African growth seen halved by global crisis

DAKAR – Africa’s economic growth will fall to 2,8 per cent this year, less than half the rate forecast before the onset of the global slowdown, the African Development Bank (AfDB) and the Organisation for Economic Cooperation and Development forecast in their annual report released on Sunday.

Budget deficits across the region will balloon as falling commodity prices and demand from western countries take their toll, the report said, forecasting a budget deficit of 5,5 per cent of output, which compares with a surplus of 3,4 per cent seen in the previous annual study.
‘With a projected growth rate of only 2,8 per cent, and a bias on the downside, many people will fall back into poverty. This is a setback beyond the control of Africans and is likely to be protracted,’ the report’s authors said in a statement.
Growth for 2009 was forecast at 5,7 per cent before the financial crisis.
Several African countries have sought aid packages from international lenders as governments grapple with falling export income and lower remittances from Africans working abroad.
‘Africa has been hit and it has been hit hardest,’ AfDB chief economist Louis Kasekende told journalists at the bank’s annual meeting, held this year in the Senegalese capital.
He called on African governments to resist the temptation to resort to protectionist measures as they attempt to support ailing economies.
‘Let us not move away from markets, let us not shy away from globalisation,’ he said.
The bank would help Africa cope with the effects of the downturn by opening a US$1 billion trade finance facility, offering US$1,5 billion in non-concessional financing, and speeding up the disbursement of previously agreed loans, he said.
After a difficult 2009 growth would partially recover to 4,5 per cent in 2010, the report forecast.
Last month the International Monetary Fund said growth in the world’s poorest continent would slow sharply this year, projecting a rate of two per cent, down from 5,2 per cent in 2008.
-Nampa-Reuters