East Africa’s economic outlook
The short-term outlook for East African countries economic growth remains below trend according to the latest index that tracks growth in the region. The index is a summary measure and includes information from a number of domestic markets, regional activity, and consumer expectations about activity and unemployment.The reports surveys six-month annualised deviation from trend growth rate in Kenya, Tanzania, Uganda, Rwanda but this year it has excluded Burundi a country suffering from political violence. It is a gauge on the likely pace of economic activity three-to-nine months into the future, increased from 4.14% in August to 4.45% in September. While a small improvement, the positive figure indicates that the regional economies will likely grow above trend in the first six months of 2016.Measures supporting the middle and lower-income groups are expected to be addressed by the respective partner states that make up East African Community.Although each country budget has measures and reliefs for families and individuals, there need to be more focus on these measures now due to the gloomy economic outlook. For most East Africans, their concerns is on the higher cost of living and job security, given that job cuts have been more prevalent this year than last year in private sector.The authors of the report expects private consumption to moderate further, falling to just above 6%.
The latest data available on private consumption showed that spending by consumers had fallen in the region to 5.7% year-on-year in the second quarter compared to 7.4% in the previous quarter. There’ll need to be measures to support consumer spending in Tanzania, Kenya and Uganda. Despite more job cuts this year, especially in the financial and mining industries, the employment has held up, and while banks have tightened financing since beginning of 2015, credit remains accessible.The consumer sentiment index in East Africa published recently showed that confidence among consumers had fallen to 66.9 points in the second quarter compared to the first quarter’s 71.5. Consumer sentiment has been trending down since late-2014, following the gradual cuts or discontinuation in subsidies for various commodities. There is also need to be an emphasis on affordable homes across the region as well and that means various schemes can be consolidated to avoid confusion that has characterised Kenya and Ugandan markets. The information on the various schemes should be up to date and that the various regional and local agencies that provide affordable housing should be consolidated so that people can have easier and less confusing access to information.The report authors also wants to see curbs on so-called rebates by property developers, as the practice has seen prices go up since the cost of the rebates has normally been factored into the selling price of the property.