African economies are projected to grow at a slower pace of 2.8% this year compared with 5.7% projected before the crisis, the 2009 edition of the African Economic Outlook or AEO said. However, the AEO forecasts the growth to climb to 4.5% next year. The growth falls short of the 5% and above growth rate averaged by the continent in the last half-decade.
The annual AEO is published jointly by the African Development Bank (AfDB), the OECD Development Centre and the United Nations Economic Commission for Africa, with support from the European Commission.
The report said the growth for oil-exporting countries is expected to fall to 2.4% in the current year, compared with 3.3% for net oil importers. Moreover, with the fall of commodity prices and demand from the OECD countries, Africa is expected to have a regional budget deficit of 5.5% of GDP this year compared to a surplus of 3.4% of GDP a year ago.
The AEO noted that the financial crisis has eroded the benefits accumulated over the years of reform, with many people expected to fall back into poverty. At the same time, Louis Kasekende, Chief Economist of the AfDB noted that the decade of reform had made African economies more competitive.
The AEO also said that Africa was in a better position to weather the crisis than it was ten years ago, as many countries had undergone prudent macroeconomic reforms in the past few years, which strengthened fiscal balances and reduced inflation to single-digit levels. Many countries also benefited from substantial debt relief, with the result that debt service/export ratios were low in most countries. Moreover, with Asian and Latin American countries becoming important trade partners, the country has become less vulnerable to the OECD countries' performance.
The region-wise outlook for the African continent reveals that economic growth in Southern Africa is expected to slow dramatically this year, to just 0.2% from 5.2% last year. However, the growth is expected to recover to 4.6% next year.
In Northern Africa, the growth is projected to slow down to 3.3% this year, and is expected to grow to 4.1% in the following year. Among Western African countries, the economic growth is projected to slow to 4.2% this year, from 5.4% last year, before strengthening to 4.6% next year.
For East Africa, the growth is expected to slow to 5.5% this year and remain about the same next year. In Central Africa, the GDP growth is expected to slow sharply to 2.8% this year, after an average 5% rise last year, and the growth is expected to increase to 3.6% next year.
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