13 October 2010
The world is changing – this is now well known. What is less well known or not yet understood is that Africa is changing as much as, if not more than, the rest of the world.
Africa is the second-fastest-growing region in the world, after “Developing Asia”, and has been for most of the last decade. Forecasts from the International Monetary Fund and the Organisation for Economic Cooperation and Development (OECD) expect this to continue to be the case.
Shifting balance of global economy
The first decade of 21st century has seen some of the most profound changes in the balance of the world economy. The dramatic extent of the shift was evident during the depths of the world financial crisis. During the course of 2009, the economies of the OECD member countries shrank by about 3.3%. Only three members of the OECD grew at all – South Korea, Australia and Poland. Overall, gross fixed investment fell in the OECD countries by nearly 12% and unemployment rose sharply.
At the same time, developing countries grew by about 1.2%. So, in the middle of the financial crisis, the developing grew 4.5% faster than the OECD member countries. And investment remained positive in many of these countries.
In the past it was the other way around – when the industrialised countries sneezed, the world got a cold. In the past, economists from the developed countries told the developing countries what they should be doing. In the past, they said that developing countries should behave more like the developed countries.
No country is an island
This time the virus has attacked the industrialised countries most severely, and they have been looking at developing countries like China, India, Brazil and South Africa to help pull them from recession back to growth.
The developing countries are not autonomous from the industrialised countries. Indeed, the world economy is more integrated than ever before, and all markets are linked. Yet, we do now have a world where the sources of growth are multiple – it is no longer a case of one or two locomotives pulling the world economy forward. This is “the new reality”.
The dynamism in the world economy is clearly shifting from North to South and from West to East. The OECD Development Centre estimates that, measured in terms of real domestic buying power, the developing countries will have a larger share of the world economy than the OECD countries by 2012. By 2030, developing countries will have 57% of the world economy, and the current OECD members 43%.
Africa in a new light
The developing world contributed almost 70% of world growth measured in terms of domestic buying power during the last decade. China alone contributed nearly 30% of world growth.
Africa is now seen in a new light. It came through the depths of the economic crisis better than many expected, growing even faster than the average for emerging and developing economies during the crisis. Africa grew by about 2.5%, on average, during 2009. While a few of the bigger economies were more severely affected by the crisis, most African countries grew even faster than that.
This is an edited excerpt of a speech by South African Deputy President Kgalema Motlanthe to the Emerging Markets Summit 2010: the New Reality. Download the original speech in PDF format (120 KB).
This article was published in South Africa Now, a six-page supplement to the Washington Post produced on behalf of Brand South Africa. Download South Africa Now (PDF, 2.12 MB).