Africa remains on the march to economic prosperity with growth of 6% expected in 2007 from 5,6% this year, said the United Nations in its mid-year World Economic Situation and Prospects Report, launched in Johannesburg on Monday.
“Strong growth is expected to continue into 2008. Africa’s good recent growth record represents a major turnaround from the previous decades of Africa’s economic stagnation,” the report says.
Rising mining outputs and increases in investment and infrastructure growth are highlighted as key benefits for Africa in the period ahead by Robert Vos, director of the UN’s development policy and analysis division.
However, the UN highlights that growth in Africa is not fast enough to meet the Millennium Development Goals, with the report noting that 44 developing countries did not manage to reach a growth rate of 3% in GDP per capita.
“This group includes a large number of African countries, suggesting that economic developments in these countries falls short of what is considered necessary by Nepad [the New Partnership for Africa’s Development] and international agencies to achieve the Millennium Development Goals,” says the UN.
The report highlights that growth of Africa’s economy continues to stem largely from developments in a few big economies in the region, namely Algeria, Egypt, Morocco, Nigeria and South Africa.
“All these economies, except Morocco, will expand at almost 5% or more in 2007,” the report notes. The UN also stresses that the growth of oil-importing countries in the region is “less robust” on average and that social and political tensions continue to restrain economic growth in a number of the poorer African nations.
“Risks to the outlook for the region are mainly on the downside. In particular, a further slowdown of the United States economy, the main global economic engine, would slow world economic growth and thereby also affect African economies.
“A weakening housing sector is the main cause of the present slowdown in the US. In the baseline scenario, only a mild further weakening of the US housing sector is expected, while US business investments are expected to pick up again in 2008 after a slow period,” says the UN.
The report warns, however, that should house prices in the US start to decline, this could affect domestic demand more seriously and push the global economy into recession.
It also highlights that growth in Africa is highly concentrated in a narrow range of activities, “making many African economies extremely vulnerable to exogenous factors such as weather conditions, terms of trade developments and aid flows”.
“As a result, most African countries have been unable to sustain sufficiently high growth rates over the medium term,” says the UN.
The report shows that from 1998 to 2006, only seven of the 52 countries monitored by the Economic Commission for Africa achieved an average real GDP growth of more than 7%, considered by some as the minimum required growth rate to halve extreme poverty in the region by 2015.
“Growth of the majority of the economies in the region has clustered in the range of 3% to 7%. By this measure and at current trends, few countries would be on track to achieve the Millennium Development Goals,” it says.
The report also states that world gross product is expected to decline to a pace of 3,4% for 2007, down from 4% in 2006. This slowdown is, however, expected to stabilise in 2008 with projected world gross product at 3,6%.
For Africa to achieve the dual aims of increasing growth rates and sustaining them, the UN says it will require sustained improvements in domestic investment climates to promote private-sector activity, improved provision of infrastructure, measures to minimise the adverse effects of external shocks on incomes of the poor and, most importantly, progress in the diversification of production and exports.
Vos was speaking at the Southern African launch of the report by the Association of Southern African Development Community Chambers of Commerce and Industry in partnership with the UN Information Centre in South Africa and the UN department of economic and social affairs. — I-Net Bridge