April 14, 2023 (GMN) - The International Monetary Fund (IMF) has projected that the size of Kenya’s economy will overtake that of Angola this year even as Ethiopia stretches its lead.
In its latest World Economic Outlook, the IMF says the gross domestic product (GDP) of Angola, an oil producer, will shrink during the period allowing Kenya, whose economy is expected to grow by 5.3 percent, to overtake it, and perch itself at the fourth spot behind Ethiopia.
However, Ethiopia, which the IMF had projected in its October 2022 outlook would overtake Kenya to become Eastern Africa’s largest economy, is now expected to overtake both Angola and Kenya to become the third largest economy in sub-Saharan Africa.
This is after the IMF revised its earlier forecast on Ethiopia’s GDP in 2023 from Sh16.9 trillion ($126 billion) to Sh20.9 trillion ($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, the Washington-based institution had projected the size of Kenya’s economy at around Sh15.7 trillion ($1117.6 billion) but has since been revised slightly upwards to Sh15.8 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.
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.