African Economic Growth to Slow to 2% This Year, UN Says

May 28th, 2009 | by addis portal |

By Jason McLure

May 28 (Bloomberg) — Economic growth in Africa will slow to 2 percent this year from 5.1 percent in 2008 as a result of falling exports and the global recession, the United Nations Economic Commission for Africa said. “Africa’s economic downturn is spurred by the financial turmoil that originated in the U.S.A. and affected most countries of the world,” according to a reported handed to reporters today in Addis Ababa, Ethiopia at the UNECA’s headquarters. “The chances for a growth rebound in Africa in 2009 are slim.”

Hardest hit will be southern Africa, where the economy will contract 1.2 percent, the report said. Continent-wide inflation is expected to ease on lower oil and commodity prices, while most African currencies will depreciate on falling exports and shrinking capital inflows, UNECA added.

Higher energy and food prices fuelled inflation across the continent last year. Excluding Zimbabwe, inflation averaged 10.7 percent in 2008, up from 6.4 percent in 2007, and only three countries held price-growth below 5 percent, the report said.

“The average poverty rate in sub-Saharan Africa is now back to its early 1980s level of 50 percent,” the report said. “The impact of soaring food prices is particularly large for oil-importing, low-income African countries.”

Zimbabwe, Ethiopia, and Guinea registered the highest rates of inflation last year, at 11.5 million percent, 41 percent, and 30 percent respectively.

UNECA’s growth estimate for this year compares with the 3.5 percent forecast by the World Bank in February.

African growth slowed to 5.1 percent last year from 6 percent in 2007 as economic activity stalled in oil-importing countries, the report said. Particularly hard hit were countries where there was political unrest.

Kenya’s economic growth slowed to 3.5 percent in 2008 from 6.1 percent following post-election violence. Zimbabwe’s economy contracted 4.5 percent, while Eritrea’s grew by just 1 percent.

Africa’s oil exporters fared better in 2008, even after energy prices dropped in the second half of the year. Angola’s economy grew 12.9 percent, the Republic of Congo by 7.8 percent and Nigeria by 6.1 percent.

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