Amidst the uncertain global developments mainly due to continuing US-China trade war and the possibility of Brexit getting precipitated, Akinwumi Adesina, President of the AfDB, said the bank would review its economic growth projection for Africa of 4% in 2019 and 4.1% in 2020.
The statement of the Adesina assumes importance since economists, till date, were of the opinion that the continent, by and large, may be insulated from the onslaught of unsavory global developments. African apex bank’s statement may not go well with the businesses that are expecting a better performance of the African economy in the coming years. The recent World Bank report also discounted the impact of global developments in Africa since it said that while all other regions had a visible shortage in the flow of foreign direct investment, Africa has accounted for an accelerated flow of investment in 2018. Significantly, Adesina has also factored the recent border issue between India and Pakistan, which can also have an impact on the global business environment as also in Africa.
The Southern African Development Community meeting, which was held in Tanzania’s commercial capital Dar es Salaam also took stock of the situation that is emerging. Adesina took part in the deliberations of the meeting. African nations, he said, in the given situation, need to boost trade with each other and add value to agricultural produces to cushion the impact of external shocks. He also underscored that China and the US, being largest investors in Africa may find the going difficult. The two economies are undergoing difficulties. In a recent report, majority of the economists surveyed in the US were of the opinion that if this trend continues, the US economy may be caught up in a recession by the middle of 2020 or beginning of 2021, which was scorched by US President Donald Trump. Instead, he called upon US banking regulator-Federal Reserve-to cut the interest rates to further consolidate the booming US economy. Reports coming out from China suggest that the growth prospects given by various international agencies are ranging from stable to negative if the trade war escalates.
African bank’s chief said that the recently launched the African Continental Free Trade Area could help accelerate economic growth and development, provided African nations remove non-tariff barriers to boost trade. According to him, it is more relevant to economies facing lower volatilities and do not rely on exports of raw materials. Also, such dispensations need the mobility of labor, capital, and people.
