Post date: Jun 15, 2012 2:47:4 PM
NEW YORK, USA (UNTV) - The United Nations report on the state on Africa's economy released on Wednesday (June 13), said the continent needed to transform the structure of institutions and diversify their economies in order to attract growth, create jobs and reduce vulnerability to outside shocks like the on going EU debt crisis.
Launching the 2012 Economic Report on Africa, senior UN economist Robert Vos said Africa's prospects were positive compared to other developing regions, but warned that African countries needed to diversify their economies to avoid being "brought down" by a possible spread of the Euro crisis.
The report entitled "Unleashing Africa's Potential as a Pole of Global Growth," said governments need to embrace macroeconomic policies that will support growth in the short term, while implementing long-term development strategies.
Robert Vos, the UN director of economic policy and analysis launched the report in New York.
He said Africa's growth prospects were better than those of other developing regions, though progress had been slowed down by less economic activity in North Africa due to political unrest.
"Five percent growth for Africa could be less than its potential, and it might move up to six or seven percent per year growth rates moving forward, if all things fall properly into place, and if Africa is not hit by another global economic crisis as the rest of the world," he said.
The report said most African economies remained strong because of rising commodity prices and high domestic demand. However the global economic environment was not conducive and if the Euro area crisis was to go on for longer, Africa's export receipts, remittances and aid flows as well as foreign direct investment would reduce significantly.
The continent could however look for other trade partners in Asia and Latin America, whose economies were growing faster, and should work on strengthening intra-Africa trade and investment, he said.
"Africa can benefit from the global economy, but has to be very careful not to be brought down by the global economy at the same time. And the only way to do that is to work harder on this diversification of its own economy, strengthen the sectors that are now lagging behind and where there's a lot of potential for the region to grow faster, earn income and earn a better living for much of its population. And then I think it can get much more of its own dynamics, and through that be less vulnerable to a downturn in Europe or the United States," said Vos.
Despite a positive outlook on the continent, job creation and unemployment numbers remained high especially among the youth, and Vos urged governments to increase investments in high-quality education, health and infrastructure.
Asked if the Euro crisis would spread, Vos said, "I still believe that policy makers are strongly committed to avoid it, but it will be very costly and it will be very difficult."
The Economic Report on Africa 2012 is produced by the UN Economic Commission for Africa (ECA) and the African Union..