Economic Recovery for Africa?

The news today brings us two optimistic articles on the African economy. Businessweek reports that “Inflation is slowing across sub- Saharan Africa’s leading economies as bumper crops and stronger currencies help curb prices, enabling South Africa, Nigeria, Kenya and Ghana to extend interest rate cuts into this year.” A new African Development Bank report states that “with a projected overall growth rate of more than four per cent this year and a gross domestic product of just under $1.5 trillion, the continent’s growth is promising.”

The Businessweek report is from Bloomberg, and focuses on inflation rates in South Africa and Kenya.  Inflation in South Africa is down to 5.2%; in Kenya it’s at 4%. According to Bloomberg, lower inflation has led to monetary policy that allows for faster economic growth. South Africa is also anticipating a bumper corn crop this year, and Kenya is benefitting from the end of a long draught.

According to the African Development Bank (AFDB) report, described high economic growth rates in countries throughout the continent, especially East Africa.

“The Democratic Republic of Congo, with a projected growth rate of 11.8 per cent is expected to be the fastest growing economy. Other projected high growth rates include Angola, 8.7 per cent, Ethiopia, 6.1 per cent, Liberia, 5.9 per cent, Madagascar, 5.9 per cent, Tanzania, 5.7 per cent, Djibouti, 5.6 per cent and Mozambique 5.5 per cent.”

I want to see good news for Africa as much as the next person. improving economies will save lives – World Bank economists projected that 30,000-50,000 babies will die in Africa as a result of the global financial crisis.

And these reports are good news – but they do need to be taken with a grain of salt. The African Development Bank has been is prone to excessive optimism about growth rates, and the Bloomberg report isn’t exactly comprehensive. While Kenya and South Africa are major drivers of the economies of the other countries of the African continent, I am reluctant to generalize from two nations to the continent as a whole. Time will tell if the good news holds true; let’s all hope.

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