Risks to growth increase daily, African Development Bank warns
Dar es Salaam — The US-China trade war and uncertainty over Brexit pose risks to Africa’s economic prospects that are “increasing by the day”, the head of the African Development Bank (AfDB) says.
The trade dispute between the world’s two largest economies has roiled global markets and unnerved investors as it stretches into its second year with no end in sight.
Britain, meanwhile, appears to be on course to leave the EU on October 31 without a transition deal, which economists fear could severely disrupt trade flows.
Akinwumi Adesina, president of the AfDB, said the bank could review its economic growth projection for Africa — of 4% in 2019 and 4.1% in 2020 — if global external shocks accelerate.
“We normally revise this depending on global external shocks that could slow down global growth and these issues are increasing by the day,” Adesina said on Saturday on the sidelines of the Southern African Development Community meeting in Tanzania’s commercial capital, Dar es Salaam.
“You have Brexit, you also have the recent challenges between Pakistan and India that have flared off there, plus you have the trade war between the US and China. All these things can combine to slow global growth, with implications for African countries.”
The bank chief said African nations should boost trade with each other and add value to agricultural produce to cushion the impact of external shocks.
“I think the trade war has significantly impacted economic growth prospects in China and therefore import demand from China has fallen significantly and so demand for products and raw materials from Africa will only fall even further,” he said.
“It will also have another effect with regard to China’s own outward-bound investments on the continent,” he said, saying these could also affect official development assistance.
Adesina said a continental free-trade zone launched in July, the African Continental Free Trade Area, could help speed up economic growth and development, but African nations should remove non-tariff barriers to boost trade.
“The countries that have always been facing lower volatilities have always been the ones that do a lot more in terms of regional trade and do not rely on exports of raw materials,” Adesina said.
“The challenges cannot be solved unless all the barriers come down — free mobility of labour, free mobility of capital and free mobility of people,” he said.