- Southern Africa recorded the lowest GDP growth of all the regions of the continent last year according a new report. Some sectors and countries even experienced negative growth, but a slow recovery is now being noted. Africa at large is already back at 2008 growth levels.
This was revealed in the latest edition of the Economic Report of Africa (ERA), launched in Malawi yesterday. The report, ERA 2010, which monitors the performance of African economies found that GDP growth in Africa at large declined from 4.9 percent in 2008 to 1.6 percent in 2009, but is expected to grow by 4.3 percent in 2010.
The volume of export growth is expected to recover from -4.9 percent in 2009 to 4.2 percent in 2010; the current account and fiscal balance and savings and investment rates all declined, stated the report.
"There were considerable regional variations in growth in 2009 across African regions and countries. Growth was highest in East Africa at 3.9 percent, followed by North Africa at 3.5 percent, West Africa at 2.4 percent and Central Africa at 0.9 percent, while Southern Africa posted a negative growth rate of 1.6 percent," the ERA 2010 pointed out.
It further pointed out that the commodity prices, which is an important determinant of growth in many African economies, fell at the beginning of 2009, but have since rebounded and are expected to stabilise in 2010 and rise moderately in 2011.
"The rebound in 2009 was mainly due to increased petroleum prices, resulting in part from increased demand from China following its stimulus package as well as the upward revision of expected world demand. However, as a result of the depreciation of the United States dollar, 2009 commodity prices were below their 2008 levels in real terms," it stated.
On the future outlook, the ERA 2010 said African countries must prioritise the creation of decent jobs as a central pillar of macroeconomic policy in order to attain the millennium development goals and eradicate poverty.
The report, published annually by the United Nations Economic Commission for Africa and the African Union Commission, this year goes under the theme: Promoting High-level Sustainable Growth to Reduce Unemployment in Africa.
ERA 2010 argues that the current global economic crisis offers African countries an opportunity to lay the foundation for sustainable, employment intensive, high growth rates. The report further argues for structural transformation as the mechanism for achieving high employment growth.
"Africa's long-term growth prospects and ability to sustain high rates of employment generation and broader social development depend on success in economic diversification," the report says.
It continues that for most people, gainful employment is the only way out of poverty. This is especially the case for youth and other disadvantaged groups. Unfortunately, unemployment and underemployment rates in Africa are high and continued to rise even during the period of rapid economic growth that came to an end with the global economic crisis in 2008.
Appropriate investment in infrastructure and human capital, renewed and creative efforts at domestic resource mobilisation, factor market reforms, incentives to support private-sector employment and efforts to increase productivity and incomes in the informal sector, are needed.
The report which is organised into two parts, discusses current trends in the global economy and their implications for African economies, and the second part, deals with how to use the challenges created by the recent global economic crisis as an opportunity to develop and implement policies that lead to the structural transformation of African economies. Special attention is paid to reducing unemployment among vulnerable groups.
Another major challenge facing Africa is climate change and the report states that agricultural output is expected to decrease by 50 percent in Africa, resulting in severe undernourishment as a result of unchecked climate changes. The health burden and conflicts will increase as populations fight over dwindling resources. The need for Africa to develop adaptation and mitigation strategies cannot be overemphasised, it further states.
The costs of adaptation and mitigation are, however, extremely high and beyond the means of African countries. It is estimated that the cost of adaptation could be anywhere between 5 and 10 percent of continental GDP, therefore making it important for the international community to help in financing the cost of climate change adaptation and mitigation in Africa.
The Economic Report on Africa is the annual flagship publication of the UN Economic Commission for Africa (UNECA) and the African Union Commission. It is the major African report tracking performance on African economies and raising challenging themes to stimulate policy debate globally on Africa.
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