n AfricaGrowth Agenda - Forces behind Africa's recovery from financial crisis and keys for medium-term sustainable growth

Volume 2010, Issue 7
  • ISSN : 1811-5187


Africa was among the world's fastest growing regions during the mid 2000s. However the growth slowed markedly at the end of 2008 due to the global financial and economic crisis. The average economic growth rate fell from about 6 percent in 2005-08 to about 2.5 percent in 2009 with per capita GDP growth coming to a near standstill. The crisis was transmitted to Africa mostly through real channels such as declining exports and reduced FDI, remittance, and tourism-related inflows. African countries have had to deal with deteriorating macroeconomic imbalances, declines of stock markets, increased unemployment and escalating poverty. The crisis has put extra pressure on SSA fiscal balances, potentially compromising progress these countries have made in reducing debt vulnerabilities. The direct impact of the crisis and the risks to debt sustainability depend on each country's circumstances and the initial conditions. Countries that were more open to trade and capital flows and grew rapidly prior to the crisis suffered the sharpest growth falls in 2009. African Development Bank indicators showed that two groups have taken a particularly large hit : (i) the emerging and frontier markets and (ii) the resource-rich countries. Due to their limited integration into the global economy, low income and fragile countries had the smallest declines in growth in 2009, but any decline in growth rates is a setback to these countries given high levels of poverty.

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