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OECD says African Economic Growth Will be Cut by Half

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VOA News - May 11, 2009

SADC

A new report by the Organization for Economic Cooperation and Development predicts Africa's economic growth will be cut in half this year and political tensions may soar as the continent struggles with the global economic downturn. But the Paris-based organization also says Africa is in better shape to deal with the crisis than a decade ago.

The report paints a bleak picture of the African economy in 2009. Hit by a drop in commodity prices, foreign investment and aid, the report says growth is expected to fall to 2.8 percent this year, less than half the 5.7-percent growth in 2008.

Growth is expected to pick up to 4.5 percent next year.

Four African countries, the Seychelles, Democratic Republic of Congo, Angola and Chad, are expected to see their growth rates decline. South African growth is also expected to drop to 1.1 percent, dragging down other economies in the region. The Central African Republic will be hardest affected by the crisis, with only 0.2 percent growth expected.

Overall, says OECD economist Federica Marzo, 2009 will be a tough year for everyone and Africa is no exception.

"However, one of the main conclusions of the African Africa Economic Output report of this year is that Africa seems to be much stronger and (more) well equipped to respond to the challenges of the crisis," Marzo said. "For different reasons, (including the fact that) the macro-economics fundamentals of the continent are stronger, in terms of ... the level of indebtedness. But also the continent has diversified not only its export products, but also the partners, trade partners - and here I am talking about the emerging economies such as China for instance."

Today, about 40 percent of African exports go to emerging markets, particularly Asian ones. Moreover, some countries may not do so badly this year. East Africa is expected to see growth rise by 5.5 percent.

"There are a certain number of countries that will grow at six percent or even more. And here I am talking about the most diversified countries, such as Tanzania for instance or the countries that rely on agriculture such as Burkina Faso, Malawi or Rwanda," said Marzo.

Still, he says the economic crisis should trigger an alarm in Africa because it came from outside the continent. One of the lessons for Africa, she says, is to invest more in domestic drivers of growth.


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