Strong growth prospects and double-digit returns for investors would help shield Africa from the debt crisis enveloping the western world, the chief economist of the African Development Bank said in Paris yesterday.
But if the turmoil in Greece tipped developed countries into another full-blown recession, Mthuli Ncube said Africa would be hit via a downturn in global trade, falls in commodity prices and a drying up of credit and foreign aid.
“There are downside risks: a slowdown in the global economy and a slowdown in China which is driving the sentiment on commodity prices on which some of the African countries depend,” he said.
The International Monetary Fund on Tuesday cut its growth forecast for this year for sub-Saharan Africa to 5.2 percent from 5.5 percent, warning that a faltering European and US recovery could undermine prospects for exports, aid and foreign capital.
However, Ncube said that if the debt crises in developed countries remained contained, he expected recoveries in conflict-hit Egypt, Tunisia, Ivory Coast and even Libya to push average growth in Africa to 6 percent next year.
He said: “I think that because of that Africa is attractive (for investors) and therefore there’s enough cushion to do well even under the current circumstances.”
With global leaders battling to save Greece from defaulting on its debt, advanced economies are under heavy pressure to cut their ballooning debt levels, leading to market turmoil and stringent budget cuts that are crimping economic activity.
He said many African countries had improved economic management and diversified their economies. – Reuters