Africa’s economy not immune from euro crises, China slow growth – World Bank

The accelerating rate of economic growth in Africa can hit a snag due to the continues euro crises and recent slowdown of the Chinese economy, according to the World Bank.

In its Africa’s Pulse report published October 4, 2012, the World Bank expects sub-Saharan Africa’s economy to grow at 4.8% in 2012, broadly unchanged from the 4.9% growth rate in 2011 and largely on track despite setbacks in the global economy.

Excluding the continent’s largest economy- South Africa, the report forecasts that growth in sub-Saharan Africa will rise to 6% as African exports rebounded in the first quarter of 2012. Exports grew at an annualized pace of 32%, up from the -11% pace recorded in the last quarter of 2011.

But this growth in Africa might be hurt due to uncertainties in the continent’s major trading partners – Europe and China.

“African countries have not been immune to the recent bout of market volatility stemming from the Euro Area crisis, as well as the growth slowdown that is occurring in some of the largest developing economies, in particular China, which remains an important market for Africa’s mineral exporters,” the report stated.

With the global economy still in fragile condition, Africa’s Pulse warns that Africa’s strong growth rates could yet be vulnerable to deteriorating market conditions in the Euro-zone.

In addition, recent spikes in food and grain prices are a cause for concern. The report said an unprecedented hot and dry summer in the US, Russia and Eastern Europe has led to reduced yields on both maize and wheat production worldwide and “Africa’s Sahel region is already suffering from higher food prices, high rates of malnutrition and recurring crisis and insecurity.”

However, consistently high commodity prices and strong export growth in those countries which have made mineral discoveries in recent years, have fuelled economic activity and are expected to underpin Africa’s economic growth for the rest of 2012, the report stated.

A third of African countries will  grow at or above six percent with some of the fastest growing ones buoyed by new mineral exports such as iron ore in Sierra Leone and uranium and oil in Niger, and by factors such as the return to peace in Cote d Ivoire, as well as strong growth in countries such as Ethiopia, said World Bank Vice-President for Africa, Makhtar Diop.

An important indicator of how Africa is on the move is that investor interest in the region remains strong, with $31 billion in foreign direct investment flows expected this year, despite difficult global conditions, Diop added.

By Ekow Quandzie