Economies across Africa and the developing world risk a decline in exports, investment, remittances and aid as a result of the continued crisis affecting Europe, according to experts at the Overseas Development Institute (ODI).
The developing world is expected to bear a cumulative output loss of $238 billion over 2012-13 because of the continued deepening of the crisis in the euro area. It is also estimated that a 1% drop in export growth could on average hit growth in poor developing countries by up to 0.5%.
Analysis of country vulnerability to possible financial and real shocks of the euro zone crisis suggests that Mozambique, Kenya, Niger, Cameroon, Cape Verde and Paraguay are amongst those most at risk.
Author Dr Isabella Massa said:
The ODI Working Paper charts the countries which are most dependent on a variety of economic variables, finding that:
- Over half of all exports from Morocco, Mozambique and Cameroon are from the EU making them particularly prone to a fall in demand. Cape Verde relies on the EU for over 90% of its exports.
- Côte d’Ivoire relies on exports to the EU for over 17% of its GDP. In Mozambique and Nigeria the figure is about 14% and 10% respectively.
- Tajikistan topped the table of dependence on remittances in 2010, with a sizeable 40% of GDP coming from citizens abroad. This figure was over 10% in Gambia and Nigeria for which the EU is the main source of remittances. Liberia and the Democratic Republic of the Congo were highly dependent on Foreign Direct Investment (FDI) in 2010, with inward FDI as a share of GDP equal to over 25% and 20% respectively. Niger followed with a value of inward FDI as a share of GDP equal to 17%. in Mozambique, Ghana, Cameroon, Rwanda, Zambia and Tanzania European banks represent over half of total bank assets.