Paris - The current economic crisis will have severe consequences for the African continent, cutting its expected GDP growth in half and ballooning its regional budget deficit, according to the 2009 African Economic Outlook (AEO) issued Monday in Paris.

"Following half a decade of above 5 per cent economic growth, the continent can expect only 2.8 per cent (growth) in 2009, less than half of the 5.7 per cent expected before the crisis," the AEO declared.

As a result, many people will fall back into poverty, the AEO said, and predicted that "only a handful of African countries" is expected to meet the aim of halving the share of the population living on less than a dollar a day by 2015.

Economic growth in Southern Africa is expected to slow to a mere 0.2 per cent this year, following GDP growth of 7 per cent in 2007 and 5.2 per cent last year.

Other African regions will be less severely affected, the AEO said, with North African GDP expected to slow to 3.3 per cent this year from 5.8 per cent in 2008, and West African countries foreseen to have an average GDP growth of 4.2 per cent in 2009, down from 5.4 per cent last year.

In addition, the collapse of commodity prices and plunging demand from industrialized countries as a result of the crisis will have severe consequences on budget balances, with the regional budget deficit estimated at about 5.5 per cent of GDP, instead of the 3.3 per cent surplus forecast last year.

"However, we should not despair," said Louis Kasekende, chief economist of the African Development Bank. "The decade of reform has introduced efficiency in macroeconomic management and made African economies more competitive."

These reforms have strengthened fiscal balances and reduced inflation to single-digit levels, the AEO said. Many countries have also benefited from substantial debt relief, with the result that most countries now boast low debt service/export ratios.

The AEO is a joint project of the African Development Bank, the OECD Development Centre, the United Nations Economic Commission for Africa and a network of African think tanks and research centres. The 2009 Outlook covered 47 countries, up from 35 last year. (dpa)