U.S. treasury projects 4.1 per cent GDP growth for sub-Sahara Africa

THERE is cheering projection of a 4.1 per cent real GDP growth rate by next year for sub-Saharan African countries like Nigeria, according to the United State government, pointing to some expected economic recovery in the continent after last year's financial meltdown that continues to rock the global economy.

This is according to the U.S. Deputy Treasury Secretary Neal S. Wolin who made this disclosure during a speech at University of the Witswatersrand, Johannesburg on an African tour of few nations.

Wolin also justified the involvement of emerging economies like those of South Africa, India and Brazil into an expanded G-20 group, but was silent on the chances of Nigeria getting in on the same deal. But Nigeria's economy is also widely regarded as one of the new emerging ones, but observers and sources close to governments of developed nations like the US have pointed out that issues of governance is robbing the country of membership at such clubs like G20.

The US Deputy Treasury Secretary in his disclosure said "For sub-Saharan Africa overall, the IMF is now projecting a healthy 4.1 per cent real GDP growth rate in 2010.

"Private capital inflows to Africa are forecasted to expand again next year. The value of exports from sub-Saharan Africa, which shrank by 38 per cent this year after six years of double-digit growth, is expected to grow by 13 per cent in 2010."

Wolin also said one of the key reasons that the global economy "have succeeded in stepping back from the brink is that together, we approached the crisis with tremendous international cooperation and coordination. Indeed, that is one of the most significant and positive outcomes of the past year."

He added that there is now a broad recognition of the importance - and also the power - of coordinated international action by leading nations in economic matters.

It will be recalled according to a recent US government bulletin that when the G-20 leaders gathered in London last April, they agreed to a coordinated recovery program - to spur growth, to stabilize the financial system, to restore the flow of credit, to mobilise financial resources for emerging market economies, and to keep markets open for trade and investment.

Said he: "Within months of the London meeting, global economic growth turned positive, industrial production began increasing, international trade recovered by 10 per cent, financial markets improved as interest rate spreads narrowed.

By the time G-20 leaders gathered in Pittsburgh two months ago, it was clear that recovery was in our sights. This past week, the United States announced third quarter GDP growth of 3.5 per cent on a yearly basis, he disclosed.

Equally, in the United States, the Obama administration and congress had already enacted a sweeping economic recovery package, which according to Wolin "established a Financial Stability Plan designed to recapitalise our financial system; to get credit flowing again to American families and businesses; and to stabilise the spiraling housing crisis."

He praised South Africa, for "the primary budget surpluses you have run in recent years allowed your government to put forward a powerful fiscal response."

He added that South Africa's Finance Minister Gordhan, in his medium-term budget policy statement last week, projected positive growth for the South African economy in 2010.

The US Treasury official noted that while tremendous challenges still remain, the crisis was years in the making, and full recovery cannot happen overnight. "But the improvements we are seeing would not have been possible without swift international action."

Talking about the fact the primary forum for international crisis response was not the G-7 or the G-8 - but now the G-20, the American top official said "the shift towards the G-20 reflects the critical importance of emerging economies like South Africa, India, Brazil and others. To be credible - and to be effective - global economic coordination in the 21st century must take place in a broad and inclusive forum."

He stated that the growing importance of emerging economies must also be reflected in the governance of international financial institutions like the IMF and the World Bank.

Wolin said that at the Pittsburgh meeting of the G-20, the nations committed to a shift in IMF quotas of at least five per cent to dynamic emerging market and developing countries and to an increase of voting power at the World Bank of at least 3 percent for developing and transition countries, on top of earlier shifts.