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Macro-economic Stability

There is sustained macro-economic stability in the EAC mainly due to effective macro-economic policies. A stable macroeconomic environment is one of the major enabling environments for growth and structural transformation.

Because growth and structural transformation are needed to substantially reduce poverty, EAC Partner States pay attention to macroeconomic stability. And because macroeconomic instability can lead to political and social instability, it captures the attention of policymakers and politicians.

Price stability is the primary objective of monetary policies in all EAC Partner States. However, core macroeconomic policies are not yet harmonized and remain country specific. For the EAC region, inflation, an important indicator of macroeconomic stability, remained in the double digits in 2018, increasing by 0.5 percentage point from 14.0% in 2017. But if South Sudan’s exceptionally high 104.1% is excluded, the region’s average inflation rate drops to an estimated 12.8% in 2018, and is projected to decrease slightly to 10.9% in 2019 and 10.2% in 2020 (East Africa Economic Outlook, African Development Bank Group, 2019).

Africa’s economic growth continued to strengthen, reaching an estimated 3.5% in 2018, about the same as in 2017 and up 1.4 percentage points from the 2.1 percent in 2016. In Africa, East Africa led with GDP growth estimated at 5.7% in 2018, followed by North Africa at 4.9%, West Africa at 3.3%, Central Africa at 2.2%, and Southern Africa at 1.2%. Southern Africa’s subdued growth is due mainly to South Africa’s weak development, which affects neighboring countries. Growth in Central Africa was gradually recovering supported by recovering commodity prices and higher agricultural output but remains below the average for Africa as a whole (AfDB 2019).


East African Community
EAC Close
Afrika Mashariki Road
P.O. Box 1096
Arusha
United Republic of Tanzania

Tel: +255 (0)27 216 2100
Fax: +255 (0)27 216 2190
Email: eac@eachq.org  |  sgoffice@eachq.org