A slowing Chinese economymay weaken demand for Africa’s raw materials, damaging a key driver of growth for the world’s poorest continent, said Mthuli Ncube, chief economist of the African Development Bank.
“What could be a big surprise factor in Africa’s economic growth is China,” Ncube said by phone from Tunis yesterday. “If the slowdown in China reducesits demand for oil, copper and base metals, the question is how much will that impact on commodity prices. That could really hurt Africa.”
China’s commodity demandhas helped propel economic growth in sub-Saharan African nationsincluding Zambia, the region’s biggest copper exporter, Nigeria, the continent’s largest oil producer, and Congo and Gabon, which both producetimber. Economic growth in the region is forecast to accelerate to 5.5 per cent in 2013 from about 5 per cent this year, Ncube said.
China in 2010 consumed one-fifth of global non-renewable energy resources, 23 per cent of major crops and 40 per centof metals, after increasing itsmarket share “sharply” over the past decade, according to the International Monetary Fund.
While China’s expansion cooled to a three-year low of 7.4 per cent in the third quarter, gages of manufacturing and retail sales have pointed to a recovery. Growth will probably pick up to 7.7 percent this quarter and 7.9 per cent in the three months through March 2013, according to a Bloomberg survey.
European crisis
Africa is also withstanding Europe’s debt crisis, thoughgovernments are failing to ensure the growing wealth reduces poverty, Ncube said. North Africa is seeing rising oil production and strong economic policies in East and West Africa are helping buoy growth there,while South Africa, the continent’s largest economy,is facing challenges from mining- labor unrest, Ncube said.
The financial upheaval in Europe is creating an opportunity for African nations to sway Chinese investors to redirect their exports and investment, said Ncube.
“If China is looking for new markets for its exports then Africa could benefit, the same for investment,” he said.
Trade between Africa and China is currently worth$166 billion after growing 30 per cent in 2011 and 25 per cent in the first half of this year, according to Jeremy Stevens, a Beijing- based economist at Standard Bank Group, Africa’s biggest lender.
Bloomberg
