Signs of steady growth in East African region
East Africa economies are finally emerged after months of stagnated growth and paralysis, with analysts saying the ‘steady growth’ will not just be short-term but a long term. The region’s economies have shown the first signs of steady growth since 2011. According to preliminary data of economic monitoring indicators showed green light last month following a run of two consecutive red signals. An analysts in the region told me last week that East Africa will likely grow by more than 5% in coming months if there are no major changes concerning the their main trading partner economies in Europe and its expected to be a long term phenomenon. The latest report showed that the score of monitoring indicators which takes into account both leading and coincident indicators rose four points to 19 points from a revised 14 points six months ago because of higher growth of exports of cash crops and agri-business products. The rise of exports was because of higher investment by local and foreign companies, especially in tourism, agriculture and service sectors. The region’s increasing investment confidence has made the economic growth more sustained.
The main economies of Kenya, Uganda and Tanzania’s exports this year are expected to register more significant growth than in 2013, benefiting from more solid Euro zone economic certainty and small growth expected in some European countries compared to the previous years. Expected strong economic performance in the US and Europe will drive the global economic growth this year to around close to 1 percent higher than a year ago based on the reports of various research institutes that I have read since the beginning of the year. The easing of bond buying by US Federal Reserve’s has been mentioned as one of the cause that could see investors shift their money from East African region back to developed countries from developing markets. This according to the report will create higher fluctuation for stock markets globally but few in East African region expects the federal reserve tapering to trigger a financial calamity in their economic bloc. Economic environments for East African countries improved after the global financial crisis four years ago, and an analyst based in East Africa I spoke to expect the United States to minimize the impact of its policy toward such vulnerable and poor countries. A researcher who works with Boston Consulting informed me a week ago that it is highly unlikely that the regional economies will show any significant improvement before the third quarter of this year, when most of them enters their peak season for exports and tourism arrivals.