2010-03-30
LILONGWE (Reuters) - Africa's economy is likely to grow by an average 4.3 percent this year from just 1.6 percent in 2009, but poverty could still increase as there may not be an similar increase in employment, a U.N. report said on Tuesday.

The United Nations' Economic Commission for Africa report predicted that oil exporting countries in the sub-Saharan region, which excludes North Africa, would grow by 5.1 percent in 2010 while oil importers would expand by 4.9 percent.

The projections are well short of the 7 percent needed to achieve the U.N.'s Millennium Development Goals of halving poverty by 2015, it said, adding that the growth rates were not enough to create large numbers of jobs.

"This means that unemployment and vulnerable employment as well as working poverty in Africa are likely to increase in 2010," said the report, released at an African Union finance and economics ministers conference.

The Commission also said inflation in southern African countries could rise to double-digit figures because of lagged effects from high oil and food prices in the region.

"Malawi's headline inflation for 2010 is forecast to rest at 10 percent, Zambia, the Democratic Republic of Congo and Angola would rest at 10.2 percent, 14.6 percent and 15.4 percent, respectively," it said in its report.

The issue of creating good jobs to lift millions out of poverty dominated the two-day meeting of senior government officials in the Malawi capital, Lilongwe.

Despite growth averaging 5 percent or more in much of the previous decade, millions of Africans still live below the breadline as the economic gains have failed to translate into more and better jobs.

Fallout from the global economic crisis last year has only exacerbated the situation.

"The problem is widespread; of the four countries studied, economic growth was accompanied by increasing unemployment in three of them, while the fourth showed a drastic rise in informal sector employment," the report said.

"The problem of high and rising unemployment persists, making it difficult for the continent to reduce poverty rapidly."

Growth will be driven by demand for African exports -- in most cases oil and minerals -- and continued fiscal and monetary stimulus.

While the developed world has started raising interest rates, many African economies are still easing monetary policy.

South Africa, the continent's biggest economy, cut interest rates by a shock 50 basis points last week, taking its repo rate to the lowest in decades. Ghana has also cut rates and indicated further monetary loosening as inflation moderates.

The report also said Africa needed to look at ways of mobilising its own capital to finance investment and growth.

"The current global economic crisis has demonstrated the vulnerability of Africa to the fortunes of the global economy. It has also demonstrated that Africa cannot rely on external sources to finance its development in a sustainable way."