Antananarivo, Thursday 13, October 2016: COMESA region has remained the fastest growing economy in the world with five member States D R Congo, Djibouti, Ethiopia, Kenya, Rwanda and Uganda recording growth levels of between 5% and 10%.
According to the latest COMESA Macroeconomic report, the growth was supported in most of member countries, by increased private consumption and investment. Among the 51 African countries evaluated on the conditions for doing business, Kenya, Uganda, Rwanda, Seychelles and Mauritius took the lead.
In 2015, the overall growth in COMESA region dropped to 6.0% from 6.5% in 2014 as a result of weaker global demand and lower international commodity prices. This adversely affected the regionâ€™s resource-rich countries.
The drop in commodity prices was attributed to weaker growth in China and its transition from investment and exports of industrial goods, towards consumption and services. Thus trade with China registered the largest deficit with a value of US$ 24 billion, followed by EU with US$ 21 billion, India (US$ 9 billion) and South Africa (US$ 5 billion).
In addition, intra-COMESA total exports declined by 8% from US$ 9.2 billion in 2014 to US$ 7.6 billion in 2015.
The report shows that savings rate in most COMESA member countries was below 20% of the Gross Domestic Product (GDP). This resulted from the fact that a large proportion of the population was not connected to the financial system and therefore had no access to savings instruments. It is necessary to generate an adequate level of domestic savings in order to ensure higher level of sustained investment, the report says.
The average overall investment, as a percentage of GDP in COMESA, increased marginally from 24.6% in 2014 to 26.3% in 2015. A number of COMESA member countries recorded investment performance of less than 20% of GDP.
Region-wide, inflation increased marginally from 6.0% in 2014 to 6.8% in 2015. Lower global oil prices and the continuing fall in food prices as well as prudent monetary policies contributed to the single digit inflation in most member countries.
However, currency depreciation in the wake of lower commodity prices increased the risk of inflation. Some countries experienced increase in annual inflation rate due to exchange rate depreciation hence monetary policies in most member countries focused on controlling inflation.
The region further recorded significant depreciation of currencies owing to widening current account deficits. The deficits resulted from persistent trade imbalances and in some cases late disbursement of external aid flows. High public sector demand for foreign exchange to finance big public investment projects, a strong dollar and high demand for foreign exchange from the local corporate sector also led to the depreciation. The countries whose exchange rates were under pressure, responded by tightening monetary policy;
The intergovernmental committee recommended among others that countries undertake continuous improvement in political and economic governance, and economic management to enhance productivity in sectors where individual member countries had comparative advantage.
Further, it recommended that countries need to accelerate regional integration and enhance the implementation of the Tripartite Free Trade Area arrangement, to boost intra-regional trade in manufactured goods.