The winner has to wait

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International financial institutions have now decided that Africa – despite its tenuous links to the global banking crisis – will suffer a serious economic downturn. Africa has been growing faster this year than at any time in the past 40 years and has posted GDP growth figures of over 5% for the past five years. Two months ago, the IMF happily predicted that Africa would ride out the storm, achieving the second highest regional growth figures after East Asia. All that has changed, says the World Bank’s latest Global Economic Prospects 2009 report, which forecasts that growth in Africa will dip to 4.6% in 2009. And the United Nations, after reporting that capital flows to Africa would increase despite the global slowdown, is now forecasting less investment in Africa, too. In so doing, the Bank and the UN have shattered more shibboleths about de-coupling and how the international economic system works. The first was that Asian economies would continue to grow, invest and trade regardless of the chaos in the Western banking system: falling trade figures and closing factories in China exposed that fallacy. A lesser shibboleth held that African economies, which are mostly agrarian and remote from the world of derivatives and credit default swaps, would sail on obliviously. Sadly for Africa, this global connectivity means that falling demand in the West has quickly led to lower prices and shrinking markets for its exports, even in Asia’s hyper-economies.