Africa to register 4.3% economic growth in 2010

A growth powered by rising commodity prices and good policies

Té / 26 January 2010

African economies are expected to register a combined 4.3 percent economic growth this year, a big leap from the combined growth of a modest 1.6 per cent in 2009, a senior Economic Commission for Africa (ECA) official said Tuesday. The growth is expected to be powered by rising commodity prices and positive impact of stimulus financial interventions put in place to beat world recession.

Presenting a World Economic Situation and Prospects report for 2010, Adam Elhiraika, ECA senior economic affairs officer, said the expected recovery in the global economy would have an overall positive effect on African economies.

From a negative growth of 2.2 percent last year, the world economy is expected o grow by 2.4 percent this year, which the ECA official said would strongly stimulate demand for most African exports, particularly commodities.

In 2009, hard hit by the global recession which caught most African countries off-guard and ill-prepared to deal with its consequences, the continent posted combined economic growth of a modest 1.6 percent.

Prices of commodities and good macro-economic management

But this year, Elhiraika said African countries were expected to post higher economic growth, reaping the benefits of economic stimulus packages they put in place, and crucially the recovery in the global economy.

"In 2010, the world economy is expected to recover, and Africa is also expected to recover," he said.

He said prices for commodities, the main African exports, were rising on international markets on the back of recovery in global demand, resulting in an increase in export earnings for the continent.

The ECA official said in some cases, this had been coupled with good macro-economic management in individual African countries and increased private and public sector investment.

"Commodity prices are expected to rebound; we have already seen this with oil whose price has recovered," Elhiraika said.

Fragile economic recovery

But he warned that the economic recovery in both the world and Africa was still too fragile to withdraw crucial financial stimulus measures that were put in place to tackle the global recession.

He said determining when to withdraw the stimulus packages was difficult, but noted this must be premised on the achievement of consistent robust growth in consumption, private investment and employment levels.

"Premature withdrawal of stimulus could cause double-dip recession. If countries withdraw (prematurely), aggregate demand will decrease," said Elhiraika.

He said countries, particularly in Africa, should avoid ’business as usual’ type of economic management, advocating for pro-business policies that would draw in private investment and ensure sustained recovery and growth.

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