African economies to grow by 4.8 per cent in 2010, says report

May 18, 2010, 9:05 GMT

Addis Ababa - Africa's economic growth is expected to rebound to 4.8 per cent in 2010 after dipping by over 2 per cent in 2009, a report released Tuesday said.

The annual report by the United Nations Economic Commission for Africa (UNECA) and the African Union Commission, launched in Addis Ababa, said that growth in Africa dipped to 2.4 per cent in 2009, from 4.9 per cent the previous year.

2009 growth was highest in West Africa at 5.5 per cent, partly as a result of a boost in oil output in the Nigeria's Niger Delta following a dip in attacks by militants.

East Africa's economies grew by 4.3 percent, while North Africa posted a Gross Domestic Product growth rate of 3.6 per cent. Central Africa economies grew by an average 1.8 percent and in Southern Africa, the economies shrunk by 1.1 per cent.

However, most economies are expected to recover as the global crisis slowly recedes and demand for African commodities swells.

Commodity prices, an important determinant of growth in many African economies, are expected to stabilize in 2010 and rise moderately in 2011, according to the report.

The rebound was mainly due to increased petroleum prices, resulting in part from increased demand from China as well as the upward revision of expected world demand.

However, the report cautioned that challenges lay ahead.

'Africa's long-term growth prospects and ability to sustain high rates of employment generation and broader social development depend on success in economic diversification,' the report said.

The report also argues that African countries must prioritize the creation of decent jobs as a central pillar of macroeconomic policy in order to eradicate poverty.

The global economic crisis also offers African countries an opportunity to lay the foundation for sustainable, employment intensive, high economic growth rates, the report said.

Investment in infrastructure and human capital, efforts at domestic resource mobilization, market reforms, incentives to support private-sector employment and efforts to increase productivity and income in the informal sector are needed to achieve these aims.

Climate change will also strongly influence Africa's GDP growth, the report said.

If climate change goes unchecked, agricultural output is expected to decrease by 50 per cent in Africa, resulting in severe undernourishment. The health burden and conflicts will increase as populations fight over dwindling resources.

The costs of adaptation and mitigation are, however, extremely high and beyond the means of African countries. It is estimated that the cost of adaptation could be between 5 and 10 per cent of continental GDP.