Africa records strongest growth in 30 years … and lowest inflation

“Africa’s growth performance has improved dramatically in recent times. Since 2001, sub-Saharan Africa (SSA) has not only exceeded the global average, it has experienced the strongest growth and lowest inflation in the past 30 years,” says Lizanne Case, business analyst: import export economics at First National Bank. She notes that the International Monetary Fund (IMF) is also optimistic about growth prospects for the continent, projecting 6.75% for 2008. “Oil exporters are enjoying strong expansion, but it is not only limited to these countries as growth is apparent overall in all groupings. While research finds no correlation between this growth and improvements in terms of trade, the IMF cites government consumption and domestic investment as the major drivers of growth in the region. This means that factors other than commodities have a dominant impact on growth, which is significant in terms of Africa’s ability to tolerate a commodity downturn and withstand the current global economic crisis,” Case explains. As always, the downside risks in Africa revolve around politics. These include Kenya’s post-electoral crisis and Zuma and the leftist shift of ANC’s NEC in South Africa, which create doubt about the future effectiveness of government. “Nigeria might still have impressive growth with a current account surplus, but the political risk is still important – like the fact that there are no embedded democratic institutions nine years after military rule,” says Case.