Washington, DC — The International Monetary Fund's World Economic Outlook report has predicted a sharp slowdown in the global economy, but says it will not have a major impact on Africa where the rate of real GDP growth is expected to rise 4.2 percent this year.
Africa should not take comfort from the statistics, however, IMF Research Director , Michael Mussa told journalists, because they reflected the continent's isolation from the global economy and the poor rate of growth in sub-Saharan Africa's GDP in the latter half of the 1990s.
The WEO report, released Thursday, says real GDP per capita in sub-Saharan Africa has fallen by over one percent a year for each of the last 25 years.
Mussa argued that Africa could begin to reverse the downward trend by becoming more open to trade and by developed countries lowering their trade barriers against goods imported from Africa. He pointed out that in the early 1970s, African countries accounted for two percent of world trade, but that this figure had fallen to less than one percent by the late 1990s.
The report suggests that the global economy will grow at a rate of 3.2 percent this year, sharply lower than the 4.8 percent growth in real GDP registered in the year 2000.
For Africa, the IMF predicts that real economic growth rates will rise faster in the Maghreb region (Algeria, Morocco and Tunisia), than in Sub-Saharan Africa.
IMF economists predict that South Africa will continue to recover from a series of adverse shocks and could reach a real GDP growth rate of 3.8 percent this year (after growing by 3.2 percent in 2000, and just 1.9 percent in 1999).
But on Nigeria, the report warns that although there have been some improvements in macro-economic policy, there is little evidence of a sustained economic recovery and GDP growth rates this year could fall to 1.7 percent, from 2.8 per cent in the year 2000.
The Kenyan economy, after facing a 0.4 percent decline of real GDP last year, is predicted to grow by 2.1 percent this year. More positively, the economies of Cameroon, Tanzania, Tunisia, Morocco and Uganda are all predicted to grow by more than five percent.
The report's writers see grounds for optimism in the recent strengthening of economic policies in several other African countries, and they forecast that the approval of debt relief programs will also substantially help some countries. But they warn that the rising incidence of war and civil conflict, combined with weak commodity prices, could continue to have an adverse impact on many countries.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
Part of the long-term solution to these problems is greater openness to international trade, according to the report. "Further trade liberalization is an important element of the policy agenda," said IMF economist, David Robinson. He said that a study included in the WEO report found that Africa has the most restrictive tariff regimes in the world, with the highest level of tariffs and tariff revenue as a ratio of GDP.
"It is striking that Africa's under-trading seems to have risen during the 1990s, at a time when African governments intensified their policy and institutional reforms with a view to enabling Africa to benefit from globalization," adds the report. It calls, in particular, for reductions in African tariffs, improving efficiency of trade infrastructure, through measures such as privatization, and for further African involvement in global trading structures such as the World Trade Organization.
However, the IMF notes that many developed nations still put up substantial barriers against African exports to their countries. "It is estimated that if the European Union, Japan, Canada, and the United States eliminated their trade barriers (tariff and non-tariff) on African trade, exports would rise by about $2.5 billion or 14 percent. But the IMF economists also acknowledge that trade liberalization would not be without cost, as resources are reallocated within these economies. >
