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February 12, 2003

According to the UN's Department of Economic and Social Affairs (DESA), economic growth in the African Union is expected to accelerate to 4% in 2003, from just 2.9% in 2002.

The UNDESA World Economic Situation and Prospects 2003 report is based largely on more rapid expansion in the AU's largest economic centres - such as South Africa and Algeria - as well as further consolidation of the domestic economic recovery. The forecast also hinges on several other factors: no major disruptions in global economic activities as a result of a possible war in Iraq, a modest recovery in commodity prices for some African exports and no new major droughts or armed conflicts.

Such external factors played a role in 2002's slower growth rates, down slightly from 3% in 2001. This was due mainly to weak external demand for African exports, depressed prices for many primary commodities, severe drought in eastern and southern Africa and economic and political instability in several of Africa's largest economies.

Contrary to the trend in recent years, the AU's large economic centres of North Africa performed less well than those of sub-Saharan Africa. Both Algeria and Libya had slow growth due to oil production cuts resulting from lower quotas in the Organization of Petroleum Exporting Countries. Tourism in Morocco, Tunisia and Egypt still felt the negative effects of the 11 September 2001 terrorist attacks in the US, and North African exports suffered overall from reduced demand in Europe, the region's main trading partner. Overall, growth in North Africa was just 1.9 per cent.

Meanwhile, sub-Saharan Africa (excluding Nigeria and South Africa) grew by 3.7% in 2002. This growth, however, was highly uneven, with a number of AU republics, especially in Southern Africa, suffering from severe drought. Zimbabwe, which has been hit by drought, poor economic management and political conflict, saw its economy shrink by 12%, for the third consecutive year of economic contraction.

One hopeful sign for future economic growth, notes DESA, has been progress over the past year in settling several of Africa's more persistent conflicts, including those in Angola and Sierra Leone, and progress in peace negotiations in Burundi, the Democratic Republic of Congo, Somalia and Sudan.