Jul 31, 2012
Europe a key risk to Africa’s 2012 growth outlook – AfDB economistBack
Africa|Development Bank|Industrial|Africa|Europe|North America|China|South Africa|Bank|Mthuli Ncube|Pravin Gordhan|North Africa|Sub-Saharan Africa
© Reuse this
The bank currently expects continent-wide growth of 4.5% in 2012, underpinned by a sub-Saharan Africa economic expansion of 5.3% – excluding slow-growing South Africa, the rate of growth in the rest of the sub-region is estimated at 5.9% for the year.
But the outlook is highly sensitive to the economic fortunes or misfortunes of Europe, with Ncube indicating that a one per cent fall in the territory’s growth will shave 0.5% off African economic growth.
Lower European growth will be felt primarily through lower export earnings and a decrease in tourism-related earnings, especially in North Africa, which is still stabilising from the after effects of the ‘Arab Spring’.
But there is also a risk of lower financial inflows in the form of aid, investment and remittances, as well as the potential for “contagion effects” spreading to African banks.
Ncube is also concerned that China, which acted as a key shock absorber during the earlier phases of the global economic crisis, may not be in a position to offer such support this time around.
The slowdown in China poses a particular risk for African commodity exporters, as it could send a “negative signal” on commodity prices.
The AfDB has already revised lower its growth outlook for South Africa, Africa’s largest economy, from 3.2% earlier in the year to around 2.9%.
The revision is in line with downgrades reported recently by the South African Reserve Bank (from 2.9% to 2.7%) and the World Bank (from 3.1% to 2.5%). Finance Minister Pravin Gordhan has also indicated that growth is likely to fall short of the 2.7% forecast by the National Treasury in February.
The World Bank warns that South Africa is vulnerable to both the slowing economies of Europe, which consumes many of its industrial exports, as well as to a slowdown in China, which consumes many of its commodities.
For Africa as a while, Ncube also warns of other headwinds, including the potential for rising inflation, food price shocks in light of the drought conditions in North America and uncertainties surrounding the oil price outlook.
Nevertheless, he is convinced that several internal and external growth drivers remain intact and that African countries will continue to grow faster than the global average.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Other Economy News
Updated 5 hours ago President Jacob Zuma has appointed South African Reserve Bank (SARB) adviser and Monetary Policy Committee member Kuben Naidoo as SARB deputy governor, following the promotion of former incumbent Lesetja Kganyago to SARB governor in November. Naidoo, who will take up...
Updated 6 hours ago The agricultural sector has a key role to play in a green economy, which incorporates both an environmental and social dimension, notes Council for Scientific and Industrial Research (CSIR) senior researcher and/or leader of the Agricultural Green Economy Project Dr...
Updated 7 hours ago A challenging construction sector, difficult contractual environment and poor operational performance have contributed to JSE-listed construction company Basil Read reporting an R820.9-million aftertax loss for the year ended December 31, 2014. “Lossmaking contracts...
Updated 45 minutes ago The government of St Helena (SHG) and its Department for International Development (DFID) on Friday appointed airline Comair as the provider of air services to St Helena with the Island’s first airport opening in 2016. Comair would offer a weekly Saturday service,...
Updated 1 hour 15 minutes ago The Department of Communications (DoC) digital terrestrial television (DTT) project team was accelerating its efforts to “revive” South Africa’s long anticipated transition from analogue to digital broadcasting. After a more than six-year delay, the next few weeks...
Updated 1 hour 16 minutes ago Residential property prices are forecast to grow at 7.2% this year, on the back of 6.72% growth in 2014.
Recent Research Reports
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
This Week's Magazine
Projected capital expenditure (capex) in the South African automotive assembly industry should reach a record R7.48-billion this year, says the National Association of Automobile Manufacturers of South Africa (Naamsa) in its 2014 fourth quarter business review. Capex...
After several years of navigating project-threatening red tape and currency fluctuations, the 4.4 MW Bronkhorstspruit biogas power plant, which will supply clean energy to a leading automotive manufacturer in Gauteng, is expected to enter production before June....
South African paper and pulp producer Sappi reported earlier this month that it would build a pilot plant for the production of low-cost Cellulose NanoFibrils, or CNF (nanocellulose) at the Brightlands Chemelot Campus in Sittard-Geleen in the Netherlands.
The long-term outlook for Nigeria is a country that has the potential to be very strong. So affirmed International Monetary Fund (IMF) Nigeria Mission Chief and Senior Resident Representative Dr Gene Leon on recently. "But we are starting from a point of huge...
Poor infrastructure planning and inadequate maintenance are becoming increasingly problematic for new developments and the associated infrastructure required to support such developments. In many urban and rural municipalities, the state of infrastructure has been...