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Sept. 6 (Bloomberg) -- The African Development Bank cut its growth estimate for the continent to as low as 3.2 percent for this year on concern the global slowdown will reduce demand for the region’s goods, Chief Economist Mthuli Ncube said.
Gross domestic product may be 0.3 percentage point to 0.5 percentage point lower than the Tunis-based lender’s initial 3.7 percent expectation for this year, Ncube said in a phone interview today. The AFDB still expects growth of 5.8 percent in 2012, the highest since 2007, after conflicts in Ivory Coast and Libya subsided, he said.
Job growth in the U.S. unexpectedly stagnated in August, the weakest payrolls reading since September 2010, government figures showed Sept. 2. World Bank President Robert Zoellick indicated today that risks to the global economy are intensifying.
A global slowdown “will effect trade for Africa and therefore contribute to a drop in GDP growth,” Ncube said. “We see a bigger impact in South Africa than the rest of Africa” as “the economy is more integrated with the U.S. and global market.”
Growth in South Africa, the region’s largest economy, is expected slow to as little as 3.3 percent from an original estimate of 3.6 percent, Ncube said.
South Africa’s economy expanded an annualized 1.3 percent in the second quarter, its weakest pace in almost two years, Statistics South Africa said on Aug. 30. The Reserve Bank will act “appropriately” to an economic slowdown, Governor Gill Marcus said on Aug. 23. The Reserve Bank has kept its benchmark interest rate unchanged at 5.5 percent this year to help boost the recovery in the nation’s economy.
“There is room for a rate cut,” said Ncube. “It will weaken the rand a little bit and South Africa needs that to increase export earnings, and that will contribute to growth.”
The rand has strengthened 32 percent against the dollar since the start of 2009, the best performer in the period after Brazil’s real and Chile’s peso.
--Editors: Ana Monteiro, Karl Maier
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