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African economic growth seen halving to 2.8 pct
Published in Saudi Press Agency on 27 - 07 - 2009


Africa has been «gravely affected»
by the global economic downturn and its growth rate will
halve this year due to collapsing commodity prices and a
decline in donor funding, a new report said Monday, according to AP.
The 2009 African Economic Outlook finds that after half a
decade of above 5 percent economic growth, the continent
can expect only 2.8 percent growth in 2009.
The annual report covers 47 of the 53 African countries
and is a key document that influences government policy and
donor spending.
It was produced jointly by the Development Center of the
Paris-based Organization for Economic Co-operation and
Development, made up of countries from the developed world,
and the African Development Bank with support by the
economic agencies of the United Nation and the European
Commission.
The report anticipates growth rebounding to 4.5 percent in
2010 and it notes that the continent is in a stronger
position than it was a decade ago thanks to reforms.
«On a more positive note, Africa is better prepared for
the crisis,» said OECD economist Federica Marzo. «Africa
is more resilient.»
The OECD has forecast that world trade will contract by 13
percent in 2009, further driving down commodity prices from
oil and mineral-rich Africa, which began falling last year.
Marzo said countries which have been most affected by the
financial crisis are those whose economies that are more
integrated with global markets.
South Africa, a regional powerhouse, has entered its first
recession in nearly two decades after the economy shrunk
6.4 percent during the first quarter of this year.
Botswana, the largest producers of diamonds, saw GDP
shrink by 20 percent in the first quarter of 2009. Growth
in Angola, one of Africa's oil exporting countries is
expected to turn negative by about 7 percent this year.
However, Marzo said there are group of countries which are
still performing well and will continue to see growth of
about 6 percent. These includes Rwanda, Tanzania and Ghana
which have diversified their economies and have strong
agricultural sectors.
In addition, countries such as Liberia and Sierra Leone,
which are recovering from long conflicts, can expect high
growth, she said.
Improved macro-economic policies and fiscal management
have seen levels of indebtedness decrease in Africa. There
is also a greater variety of trade and investment partners.
China increased its trade with Africa by 50 percent last
year.
However, benefits accumulated over the years of reform now
risk being eroded by the economic crisis and there is a
danger countries will fall back into poverty, the report
said.
Foreign direct investment decreased by about 10 percent in
2008 and while aid to Africa increased last year there are
concerns that donor budgets are being slashed.
African governments are also under pressure to reduce
spending. Angola has cut public investment by 40 percent
and spending on poverty reduction schemes have declined in
Kenya, Zambia and Nigeria.
Rising prices saw food riots in parts of Africa last year
and the burden on workers has continued with serious job
losses.
In Zambia, 20 percent of the miners have been fired while
Congo has seen 100,000 workers laid off. In South Africa,
where there has seen protracted strike action, 180,000 jobs
have been shed.
«The deteriorating living conditions of people is
worrisome also in terms of political stability,» Marzo
said. «This year, in the context of decreasing resources
it will be more difficult for government to respond to the
instability and this is a real risk.»
She said trade with emerging markets such as China and
India, where sustained growth is still expected, would help
offset some of the effects of the global crisis.
The report predicts that markets will begin recovering in
2010 and this will lead to a renewed demand for African
commodities.
«There is consensus that we are at the bottom of the
crisis,» she said. «How long Africa will take to recover
its high growth rate is very difficult to say.»


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