Sweden is now targeting Africa to revive trade as the Nordic region’s largest economy adjusts to a slump in demand from Europe.
Sweden needs to sell to more markets outside Europe to achieve economic growth of 3 percent, Finance Minister Anders Borg said yesterday in the Nigerian capital, Abuja. Borg is touring Africa, traveling from Ethiopia before heading to South Africa for the World Economic Forum in Cape Town.
“We’re in a tough neighborhood because the rest of Europe is growing very slowly, so we are heavily diversifying our trade toward Asia, but also I think to Africa and Latin America,” Borg told reporters in Abuja. “We don’t want to be stuck in a low-growth Europe.”
Sub-Saharan Africa’s economy will expand 5.6 percent this year and 6.1 percent next year, according to April estimates by the International Monetary Fund. The region is outgrowing an estimated global expansion of 3.3 percent this year and 4 percent next year, according to the IMF.
The 17-nation euro area will shrink 0.4 percent this year, the European Commission said on May 4.
“A main driver of growth in 2014 will be the strengthening of activity in South Africa and other middle-income countries, predicated on improvements in the external environment,” according to the IMF report. “Similarly, some low-income and fragile countries are expected to do better, including those currently experiencing internal conflict.”
Swedish Trade Minister Ewa Bjoerling has urged exporters to target markets outside Europe to reduce the country’s reliance on a region hampered by recession, rising unemployment, austerity and budget cuts in the wake of the European debt crisis. Swedish exports dropped 3.6 percent last year. Of the nation’s total exports in 2012, 71 percent went to Europe while 11 percent were shipped to Asia and Oceania. Only 3 percent were sent to Africa.
“Africa’s youthful population, its huge production potential, its market and its vitality will for the next couple of decades play a crucial role when it comes to vitalizing the world economy,” Borg said. Still, “there are many challenges in terms of infrastructure, ports, roads, railways, electricity,” he said, also listing “political issues, openness, democracy, freedom of speech” as concerns.
Africa needs $93 billion per year over a decade to improve infrastructure, with almost half of that required to boost power supply, according to a 2009 World Bank report. With 7 to 10 million young people entering the labor force each year, the continent has an annual gap of $48 billion between infrastructure needs and investments, the lender said in March 2011.
The Swedish government forecasts that exports to sub- Saharan Africa will grow 5.2 percent this year, followed by a 9.3 percent expansion in 2014 and growth of 12 percent and 14 percent in 2015 and 2016, respectively. Exports to North Africa and the Middle East are estimated to increase 3.1 percent this year and 11 percent in 2014, followed by a 10 percent expansion in 2015 and growth of 8.1 percent in 2016. Exports to Asia are seen rising 8 percent next year, while exports to the European Union are projected to advance 4.3 percent.
“I think many of the Swedish companies are reassessing their perspective on Africa, and actually seeing a lot of investment opportunities,” Borg said.
To contact the editor responsible for this story: Nasreen Seria at email@example.com