Sharp Rise in Liberia Inflation; World Bank Report Points to Uncertainty in Global Economy
Monrovia – The Africa Pulse Report, the World Bank’s twice-yearly economic update for the region reported Wednesday that growth in Sub-Saharan Africa remained slow through 2019, hampered by persistent uncertainty in the global economy and the slow pace of domestic reforms.
Looking specifically at the case of Liberia, World Bank Liberia Country Economist, Daniel K. Boakye stated that the economy of Liberia is projected to contract by 1.4 percent in 2019 compared to 1.2 percent in 2018, adding that there has been a sharp rise in inflation.
Speaking Wednesday at a news conference highlighting the report’s release, at the World Bank Country office in Monrovia, Mr. Boakye averred that as of last June, inflation was around 24 percent and 2019 June, inflation has risen to 28.5 percent.
The economist further explained that the Liberian economy is broken down into two sectors, which include the mining and non-mining sectors; for the non-mining sector which looks at agriculture and manufactures and services, the bank sees a negative growth in that area while the mining sector has positive growth of 7 percent.
“All these three sub-components put together has declined by 3.4 percent and when the economy is declining it also puts pressure on the extent to which the government can generate taxes; they are co-related.” He stressed.
Living Below Poverty Line
Mr. Boakye further noted that whilst revenue may change, some of the expenditure commitments of government are almost irreversible, which creates physical pressure for government. He however said, the Household and Expenditure aspect of the report reveals that ‘grossly’ almost half of the Liberian population live below the poverty line leading to the fact that the economy is declining.
Looking at the external sector, Boakye intoned that even though exports are still in the positives, the main challenge that the government of Liberia has is with its current account balance which include trade and financing inflows and outflows. “We see that account deficit is projected to increase in 2019 and when this happens it means that the government will have to find ways of fixing or unplugging the deficit we have in the country,” said Boakye.
To put the situation under control, the economist said, the government will have to borrow more to close the current account gap. “In trying to close the current account gaps we see that the government will have to use some of the reserve, pay for some of the liabilities as to assist their economies.”
Mr. Boakye however expressed optimism that Liberia growth rate will increase in the next one to two years. “We are optimistic for the very reason that government has committed itself at the recent National Economic Dialogue and a lot of policy discussions that were held there are relevant for addressing this problem,” he said.
On the overall, the economist averred, uncertainty continues to slow the growth rate in African Economies.
Addressing a televised conference from his Washington D.C office along with the world bank offices across Africa, the Chief Economist for Africa at the World Bank, Albert Zeufack stressed that growth in Sub-Saharan Africa remained slow through 2019 which is being hampered by persistent uncertainty in the global economy and a slow pace of domestic reforms. “African economies are not immune to what is happening in the rest of the world, and this is reflected in the subdued growth rate across the region,” he said.
Heavy Economic Activity Key
Mr. Zeufack linked some of the challenges faced by African economies to poor governance and poor growth rate, adding that the way forward is for African policymakers and citizens to prioritize the establishment of efficient and transparent institutions.
The Africa’s Pulse report recommends that the poverty agenda in Africa should put the poor in control which will help to accelerate the fertility transition, leverage the food system on and off farm, address risk and conflict, and provide more and better public finance to improve the lives of the most vulnerable.
The report said global uncertainty is taking a toll on growth well beyond Africa, and real GDP growth is also expected to slow significantly in other emerging and developing regions. The Middle East and North Africa, Latin America and Caribbean, and South Asia regions are expected to see even larger downward revisions in their growth forecasts than in Sub-Saharan Africa for 2019.
Beyond Sub- Saharan Africa’s regional averages, the picture is mixed. The recovery in Nigeria, South Africa, and Angola—the region’s three largest economies—has remained weak and is weighing on the region’s prospects. In Nigeria, growth in the non-oil sector has been sluggish, while in Angola the oil sector remained weak. In South Africa, low investment sentiment is weighing on economic activity.
Excluding Nigeria, South Africa, and Angola, growth in the rest of the subcontinent is expected to remain robust although slower in some countries. The average growth among non-resource-intensive countries is projected to edge down, reflecting the effects of tropical cyclones in Mozambique and Zimbabwe, political uncertainty in Sudan, weaker agricultural exports in Kenya, and fiscal consolidation in Senegal.
In Central African Economic and Monetary Community countries, which are also resource-intensive, activity is expected to expand at a modest pace, supported by rising oil production. Growth among metals exporters is expected to moderate, as mining production slows and metal prices fall.
Earning Gaps huge
Four in ten Africans, or over 416 million people, lived below $1.90 per day in 2015. Absent significant efforts to create economic opportunities and reduce risk for poor people, extreme poverty will become almost exclusively an African phenomenon by 2030. According to Africa’s Pulse, the poverty agenda in Africa should put the poor in control, helping to accelerate the fertility transition, leverage the food system on and off the farm, address risk and conflict, and provide more and better public finance to improve the lives of the most vulnerable. A critical piece will be addressing gender gaps in health, education, empowerment, and jobs.
Sub-Saharan Africa is the only region in the world that can boast that women are more likely to be entrepreneurs than men, and African women contribute to a large share of agricultural labor across the continent. This success is stifled by large and persistent earnings gaps between men and women. Women farmers in Sub-Saharan Africa produce 33 percent less per hectare of land than men do, and female entrepreneurs or business owners earn 34 percent less profits than male business owners.
These earnings gaps are very costly to African people and economies. Africa’s Pulse identifies six policy pathways for women’s economic empowerment: 1. building women’s skills beyond traditional training; 2. alleviating women’s financial constraints through innovative solutions that relieve the collateral problem and improve their access to the financial sector; 3. helping women secure their land rights; 4. connecting women to labor; 5. addressing social norms that constrain women’s opportunities; and 6. building a strong new generation by helping girls to navigate their adolescence.