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Economic Challenges Loom for East Africa in 2023, Deloitte Report Warns

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A recent report by financial advisers at Deloitte forewarns of economic challenges for East African countries in 2023, with a projected decline in the overall GDP growth rate to 5.7%, down from 6.1% in 2022. The region grapples with a challenging macroeconomic environment marked by escalating inflation, currency depreciation, surging commodity prices, and tightened global financial conditions.

The report acknowledges the socioeconomic shocks of 2022, including drought, political instability, and currency depreciation, contributing to weakened economic activity and heightened inflation in 2023. Despite these challenges, the report cautiously expresses optimism for 2024, anticipating a recovery in growth to 6.3%.

“Growth is expected to recover in 2024, with real GDP growth averaging 6.3%,” states the report, citing a potential rebound in the services sector and improved export performance.

However, the report warns of potential obstacles such as commodity price volatility, rising debt service costs, and rapid currency depreciation. Average inflation in the region is forecasted to rise to 14.5% in 2023, driven by high food and energy prices and currency depreciation. The report suggests that inflationary pressures may ease in 2024 as global supply chain disruptions subside, but fiscal adjustment policies may be necessary to manage debts sustainably.

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