African Economic Report Shows 4.3 % GDP Growth in 2001

Source: The Daily Monitor (Addis Ababa)

http://allafrica.com/stories/printable/200207170328.html

The Untied Nations Economic Commission for Africa (UNECA) released yesterday the economic report - Tracking Performance and Progress - on Africa for 2002.

Doctor Patrick Asea, Director of the Economic and Social Policy Division of the commission, said that despite the predictions that Africa's economy would suffer following the September 11 attack, it has beat expectations by registering a GDP growth of 4.3 % in 2001, up from 3.5 % in 2000.

Among the various factors mentioned in the report as having contributed to the achievement were; low oil prices in the world that freed resources for other imports, and minimized inflationary pressures; sounder economic management; higher than expected exports under the US African Growth Opportunities Act (AGOA); reduced conflict and currency depreciation (especially in South Africa.)

African exports to the United States jumped from 1.5 billion dollars a month in 1999 to 2.3 billion in 2000, according to the report.

The report also stated that there was a further boost in January 2001 because of the AGOA.

Net Private Investment in the emerging markets of the continent, namely Algeria, Egypt, Morocco, South Africa and Tunisia grew from 4.9 billion dollars in 2000 to 9.5 billion dollars in 2001.

Foreign Direct Investment fell from 25% in the early 70's to just 5% in 2000.

The report however added that this percentage disparity masked some interesting developments.

It said that while in previous times institutions were the major sources of FDI, lately some new sources have emerged, like Canada, Italy, the Netherlands, the developing economies of Asia, and increasingly important, from African countries themselves.

The oil-based economy of Equatorial Guinea registered a growth rate of 65 %, far over shadowing the next best growth rate of 9.2 % registered by Mozambique.

East Africa's projected GDP growth in 2001 was better than the other regions standing at 5.03 %.

This better performance is partly due to the 8.7% growth rate projected for Ethiopia. Ethiopia was praised in the report for its good economic policies and modest outcomes.

Kenya's 2 % growth rate on the other hand was attributed to bad governance in the country.

Dr. Asea noted that there was a decrease in rural poverty in Ethiopia and stagnation of urban poverty in some parts.

The report indicated that South Africa could become the engine of the continent's economy.

South Africa's strong economic fundamentals and stable macroeconomic environment, which allow a robust expansion over the medium term, point at a positive out look for the country.

The report forecasted that Africa could register GDP growth rate of 3.4 % owing to such factors as the US AGOA and the European Union's "Everything But Arms" initiative.