The collapse of global trade, murky protectionism, and the crisis:

5. What can the G20 do on trade that can
benefit Africa?
African Development Bank Secretariat
The global economy continues to grapple with the impact of the financial and economic
crisis, with global output growth in 2009 estimated to contract to about 0.5%,
the worst record since World War II. 7 This sharp economic downturn worldwide has
led to an immense contraction in international trade. Growth in exports volume in
Africa is expected to decrease to 3.6% in 2009 from a buoyant rate of 10.6% in 2008
(Figure 1). Africa's economic growth is expected to follow suite, declining to 3.2% in
2009 from 5.7% in 2008. In countries such as South Africa, export growth declined
from a buoyant 7.5% in 2007 to 2.1% in 2008 and is expected to contract by -1.4%
in 2009. 8
Figure 1 Volume of exports, growth rate (%)
18
16
14
12
10
8
6
4
2
0
2006 2007 2008 2009
World Africa North Africa Sub-Saharan Africa(excluding Nigeria and South Africa
Source: African Development Bank estimates; United Nations World Economic Situation and Prospects,
2009
The shortage of liquidity in financial markets has reduced credit for trade finance.
Given that 60% of trade finance is handled by private agents and 90% of the $14 trillion
worth of global trade is financed by trade credits, further tightening of markets
has dire consequences on trade performance. The WTO estimates that liquidity shortage
and aversion to risk have caused a shortfall in trade finance to the order of $25
billion, disrupting trade, and ultimately exacerbating effects of the crisis.
Liquidity shortage has also affected trade in services, particularly due to declining
7 International Monetary Fund, World Economic Outlook Update, January 2009.
8 National Treasury of South Africa, Budget Review, February 2009.
29