The Economic Commission of Africa of the United Nations has expressed the optimism that Africa’s economic outlook this year could surprise the expectations of many economists who are downbeat about the continent’s growth prospects.
According to the ECA, its projections show that the continent will grow by 3.7 per cent this year, which contrasts with the position of the International Monetary Fund (IMF).
On Wednesday, the IMF in a revised note to the continent projected that growth in African economies will drop to 3 percent from 3.4 percent in 2015 mainly on account of the slump in global commodities prices, a position the ECA has disagreed.
Speaking to the media at the Annual Investment Meeting in Dubai on Wednesday, the Executive Secretary of the ECA, Dr. Carlos Lopes said that the low growth projections by the Bretton Wood institution is at best conservative and does not reflect the economic activities on the continent.
“First of all, Africa is growing a in a world where growth is minimal or does not even exists. If you look at the IMF’s projection, there’s really a pessimistic view of growth prospects for Africa.
“We believe and that is the projection of the ECA, that growth in Africa this year is going to be 3.7 percent compared to the forecast of the IMF of only 3 percent.
And the reason for the difference is that consistently, we have seen that the performance of Africa is better the forecasters predictions partly because they continue to be bulked with the concept and ideas that Africa’s growth is mostly dependent on commodities.
“Actually, it does depend on commodities but in effect the real size is just about one-third and the two-thirds is made up of consumption, which is also responsible for Africa’s growth and that will not change easily. And Africa’s economies are the fastest growing ones in the world. If you take the 10 fastest growing economies in the world, five are Africa and if you take 20 fastest 10 are Africa’s.
“Furthermore, not only are Africa’s economy growing but also it’s population and purchasing power are on the rise and will reap the demographic dividend, which is not an automatic opportunity though. But Africa’s growing middle class offers an increase in consumer spending and expanding markets.
“In addition, Africa is doing away with the negative image as a high risk investment destination, which include the perceived dependence on commodities, macroeconomic stability and in particular debt sustainability.” he said.
The position of the ECA has been articulated as global economic leaders gather in Washington to deliberate on how to revive world economies.
The IMF in its latest World Economic Outlook report on Tuesday warned of the risk of global stagnation as it cut its economic-growth forecast to 3.2 percent this year from 3.4 percent in January.
The Fund warned that Africa and other emerging markets especially low-income commodity exporters will struggle to restore growth until they have diversified their export bases, a process it said “will take time.”
Source: B&FT Online