Africa's policymakers should prepare for global recovery by priming their private sectors
Africa's limited integration into global markets has provided little protection from the direct effects of the global financial crisis. But Africa should brace itself for the consequences of the global crisis on its real economy. The speed at which African economies have been affected has exceeded earlier expectations. Although the extent and depth of contagion are uneven across the continent—with mineral-exporting countries, large open economies, and fragile states affected most through one or several transmission channels—the continent as a whole has seen its growth prospects reduced from an average of 6 percent to less than 3 percent.
Widening current account and budget deficits pose an immediate threat to macroeconomic stability that years of economic reform helped establish. The ability of African governments to undertake needed crisis response, let alone sustain basic services and development programs, will be seriously tested. At this stage, it is difficult to predict how long African growth will continue at half its previous pace, because the global crisis is still relatively young. It is safe to assume, however, that whenever the global economy returns to a growth path, Africa's recovery is likely to be asymmetrical.
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