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U.S.-China trade war, Brexit uncertainty pose risks to Africa’s economic prospects-AfDB boss

Reuters, 18 Aug 2019

The U.S.-China trade warand uncertainty over Brexit pose risks to Africa’s economic prospects that are“increasing by the day,” the head of the African Development Bank (AfDB) toldReuters. The trade dispute between the world’s two largest economies has roiledglobal markets and unnerved investors as it stretches into its second year withno end in sight. Britain, meanwhile, appears to be on course to leave theEuropean Union on October 31 without a transition deal, which economists fearcould severely disrupt trade flows. Akinwumi Adesina, president of the AfDB,said the bank could review its economic growth projection for Africa of 4% in2019 and 4.1% in 2020 -- if global external shocks accelerate. “We normallyrevise this depending on global external shocks that could slowdown globalgrowth and these issues are increasing by the day,” Adesina told Reuters lateon Saturday on the sidelines of the Southern African Development Communitymeeting in Tanzania’s commercial capital Dar es Salaam. “You have Brexit, youalso have the recent challenges between Pakistan and India that have flared offthere, plus you have the trade war between the United States and China. Allthese things can combine to slow global growth, with implications for Africancountries.”

The bank chief said Africannations need to boost trade with each other and add value to agriculturalproduce to cushion the impact of external shocks. “I think the trade war hassignificantly impacted economic growth prospects in China and therefore importdemand from China has fallen significantly and so demand for products and rawmaterials from Africa will only fall even further,” he said. “It will also haveanother effect with regard to China’s own outward-bound investments on thecontinent,” he added, saying these could also affect official developmentassistance. Adesina said a continental free-trade zone launched last month, theAfrican Continental Free Trade Area, could help speed up economic growth anddevelopment, but African nations needed to remove non-tariff barriers to boosttrade. “The countries that have always been facing lower volatilities havealways been the ones that do a lot more in terms of regional trade and do notrely on exports of raw materials,” Adesina said. “The challenges cannot besolved unless all the barriers come down. Free mobility of labour, freemobility of capital and free mobility of people.”