Africa relies on SA revival to spark growth

Posted On Monday, 01 May 2000 02:00 Published by eProp Commercial Property News
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South Africa's increased growth this year hinges on SA's economic recovery, which is moving at a slow pace.

Maria RamosAFRICA's increased rate of growth this year hinges on SA's economic recovery, which is moving at a slow pace. This is disclosed in the latest Trade and Development Report 2001 from the United Nations Conference on Trade and Development (Unctad).

Earlier this year following the budget presentation treasury director-general Maria Ramos told MPs the average economic growth rate of 3,5% a year over the next three years used in the budget, took into consideration the slowdown in global economic growth.

While last year's Unctad report painted a bleak picture of Africa's economic growth, the latest report has portrayed a positive outlook on economic growth in some African countries such as Cameroon, Ghana, Mozambique, Uganda and Tanzania.

These countries are expected to reap some of the benefits resulting from macroeconomic and structural reforms. In Zimbabwe, the economic crisis continued to deepen and is estimated to have resulted in an output contraction of about 6% last year

In Mozambique, where the implementation of a comprehensive government reconstruction plan received generous and timely international support, output was estimated to have grown by more than 4% (after 8,8% in 1999), although flooding caused substantial damage early in the year.

European and US initiatives to open their markets to Africa's poorest economies and bilateral debt reduction by some industrialised nations are expected to bring benefits.

Nine African countries (Benin, Burkina Faso, Cameroon, Mali, Mauritania, Mozambique, Senegal, Uganda and Tanzania) have qualified for debt relief under the enhanced heavily indebted poor countries initiative by the World Bank. Yet the effect of these measures will not be felt immediately and many countries in sub-Saharan Africa continue to suffer from a debt overhang.

Referring to the findings in the latest report, Unctad secretarygeneral Rubens Ricupero says if the poverty reduction targets were to be reached, Africa needs to grow by at least 7% a year.

This would entail doubling the current amount of official development assistance and maintaining it for a decade if aid dependence was to be reduced and Africa placed on a sustainable growth path. The report stated that rather than pulling up strongly together as many expected six months ago, the leading economies globally had all been heading downwards, following a sharp slowdown in the US.

With emerging markets still vulnerable to economic shocks, the downside risks facing the world economy were mounting.

Bolder policies from, and cooperation among, all the major economies would be needed to stop the global situation deteriorating further. The report pointed out all the developing countries picked up last year, posting an overall growth rate of 5,5%. Only Africa failed to register a significant increase in per capita income; its modest 3,5% acceleration in growth was still insufficient to tackle rising poverty and declining health.

The report urged developing countries to reach consensus on how they want the reform process to move forward. Presenting the report in Cape Town yesterday, ANC MP Ben Turok said one of the country's most important policy goals was to co-ordinate policy positions among the African, Caribbean and Pacific countries on both global trade and financial reform issues within international forums.

The report stated emerging markets' prospects depended very considerably on how countries were plugged into the global economy. Yet all were vulnerable to a sharp global slowdown.

International trade was buoyant last year. Oil and the US economy were key forces behind double digit growth in imports and exports, and these same forces helped to move the terms of trade for many developing countries in a favourable direction.

Still, the prices of a number of agricultural commodities stagnated or dropped. The combination of falling export and rising import prices hurt some of the world's poorest countries.

Even with oil prices looking more stable this year and perhaps dipping below $20, prospects for many commodity exporting developing nations, especially in Africa, remain bleak.

Last year's capital flows to the developing world were little improved on the 1999 figure. Most forms of such flows dropped off last year, with only bank lending keeping steady after sharp falls in 1998 and 1999.

Unctad stated that for the world economy to regain its momentum this year, the large economies would have to fire on all engines, and at the same time.

Stimulating growth needed to be the uncompromising policy message everywhere and this included developing countries. 

Last modified on Thursday, 17 April 2014 08:43
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