing the collective economic resilience of the region.
The World Economic Outlook report is, however, not entirely optimistic about the entry of Somalia into the bloc.
Ideally, the admission of the Horn of Africa country last November expands the EAC market to 301.8 million consumers.
The land area of the economic bloc is now 5.4 million square kilometres, with the region’s gross domestic product (GDP) rising to $312.9 billion.
The expansion, as the report pointed out, improves the Community’s strategic and geopolitical significance and prospects.
However, the entry of Somalia may not end the geopolitical tensions and conflicts due to the fragile security in the troubled country.
Such tensions, it said, have the potential to disrupt trade and investment flows and increase non-tariff barriers (NTBs) within the region.
A major economic risk the region will face this year includes the impact of climate change on critical sectors like agriculture.
“Climate change is a notable economic risk, potentially affecting food security and livelihoods,” the report went on.
Solutions to the crisis include diversification of the economies into agricultural processing, infrastructure development and technological innovations.
Others are the economic empowerment of women, youth and small and medium enterprises (SMEs), which are deemed to be central “to driving sustainable economic growth.”
The much-anticipated 2024 African Outlook Report forecasts the overall economic growth on the continent at four percent, a notable increase from 3.3 percent last year.
East Africa takes centre stage in this growth narrative, exhibiting consistently higher growth rates than the rest of the continent.
Tanzania, Rwanda, Uganda, and Kenya are identified as key drivers, collectively contributing significantly to the region’s economic resurgence.
“East Africa’s growth is propelled by dynamic sectors such as natural resources, transportation, tourism, and agriculture.
“Significantly, there is potential for further acceleration due to increased investment from Gulf countries.”
These developments are shaping East Africa into a model region for economic resilience and diversification,” says Fadekemi Abiru, Head of Insights at Stears, a global think-tank.
