Africa Economy: Sub-Saharan Africa's economy grows by 4.5 pct in 2014: World Bank

Economic growth in sub-Saharan Africa grew by 4.5 percent in 2014 compared with 4.2 percent in 2013, the World Bank (WB) said in its latest report received on Thursday.

The WB's Global Economic Prospects 2015 attributed the moderate growth to investment in public infrastructure, increased agriculture production, and buoyant services were key drivers of growth.

"Foreign Direct Investments (FDI) flows, an important source of

financing of fixed capital formation in the region, declined in 2014, reflecting slower growth in emerging markets and soft commodity prices," WB said in the report.

Among frontier market countries, growth is expected to increase in Kenya, boosted by higher public investment and the recovery of tourism.

The report notes that high interest rates and inflation would weigh on consumer and investor sentiment in Ghana, slowing economic activity.

The regional GDP growth is projected to remain broadly unchanged at 4.6 percent in 2015, rising gradually to 5.1 percent in 2017, supported by sustained infrastructure investment, increased agricultural production, and expanding service sectors.

According to the report, commodity prices and capital inflows are expected to provide less support, with demand and economic activity in emerging markets remaining subdued.

"Growth will remain robust in most low-income countries, owing to infrastructure investment and agriculture expansion, although soft commodity prices will dampen activity in commodity exporters, " the report said.

It notes that South Africa is expected to experience slow but steady growth, helped in part by gradually increasing net exports, and reforms to alleviate bottlenecks in the energy sector.

The global lender said growth is expected to pick up moderately in Angola, as oil production rebounds.

In Nigeria, the devaluation of the naira will push up inflation and slow growth in 2015, but with continued expansion of non-oil sectors, particularly the services sector, growth is expected to pick up again in 2016 and beyond.

However, several frontier market countries including Cote d'Ivoire, Kenya and Senegal were able to tap international bond markets to finance infrastructure projects.

According to the WB, risks to the region's outlook are mostly on the downside, stemming from both domestic and external factors.

On the domestic front, the report said, the Ebola outbreak could spread more widely than assumed in the baseline, dent confidence and cause severe disruptions to cross-border trade and supply chains in the region.

In various countries, the bank said government budgets are at risk from demands for increased spending.

"Conflicts in South Sudan and Central Africa Republic, and security concerns in northern Nigeria could deteriorate further with harmful regional spillovers," WB said.

On the external front, the report said a sudden increase in volatility in international financial markets, and lower commodity prices are among the major risks to the region's outlook.

"A sharper or sustained decline in the price of oil would adversely affect the region, even though net oil importers would gain," WB noted.

The fiscal deficit for the region narrowed as several countries took measures in 2014 to control expenditures.

"At the same time, however, the fiscal position deteriorated in many countries. In some, it was due to increases in the wage bill (such as Kenya and Mozambique)," it said.

"In other countries (such as Mali, Niger, and Uganda), it was due to higher spending associated with the frontloading and scaling up of public investment."

According to the WB, falling prices for oil, metals, and agricultural commodities weighed on the region's exports. Endi