Oil-producing countries will be hardest hit by financial crisis

After maintaining a near 6% growth for the past five years, sub-Saharan Africa will likely suffer to a far greater extent from the effects of the global financial crisis than first expected. This is according to credit solutions provider Coface, which believes the oil producing countries will probably be the hardest hit by the crisis. Forecasts for 2009 have been accordingly reduced below 2% compared to the 5% forecast last October, and while growth is expected to rebound to 4% in 2010, it will remain below its pre-crisis level. According to Coface, the oil producing countries are likely to suffer a precipitous 5.5-point drop in growth, down from 6.9% in 2008 to a still-positive 1.4 % this year. “Most oil countries will be unable to offset the decline in prices by increasing production. Angola is likely to experience an economic contraction of about 3.5%, after maintaining near 20% annual growth over the past five years,” according to Coface. While a large majority of continental countries have benefited from the fall of oil and foodstuff prices, all have suffered from the decline in their exports in both volume and value terms and from the decline in financing flows, particularly foreign direct investment and private transfers. Lacking diversification, African economies suffer directly from the decline in prices and demand for their main export production like diamonds in Botswana and Namibia. But, says Coface, a few exceptions are noteworthy like the rise of cocoa prices in Ghana and cotton in Mali and Burkina Faso. Also proving positive for the continent is the steady price for gold with its safe haven appeal.