Service sectors set to lead economic growth next year

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Economy

Service sectors set to lead economic growth next year


Concept of economic growth. PHOTO FILE | NMG

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Summary

  • NCBA economists said in a macroeconomic outlook report that real estate, health care, education and financial services are also expected to return to historic growth trends, but agriculture is likely to be affected. negatively by irregular weather conditions.
  • The hospitality sector has been hit hardest by the pandemic, contracting 48% in 2020 as tourist arrivals level off and restaurants face extended closures to mitigate the spread of Covid-19 .
  • Already, the global economy has become nervous following the discovery of the Omicron strain of Covid, with some countries already reinstating travel restrictions and falling back into restrictions.

Sectors such as hospitality, services and transportation that have been hit hardest by the Covid pandemic are expected to lead the growing economy next year as they reap the benefits of easing restrictions on Covid-19 and increasing consumer spending.

NCBA economists #ticker: NCBA said in a macroeconomic outlook report that real estate, health care, education and financial services are also expected to return to historic growth trends, but agriculture is likely to be adversely affected by irregular weather conditions.

The hospitality sector has been hit hardest by the pandemic, contracting 48% in 2020 as tourist arrivals level off and restaurants face extended closures to mitigate the spread of Covid-19 .

Signs of recovery have already been seen this year, especially in the second quarter, when the accommodation industry grew 9.1% against a 56.8% contraction in the second quarter of 2020.

“The service sectors are expected to grow more than agriculture. We don’t expect to see the agricultural sector shut down with a similar measure last year. We are also seeing a slight contraction in agricultural activity this year due to difficult weather conditions which could keep growth below historical average, ”said NCBA chief economist Raphael Agung ‘.

The NCBA forecasts economic growth of 5.8 percent this year, up from an earlier estimate of 5.3 percent. It predicts that GDP growth will reach 5.2% in 2022, driven by the continued rise in demand and spending in the economy.

Risks remain, however, such as inflation, global supply shocks, rising taxes, a low exchange rate and the emergence of new strains of Covid.

Already, the global economy has become nervous following the discovery of the Omicron strain of Covid, with some countries already reinstating travel restrictions and falling back into restrictions.

Political uncertainty also remains a concern ahead of the 2022 general election, although the NCBA remains optimistic that the election would not undo any investments made in the past and that any slowdown would be reversed soon after the election.

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