NAIROBI, Kenya, Apr 24 – Africa may be the worst hit region by the global economic crisis despite being the least integrated with the global economy, a World Bank report indicates.
The report shows that a decline in remittances, commodity prices, private capital inflows and foreign aid will hugely impact African economies, with the net result being a 2.4 percent GDP growth for the Continent in 2009 about two and a half percentage points slower than in 2008.
“While 2.4 percent growth is higher than the zero or negative growth being forecast for the United states or Europe, a two to three-percentage-point drop in growth could have devastating consequences for a low-income region,” part of the report read.
A part implication of this decline is a human crisis in the region where it is estimated that an additional 700,000 infants would die before their first birthday.
Until 2008, African countries had been experiencing for the first time in two decades sustained economic growth equal to that of all developing countries (outside china and India).
Growth at the time was attributed to sound economic policies and rising commodity prices, with it accelerating from 5.7 percent in 2006 to 6.1 percent in 2007 and a projected 6.4 percent in 2008.
“Now the hopes created by this decade-long surge in growth are being dashed and political and social unrest may follow,” the report read in part
The report attributes Africa’s recent economic growth in part to the economic reforms that policymakers undertook during the previous decade.
However as a result of the global economic crunch the report indicates that there is a good chance that political support for these reforms will wane.
“Most developed countries are undertaking what look like “reverse reforms”—bank nationalization and deficit-increasing public spending programs that will make it harder to sustain reform momentum in Africa’’