The African Development bank is cutting its 2011 growth forecast for the continent mainly due to political unrest in North Africa, said AfDB Chief Economist Mthuli Ncube.
The AfDB will give its formal economic forecasts in June, but Ncube told Reuters in an interview that growth in the continent was likely to come in no higher than 5 percent this year, down from a previous projection of 6 percent.
“The trend is slightly lower mainly because our expectation this year is that Ivory Coast will have a negative rate of growth. In Northern Africa the revolutions in Tunisia and what is happening in Egypt and Libya is going to pull down growth.”
“Our expectation is that for Egypt, growth is going to be as low as 0.5 percent and for Tunisia as low as 1.0 percent so that has dragged down growth in the whole region,” Ncube said. Countries in North Africa, including Tunisia, Egypt and Libya, as well as Ivory Coast in West Africa have seen widespread protests that have toppled governments in Tunisia and Egypt and led to Western-led air strikes in Libya, Reuters reports.
Ncube said southern Africa would be cushioned by the recovery in commodity prices, with growth averaging 4.5 percent in 2011.”
The bank has said the continent needs to diversify its economy away from resources and invest more in manufacturing and other sectors.
Fast-growing economies in southern Africa such as Angola and Zambia rely heavily on resources such as oil and copper.
Despite the short-term negative impact on economic growth, the political unrest in north Africa could bring much-needed democracy.
“The absence of democracy and its stifling of entrepreneurship in Tunisia and Egypt was costing the economy,” Ncube said, adding the bank estimated a 2.0 percent of GDP cost per annum to the country.
The AfDB is increasing its loans to Tunisia, giving it $1 billion this year, and more after 2011.
As for Libya, Ncube said the economy would contract this year but the extent of that decline would be limited if Muammar Gaddafi were to step down.
“We’re expecting the economy to shrink by at least 10 percent this year. It would definitely be better for the economy if Gaddafi stepped down,” Ncube said.
Western powers, led by the United States, France and Britain, are spearheading air strikes in Libya but Gaddafi has given no signs of giving i2n to pressure to step down.