IMF projects Kenya’s economy to overtake Angola as Ethiopia widens lead
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IMF projects Kenya’s economy to grow by 5.3 percent and overtake Angola as Ethiopia widens its lead
IMF projects Kenya’s economy to grow by 5.3 percent and overtake Angola as Ethiopia widens its lead.
Even as Ethiopia extends its lead, the International Monetary Fund (IMF) predicts that Kenya’s GDP will grow to a size larger than Angola’s this year.
According to the IMF’s most recent World Economic Outlook, Angola’s gross domestic product (GDP) will decline over time, allowing Kenya to pass it and move up to fourth place behind Ethiopia thanks to its anticipated 5.3 percent economic growth.
Ethiopia, however, is now anticipated to surpass both Angola and Kenya to become the third-largest economy in sub-Saharan Africa, whereas the IMF had previously predicted that it would surpass Kenya to become Eastern Africa’s largest economy in its October 2022 forecast.
This is after the IMF revised its earlier forecast on Ethiopia’s GDP in 2023 from $126 billion to $156.1 billion, stretching its newfound lead over Kenya.
Sub-Saharan Africa accounts for 46 of the continent’s 54 countries, excluding giants such as Morocco and Egypt.
Nigeria remains the largest economy in the region with a GDP, in current prices, of $506.6 billion followed by South Africa ($399 billion), and Ethiopia ($156.1 billion).
In October last year, IMF had projected the size of Kenya’s economy at around Ksh15.7 trillion ($1117.6 billion) but this has since been revised slightly upwards to Ksh15.8 trillion ($118.1 billion) in the April 2023 outlook.
The fight for the economic dominance of Eastern Africa’s region between Kenya and Ethiopia has essentially been a contest for the attraction of investments especially in the agriculture and manufacturing sectors.
For example, both countries are major producers of coffee, tea and flowers. They are also keen to shore up their value-addition by rebooting their textile and apparel sectors.
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The attraction of foreign direct investment (FDI) is critical in easing growing youth unemployment in Africa.
Addis Ababa is expected to keep stretching this lead up to the end of 2028, the IMF projections show.
So far, South Africa and Ethiopia have fared better than Kenya in attracting foreign investments eyeing a population that has more cash to spend.
The IMF does not expect Kenya to stay long at the third position with Angola projected to regain the position next year before Nairobi overtakes it again in 2027.
Initially, the IMF had projected Angola’s GDP this year to be at $135 billion, making it the third largest economy ahead of Ethiopia.
The global lender has, however, not revised its estimates for 2022, which showed that the West African nation had overtaken Nairobi to become the region’s third-largest economy.
A return to growth linked to higher oil prices saw Angola overtake Kenya last year, according to the IMF’s projections in October last year.
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