Report Highlights Differences in the Way Crisis Affects African Regions.

Addis Ababa, Ethiopia, 24 June 2009 (ECA) – The 2009 edition of the African Economic Outlook report provides an useful snapshot of how the current economic crisis is affecting different regions of Africa, it is learned in Addis Ababa this morning.

Presenting the report to development partners and key African economists, Mr Adam El Hiraika, of ECA’s Macroeconomic Analysis Section, and one of the authors of the report, highlighted the differences in how oil and non-oil producing African countries are feeling the heat from the crisis.

He said that, quite interestingly, the oil-producing nations of the continent were the most affected, precisely because of the fall in the prices of oil.

Similarly there are major differences in the way countries of the various African regions have been touched by the global downturn.

The report notes that economic growth in Southern Africa registered at 5.2 per cent in 2008, down from 7 per cent in 2007. It is expected to slow dramatically in 2009 to 0.2 percent before recovering to 4.6 per cent in 2010.

In South Africa, growth is expected to fall to 1.1 per cent due to the impact of the global economic crisis on demand for its mineral exports compounded by a contraction in private consumption and investment, it observes.

In Angola, the economy is expected to contract by 7.2 per cent in 2009 on the assumption that the reduction in quotas by OPEC countries will translate into a reduction of oil production. In 2008, Madagascar and Malawi benefited from strong growth in agriculture, and large investments in the mineral sector in the former.

On the other hand, average GDP growth in North Africa is expected to improve slightly from 5.3 per cent in 2007 to 5.8 percent in 2008, according to the report findings. It is then expected to slow significantly in 2009, to 3.3 per cent before increasing to 4.1 per cent in 2010.

All North African countries will grow more slowly in 2009, due to cutbacks in oil production and tourism receipts. Morocco and Tunisia have more diversified production and exports that make these countries less vulnerable to the reduction in demand resulting from the crisis, but growth will slow there as well.

The report also reveals that real GDP growth in West African countries is projected to slow to 4.2 per cent in 2009, from 5.4 per cent in 2008 and 2007, before strengthening to 4.6 per cent in 2010.

Projections for 2009 indicate a slowdown in Nigeria’s growth rate to 4 per cent, as a result of the OPEC quota on oil production and declining investment. Most of the other countries in the region are also expected to experience slower growth in public and private investment associated with lower commodity prices and remittances. Liberia and Sierra Leone, however, are expected to continue to enjoy high growth rates as output recovers after years of conflict.

In 2008, average GDP growth in the seven countries of Central Africa registered at 5 per cent, up from 4 per cent in 2007. In 2009, GDP growth is expected to slow sharply to 2.8 per cent and increase to 3.6 per cent in 2010. Reduction in demand for oil and minerals will undermine growth in resource-rich countries.

The average growth rate for East Africa is projected at 7.3 per cent in 2008, down from a very strong 8.8 per cent in 2007. The region’s performance is expected to slow to 5.5 per cent in 2009 and remain about the same in 2010.

Ethiopia, Rwanda, Sudan, Tanzania, and Uganda – which were the fastest growing economies in East Africa in 2008 -- are projected to maintain moderately robust growth in 2009 and 2010 because demand for their major agricultural and horticultural exports is less sensitive to the effects of the crisis.

Burundi, The Comoros, and Seychelles are expected to continue stagnating; the latter two experiencing depressed tourism due to the global recession and, in the case of The Comoros, civil unrest.

Growth in Djibouti, which registered at 5.9 per cent in 2008, is projected to accelerate in 2009 and 2010 to about 6.6 per cent in this period. Kenya is expected to exhibit strong growth in 2009 (5 per cent) due to the recovery of domestic demand following the sharp slowdown in 2008.

Launching the report this morning, Mr. Abdoulahi Mahamat, OIC of ECA’s Trade and Finance Division (TFED), underlined the singular character of the African Economic Outlook, calling it “the only annual publication that covers the continent on a country-by-country comparative basis”.

It is published jointly by the African Development Bank (AfDB), the OECD Development Centre and the United Nations Economic Commission for Africa, with support from the European Commission.

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