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The Global Financial Crisis and Recession

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  • Maswana, Jean-Claude

Abstract

This article analyzes how the global financial crisis is affecting African economies and identifies risks ahead with respect to prospects for development. Preliminary assessment shows that the aftershocks of the global meltdown have affected African economies through declines in exports of primary commodities and the relative price of exports, capital inflows, and investment in the infrastructure on which future growth depends. In addition, government revenues are dwindling. Combined with rapidly rising unemployment, the decline has weakened the fragile safety net and caused living standards in most countries to deteriorate. The global recession has served as a reminder that African success stories are still very fragile. The ongoing global rebalancing may negatively affect economic growth prospects in Africa. Short-term policy should therefore focus on expanding fiscal space, rehabilitating physical infrastructure using labor-intensive techniques, and providing social safety nets, such as employment protection. The challenge for Africa should not consist simply of ensuring that national economies return to the precrisis commodity export–led type of growth but that the drivers of growth switch to a more value chain–based and intra-African trade–driven pattern. Addressing the challenges of African postcrisis development requires policies that strengthen the resilience of African economies to external shocks, by investing massively in infrastructure.

Suggested Citation

  • Maswana, Jean-Claude, 2010. "The Global Financial Crisis and Recession," Working Papers 15, JICA Research Institute.
  • Handle: RePEc:jic:wpaper:15
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    File URL: http://hdl.handle.net/10685/70
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    References listed on IDEAS

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    10. Keith Griffin and Azizur Rahman Khan, 1992. "Globalisation and the Developing World: An Essay on the International Dimensions of Development in the Post-Cold War Era," Human Development Occasional Papers (1992-2007) HDOCPA-1992-02, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
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    Cited by:

    1. Kodila-Tedika, Oasis & NGUENA, Christian L., 2017. "Recession and financial development: An empirical analysis," MPRA Paper 81527, University Library of Munich, Germany.

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