1. The Global Economic Crisis: Impact on Sub-Saharan Africa and Global Policy Responses: R40778.
- Author
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Arieff, Alexis, Weiss, Martin A., and Jones, Vivian C.
- Subjects
GLOBAL Financial Crisis, 2008-2009 ,ECONOMIC policy ,SOUTH African economy, 1991- ,ECONOMIC conditions in Africa, 1960- ,ECONOMIC conditions in Africa - Abstract
Many analysts were initially optimistic that the impact of the global financial crisis on Sub- Saharan Africa would be negligible. Many African economies are among the least exposed to the global financial system, and African banks hold few of the “toxic assets” that helped spark the crisis. However, as the financial crisis has deepened into a global recession, most agree that Africa will be strongly affected. The International Monetary Fund (IMF) estimates that average economic growth in Africa will slow from an average of over 6% per year over the past five years to 1.5% in 2009. As a region, Sub-Saharan Africa is not projected to undergo a recession in 2009. However, most African countries are thought to require high rates of economic growth in order to outpace population growth and make progress in alleviating poverty. The mechanisms through which the crisis is affecting Africa include a contraction in global trade and a related collapse in primary commodity exports, on which many countries are dependent. Foreign investment and migrant worker remittances are also expected to decrease significantly, and some analysts predict cuts in foreign aid in the medium term if the crisis persists. Africa’s most powerful economies have proven particularly vulnerable to the downturn: South Africa is experiencing a recession for the first time in nearly two decades, and Nigeria and Angola have reported significant revenue shortfalls due to the fall in global oil prices. Among the many African countries seeking multilateral assistance are those seen as having relatively solid macroeconomic governance, such as Botswana, Ghana, Kenya, and Tanzania. The 111th Congress has monitored the impact of the global economic crisis worldwide. The FY2009 Supplemental Appropriations legislation (P.L. 111-32) provided $255.6 million for assistance to vulnerable populations in developing countries affected by the crisis. While an initial House report indicated several countries, including five in Africa, should receive priority consideration, the subsequent conference report did not specify recipients. More broadly, U.S. policy responses to the impact of the crisis overseas have focused on supporting the policies of multilateral organizations, including the IMF, the World Bank, and the African Development Bank (AfDB). These organizations have increased their lending commitments and created new facilities to help mitigate the impact of the global crisis on emerging market and developing countries worldwide. However, the U.S. government has not formulated bilateral efforts to mitigate the impact of the crisis in Africa specifically. This report analyzes Africa’s vulnerability to the global crisis and potential implications for economic growth, poverty alleviation, fiscal balances, and political stability. The report describes channels through which the crisis is affecting Africa, and provides information on international efforts to address the impact, including U.S. policies and those of multilateral institutions in which the United States plays a major role. It will be updated as events warrant. For further background and analysis, see CRS Report RL34742, The Global Financial Crisis: Analysis and Policy Implications, coordinated by Dick K. Nanto [ABSTRACT FROM AUTHOR]
- Published
- 2009