Tuesday, March 02, 2010

Newsweek - Is Africa Becoming The New Asia?

Newsweek: How Africa Becoming The New Asia

China and India get all the headlines for their economic prowess, but there's another global growth story that is easily overlooked: Africa. In 2007 and 2008, southern Africa, the Great Lakes region of Kenya, Tanzania, and Uganda, and even the drought-stricken Horn of Africa had GDP growth rates on par with Asia's two powerhouses. Last year, in the depths of global recession, the continent clocked almost 2 percent growth, roughly equal to the rates in the Middle East, and outperforming everywhere else but India and China. This year and in 2011, Africa will grow by 4.8 percent—the highest rate of growth outside Asia, and higher than even the oft-buzzed-about economies of Brazil, Russia, Mexico, and Eastern Europe, according to newly revised IMF estimates. In fact, on a per capita basis, Africans are already richer than Indians, and a dozen African states have higher gross national income per capita than China.

Please note: While I am encourage by any positive growth in Africa we should not confuse the percentage of growth with the dimension of absolute growth.

Certainly a nation with a GDP of $1B that grows it to $2B has experienced 100% growth. However a nation with $100B GPD but which grows to $125B has "only" a 25% growth rate. Lower growth rate by in a far better position because of the base from which it was starting from.

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