Africa trade, GDP in strong rebound in 2021

22 Jun, 2022 - 00:06 0 Views
Africa trade, GDP in strong rebound in 2021 H.E. Mr Lai Mohammed, Minister of Information, Culture and Tourism, the Federal Republic of Nigeria and Professor Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank

eBusiness Weekly

Kudzanai Sharara 

African trade and GDP rebounded strongly in 2021 and forecasts point to continued resilience, even in light of various post-pandemic and geopolitical pressures.

Following the myriad negative shocks triggered in 2020 by the Covid-19 pandemic, the year 2021, which was supposed to be a transitional one, proved to be exceptional in macroeconomic terms.

According to the African Trade Report 2022 (Trade Report), launched last week during the 29th Afreximbank Annual Meetings (AAM2022) that was held in Cairo, Egypt, African trade rose by 31,4 percent in 2021.

This is after African trade had contracted sharply in 2021 amid falling commodity prices in the face of sharp global demand and supply shocks.

Further, aggregate GDP expanded by 6.9 percent, recovering from the 1.6 percent contraction in 2020 that marked the region’s first recession of the last 25 years.

The Report said the 31 percent growth in intra-Africa trade is “even more impressive” as it is supported by improving commodity terms-of-trade and expanding trade ties with Asia.

That Asian region consolidated its position as Africa’s foremost trading partner, accounting for more than 32 percent of extra African trade.

Launching the Trade Report, along with H.E. Mr Lai Mohammed, Minister of Information, Culture and Tourism of the Federal Republic of Nigeria, Professor Benedict Oramah, President and Chairman of the Board of Directors of African Export-Import Bank (Afreximbank), attributed Africa’s resilience to coordinated responses from governments, development finance institutions, multilaterals, including the IMF through its Rapid Credit Facility and Afreximbank through its Afreximbank’s Pandemic Trade Impact Mitigation Facility (PATIMFA).

According to the Trade Report, the strong rebound and increasing resilience of African economies reflect
several factors, including swift and bold fiscal and monetary support, timely counter-cyclical measures
from multilateral and development finance institutions— including PATIMFA —and the effectiveness of Covid-19 vaccines and therapeutics, which led to the relaxation of containment measures.

Globally, easing financing conditions also supported the strong post-pandemic performance, strengthening global demand and improving commodity terms of trade,” reads part of the Trade Report.

The Trade Report also pointed out that the remarkable bounce back in trade and GDP was also propelled by the recovery of consumer-facing industries, particularly in the services sector, which was markedly affected by the pandemic as household consumption shifted more towards goods.

The report also reveals large untapped export potential in intra-African trade across all sub regions, pointing to significant growth opportunities.

South Africa—which remains the largest intra-African trading nation, accounting for around 20 percent of total intra-African trade— has been the leading driver of intraregional trade growth dynamics.

Its strong performance consolidated Southern Africa’s position as the top intra-African trading sub region. After recording the fastest growth rate in 2021, Southern Africa’s share of intra-African trade increased to account for more than 44 percent of total intra-African trade.

Looking ahead, the Trade Report argues for a speedy conclusion of negotiations on the rules of origin as well as those on trade in services, intellectual property, investment, and digital trade.

Dr Hippolyte Fofack, Afreximbank’s Chief Economist, noted that in order to increase its share of global growth and trade and to foster its integration into the global economy, Africa must use the AfCFTA, which has been touted as a game-changer, to accelerate the process of structural transformation and growth.

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