Africa has been projected to see a lift in economic growth this year and next on the back of a rebound in global commodity prices, according to Reuters and the African Development Bank’s (AfDB) African Economic Outlook, launched Monday at the 52nd Annual Meetings of the African Development Bank Group, taking place in Ahmedabad, Gujarat State, India.
The report, which presents the continent’s current state of affairs and forecasts for the coming two years, said that a decline in commodity prices starting in mid-2014 had a devastating impact on several commodity-exporting African economies with Nigeria, for example, which has the biggest share in Africa’s GDP, slipping into recession.
It noted that Africa has been worryingly dependent on commodities to power economic growth. The fall in raw materials prices inflicted a significant shock on sub-Saharan Africa as fuels, ore and metals account for more than 60 percent of the region’s exports.
However, commodities have staged a comeback since late last year, buoyed by an improvement in the world economic outlook together with the return of risk appetite among global investors.
According to the report, if the rise in commodity prices is sustained, it would trim the continent’s current account deficit to five percent of GDP this year from 6.5 percent in 2016.
It, however, urged the countries in the region to diversify their exports to reduce their exposure to commodity-price shocks and take measures to boost trade within Africa.
The report also projected that Africa would witness a marginal improvement in external inflows that are estimated to inch up to $179.7 billion in 2017 from $177.7 billion a year ago.
It equally takes a hard look at industrialisation and entrepreneurship in Africa and proposes practical steps to harness the potential of entrepreneurship in Africa.
The Organisation for Economic Cooperation and Development (OECD) and the United Nations Development Programme, also have positive outcomes for the continent’s economy, expecting it to grow by 3.4 percent in 2017 and 4.3 percent in 2018, up from an estimated 2.2 percent last year.
The Annual Meetings of the AfDB, specifically focuses on the theme “Transforming Agriculture for Wealth Creation in Africa ” and draws on one of the Bank’s “HIGH 5” priority areas, namely to “Feed Africa”.
Narendra Modi, Indian prime minister, said his country’s hosting of the AfDB meetings is an effort to promote ‘south-south’ economic ties, especially with a continent that has a large Indian diaspora but has seen far larger inward investment from China. The annual meetings would close Friday, May 26, 2017.