Africa growth to fall to 2 percent in 2009: AU

By Barry Malone

ADDIS ABABA (Reuters) - African growth will slump to 2 percent in 2009 from 5.1 percent in 2008 and agriculture will prove the world's poorest continent's best chance of pulling itself from poverty, the African Union (AU) said on Thursday.

Most African economies had been growing at a healthy pace but the global economic crisis has caused aid flows to fall and slashed demand and prices for its mainly agricultural exports.

"GDP growth in Africa has declined from 6.0 percent in 2007 to 5.1 percent in 2008 and is expected to be 2.0 percent in 2009," a report published jointly by the AU and the United Nations Economic Commission (ECA) for Africa said.

Inflation on the continent, excluding Zimbabwe, was 10.7 percent in 2008, up from 6.4 percent in 2007, the report said, citing high fuel and food prices and devalued currencies.

The report did not project inflation figures for 2009 but said purchasing power would increase as oil and food prices are expected to fall.

Oil-producing countries continued to fare better in 2008, seeing growth of 5.9 percent in comparison to growth of 4.3 percent for the continent's crude importers.

South Africa will be the worst affected in 2009, the report said, with its economy set to shrink by 1.2 percent - the African economic powerhouse's first recession in 17 years.

The report called for more investment in the continent's agriculture industries. It said only 6 percent of African land was arable compared to 40 percent in Asia.