African Economies Growing Stronger Despite Weakening Global Growth - World Bank and IMF
By Staff Writer
Despite weaker than expected global growth and stable or declining commodity prices, African economies continue to expand at a moderately rapid pace, leaving the rest of the world agape, the World Bank has said.
According to the World Bank’s new Africa’s Pulse, a twice-a year analysis of the issues shaping Africa’s economic prospects; the African regional Gross Domestic Product (GDP) is projected to strengthen to 5.2% annually in 2015-16 from 4.6% in 2014.
Significant public investment in infrastructure, increased agricultural production and expanding services in African retail, telecoms, transportation, and finance, are expected to continue to boost growth in the region.
This pick-up in growth is expected to occur in a context of lower commodity prices and lower foreign direct investment as a result of subdued global economic conditions.
Commodity prices remain highly significant to Africa’s outlook since, as the report notes, “primary commodities continue to account for three quarters of sub-Saharan Africa’s goods exports and the share of the region’s top five exports has risen to 60% in 2013 from 41 % in 1995.”
“Overall, Africa is forecast to remain one of the world’s three fastest growing regions and to maintain its impressive 20 years of continuous expansion,” says Francisco Ferreira, the World Bank’s chief economist for Africa.
“Downside risks that require enhanced preparedness include rising fiscal deficits in a number of countries; economic fallouts from the activities of terrorist groups such as Boko Haram and al-Shabaab and, most urgently, the onslaught of the Ebola epidemic in West Africa.”
A World Bank study of the likely economic impact of Ebola, released last month, suggested that if the virus continues to spread, its economic impact could grow eight-fold.
As Africa’s economic growth spiral upwards, finance officials from the world's leading economies are being urged to prevent the global economy from falling into a "new mediocre" in which growth remains stuck at subpar levels for years to come, trapping millions of people on unemployment rolls.
Finance ministers and central bank presidents of the Group of 20 nations, which include traditional economic powers such as the United States, Japan and Germany, and emerging economies such as Russia, China and India, are wrapping up two days of talks today, Friday 10 with a joint statement of goals.
The G-20 meeting comes at a time when the news from Europe has been gloomy, raising the prospect that the 18 nations that share the euro currency could be in danger of slipping into another recession with Germany reporting on Thursday 9 that it had the biggest monthly plunge in exports in five years due to sharp declines in industrial production, factory orders and business confidence in Europe's biggest economy.
Australia, which chairs the G-20 this year, is pushing for adoption of an action plan that will establish a goal of boosting global growth by at least 2% over what it would otherwise have been over the next five years. Such a target would mean an extra $2 trillion in output during that time period.
Australian Treasurer Joe Hockey told a conference in Washington on Wednesday 9 that this goal was "ambitious but deliverable" and would mean millions of new jobs. The plan would rely in part on increased spending on infrastructure projects.
The G-20 discussions are being held in advance of the annual meetings of the 188-nation International Monetary Fund and the World Bank.
In a global forecast prepared for the meetings, the IMF downgraded its outlook this year because Europe is at risk of slipping back into recession and persistent weakness is slowing Japan, China and Brazil. The IMF called the recovery uneven and said global growth this year would be 3.3%, one-tenth of a percentage point below its forecast in July. And it lowered its outlook for 2015.