African growth set to slow to 3.7%
Growth in African countries will to slow to 3.7% this year owing to upheavals in northern Africa and increased food and fuel prices, the latest African Economic Outlook report said on Monday, pointing to a rally in 2012.
Africa should benefit from the arrival of investment from emerging countries on the continent.
But the regions in Africa should also increase their integration to have a stronger position towards trading partners and notably emerging economies, it said.
Last year China became the biggest trading partner for Africa, displacing the United States.
In the last 10 years, the amount of trade with emerging countries as a proportion of all trade by Africa had risen from 23% to 39%.
Africa had to attract investment into more diversified sectors than oil, and generating more added value, in order to boost growth.
The report noted that Africa had posted a strong rebound of 4.9% growth last year, but warned “Africa is marching into serious headwinds, notably caused by high food and fuel prices and political upheavals in a number of countries”.
The report, compiled by the Organisation for Economic Cooperation and Development, the African Development Bank, United Nations (UN) Development Programme and UN Economic Commission for Africa, forecast growth to recover to 5.8% next year.
However that forecast is based on a quick end to unrest to Libya and Côte d’Ivoire.
It said that growth in North Africa was expected to slow this year to less than one% from 4.6% in 2010, because of the unrest in Libya and economic disturbances from the regime changes in Egypt and Tunisia.
The report said that growth in West Africa would decline to under 6%.
The economy in East Africa was expected to continue to grow at a rate above 6%.
Growth in Central and Southern Africa was expected to accelerate but stay below growth in East Africa.
What Africa lacks today
The report said that monetary policy was likely to tighten across the continent in response to increased inflation, but said there was no need for vigorous tightening.
The rise in commodities prices might help support foreign investment into Africa, it added however.
An economist at the OECD development centre, Jean Philippe Stijns said that integration of the regions was suffering from political instability in some areas, and that serious weaknesses in links had to be rectified.
“African countries have to improve their regional infrastructures,” he said.
This would have a double advantage. It would “stimulate the economy at regional level but also attract major investment, which Africa lacks today”.
Increased integration would also enable African countries to strengthen their negotiating positions because “one cannot hope for talks between equals between a country such as Malawi and a country such as China”, he said.—AFP.