Too early to toast Africa's robust growth, bank says
Africa's robust 4.5% growth forecast for this year should not prompt premature celebration, the African Development Bank cautioned yesterday, citing the festering eurozone crisis and chronic youth joblessness.
Ranked as the poorest continent in the world, Africa has posted strong growth rates in recent years, second only to Asia, drawing rising inward investment and giving rise to talk of its economic resilience, accompanied by much self-congratulation among officials.
"I'll be cautioning against excessive exuberance," Donald Kaberuka, the bank's president, said at the launch of its African Economic Outlook, at the start of the bank's annual meeting.
The bank's forecast for this year beats last year's 3.4% growth, after the Arab spring in North Africa cut the northern region's growth in economic output to 0.5%.
In contrast, sub-Saharan Africa grew by more than 5%, with the exception of South Africa, which expanded output by 3.1%.
The eurozone and other rich nations would take some time to resolve the issues bedevilling their economies, Kaberuka said.
"That will have implications on the growth of the continent," he said, adding that any economic slowdown by large emerging markets such as China would cause further problems.
Despite the growing economic role of large emerging markets such as the Brics in Africa, Europe remained a vital economic partner for the continent, accounting for more than half of external trade, said Mthuli Ncube, the bank's chief economist.
The eurozone crisis could hit demand for Africa's exports, denting growth in economies such as Kenya, which also depend on Europe as a source of visitors.
"The visitors from Europe will certainly feel the pressure to travel less," Ncube said, adding that remittances from Africans living there could also be hurt.
The bank said the continent's economic growth also faced risks from political crises . Mali and Guinea-Bissau have both experienced coups this year, while Uganda, Burundi, Kenya and other nations in the horn are all militarily involved in efforts to secure peace in Somalia after decades of conflict.
African governments also needed to do more to ensure they were creating jobs for the legions of young people who could pose a social challenge if they felt left out of the economic growth, it said.
"Africa is on a good path but it needs to be inclusive and create jobs for it to be a better quality of economic growth," Ncube said.
Youth unemployment in most African countries is at least 25%, the bank said.