Wednesday, June 10, 2009

Report on the economic state of Africa from the World Economic Forum

The World Economic Forum on Africa is currently meeting, and the picture they give of the economic conditions in the continent is not a good one. A report released by the Forum says that the global recession will drag millions back into poverty. The report also says the recession will make Africa lose at least 50 billion dollars this year.

From All Africa, we find this summary of the report.

The report, published at the meeting of the World Economic Forum on Africa in Cape Town, was drawn up by an international review panel established to monitor whether the world's leaders are meeting their commitments to Africa. The group, known as the Africa Progress Panel, is headed by former United Nations secretary-general Kofi Annan.

The panel said many African nations had worked hard to establish macroeconomic stability and pursue sound economic policies over the last year. Even as economic turbulence began to cut the demand for exports in the second half of 2008, many countries managed to achieve high rates of growth in per capita income, and investment continued to flow into the continent.

"However, since early 2009, capital inflows have come under growing pressure as global liquidity tightened, exchange rates and capital markets became more volatile," the panel said. "And investors have become more concerned about an increase in political and macroeconomic risks and the liquidity of their assets."

Summarizing forecasts which it said "paint an increasingly gloomy picture," the panel noted that:

* The International Monetary Fund (IMF) has reduced its growth forecast for sub-Saharan Africa from 5.5 percent in 2008 to to 1.7 percent this year;
* The IMF is predicting that a continued decline in economic activity could result in more than 53 million people being added to those living on less than $2 a day;
* The Institute of International Finance predicts an 82 percent decline of net capital flows to developing countries, from $929 billion to $165 billion, with Africa expected to suffer particularly badly;
* The World Bank estimates that by the end of 2009, sub-Saharan Africa nations will have lost expected incomes of at least $50 billion; and
* The bank is warning that 43 of Africa's 53 states are highly exposed and vulnerable to the effects of the global crisis.

No comments: