Slow recovery overseas to hurt Kenya’s growth

It said that in the still weak environment, oil prices are expected to remain broadly stable, averaging about $76 a barrel; and other commodity prices should rise by only three per cent per year on average during 2010 and 2011.

“The overall regional (sub-Saharan Africa) outlook remains uncertain and the strength of the recovery will largely depend on demand from key export markets,” the report said.

Exports, which are mainly commodities, are expected to rise by only three per cent on average in 2010 and 2011, thereby dampening prospects for a stronger recovery.

“Unfortunately, we cannot expect an overnight recovery from this deep and painful crisis because it will take many years for economies and jobs to rebuild. The toll on the poor will be very real,” said Justin Lin, World Bank chief economist and senior vice-president for development economics.

He said that the poorest countries, those that rely on grants or subsidised lending, may require an additional $35-50 billion (Sh2.7 trillion- Sh3.8 trillion) in funding just to sustain pre-crisis social programmes.

These include all countries in East Africa except Kenya.

The report noted that Sub-Saharan Africa initially felt the crisis through trade, foreign direct investment, tourism, remittances, and official assistance channels.

Regional GDP is estimated to have increased by only 1.1 per cent last year.

“Oil exporters and middle income countries were hit more severely than low-income, fragile and less integrated countries – at least initially,” said a statement on the report.

In 2010, GDP is expected to grow by 4.8 per cent in SSA countries excluding South Africa.

South Africa is expected to grow by two per cent this year after having contracted by 1.8 per cent in 2009, while middle-income countries growth will accelerate to 3.5 per cent.