UN REPORT SAYS AFRICA'S ECONOMY CONTINUES STRONG MARCH TOWARDS RECOVERY

ADDIS ABABA, Jan 18 (NNN-XINHUA) -- Africa's economy continues its strong march towards recovery, defying the global trend, according to the United Nations economic report for 2012.

The World Economic Situation and Prospects (WESP) 2012, which was launched on Tuesday, forecasts Africa to see an increase in its overall growth from 2.7 per cent in 2011 to 5.0 per cent in 2012 and 5.1 per cent in 2013.

This marks a pronounced recovery and a return to the solid growth trend which emerged after the peak of 2008 global economic crisis.

With strong recovery in many African countries, it is hoped that progress of social development goals, the Millennium Development Goals (MDGs) in particular, should be accelerated in 2012 and 2013 towards 2015, said Adam Elhiraika, Chief of Macro-economic Analysis Section at the UN Economic Commission for Africa (UN-ECA), who was briefing journalists about the Report.

The Report says relatively strong commodity prices, solid external capital inflows and a continued expansion of demand and investment from Asia will be the important driving forces for the trend.

Countries across the continent will continue to have widely divergent growth outcomes owing to military conflicts, lack of infrastructure, corruption and severe drought, states the WESP.

In North Africa sub-region, Libya's economy is estimated to have contracted by 25 per cent in 2011 in the wake of the recent regime change, but reconstruction is expected to drive a rebound.

Egypt, Morocco, and Tunisia are all expected to see a more pronounced increase in economic growth in 2012. Growth rates in the sub-region will remain constrained by uncertain political conditions, negatively affecting the tourism sector in particular, but the region should see a post-conflict bounce, says the Report.

In East Africa, Ethiopia will reflect continued infrastructure improvements, especially in the energy sector which overshadow the negative impact of drought conditions on agricultural output in some areas.

Kenya will see continued strength in its Gross Domestic Product (GDP) growth figure, driven by infrastructure investment, the expansion of the telecommunication sector and increased banking participation rates. Uganda is also expected to see solid growth on the back of large energy investments, states the Report.

The WESP says there is relatively positive outlook for South Africa and energy producers in the region. South Africa is forecast to see stronger economic growth in 2012, underpinned by favorable external demand, continued fiscal stimulus and rising consumption driven by higher wages.

Elevated oil prices will continue to create significant upside potential for oil-producing economies such as Angola, Ghana and Nigeria. However, infrastructure shortfalls, especially in the energy sector, as well as political instability in the Niger Delta will prevent Nigeria from exploiting its full growth potential.

In Angola, the start of operations at a new liquefied natural gas project will boost growth in 2012, it says.

The Report also says despite the relatively solid expected growth trajectory in Africa, unemployment and poverty remain major problems.

Diversification, particularly into activities generating higher value added, a shortage of skilled workers and low productivity are among the underlying causes of the problems.

The UN notes that its economic outlook for Africa is subject to a number of downside risks.

"Debt crisis in Europe and in the U.S. could push the global economy into stagnation, affecting growth in developing countries. Under these adverse developments, Africa's external sector may contract significantly if commodity demand and prices, as well as tourism receipts, decrease," the report says.

In parallel to this, flows of official development assistance, foreign direct investment and remittance might also fall, negatively affecting Africa's development financing.

Such a scenario would reduce growth in Africa by 1.7 percentage points in 2012 and 1.5 percentage points in 2013, led by a pronounced economic slowdown in major economies such as South Africa and Nigeria.

The possibility of adverse weather conditions pose another significant downside risk, given the larger role of agriculture across the continent, says the Report. -- NNN-XINHUA

Source: http://c.moreover.com/click/here.pl?r5767943721

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