Maravi

COMESA economies remain vulnerable

COMESA economies remain vulnerable
By Mutale Kapekele
Wed 15 Dec. 2010, 04:02 CAT
ECONOMIES within COMESA remain vulnerable to the aftershocks of the global economic crisis due to continued dependence on commodities, says COMESA secretary general Sindiso Ngwenya.

Speaking at the 29th meeting of the COMESA council of ministers, Ngwenya emphasized the urgent need to diversify from commodity trade to other sectors.

“The recovery of our economy remains fragile because it depends on the price of our export commodities which have remained all time high except for 2008 and 2009,” Ngwenya said at a meeting that took place in Lusaka on Friday.

“It is interesting to note that the exports in manufactured products were not affected. The lesson we can draw from this is that the time is now for COMESA countries to revisit the strategy for market integration that has placed emphasis on trade; that is trade integration, to production integration.”

Ngwenya informed the meeting that the huge demand by nations such as China and India had helped drive-up prices of commodities since 2008, handing a reprieve for commodity exporters even as other sectors took a hit.

“It is, however, not certain that these prices will remain at an all time high because should demand fall there will be a precipitous drop in commodity prices that will have negative social consequences,” he said.

Statistics show that the global financial crisis hurt the value of intra-COMESA trade, which declined by seven per cent, from US$13.7 billion in 2008 to US$12.3 billion last year.

The bloc’s total trade with the rest of the world, declined by 20 per cent from US$301 billion in 2008 to US$241 billion in 2009.

Ngwenya said although economies within COMESA did not suffer devastating effects as witnessed in developed countries, there were still threats of aftershocks unless member states diversified their respective economies.

“The COMESA regional economy will remain vulnerable to external shocks as long as the economies are not structurally transformed,” said Ngwenya. “For example, one of the main factors that contributed to the decrease in intra COMESA trade in 2009 was the fall in the demand for commodities, such as, tea and copper in the importing countries.”

posted by MrK @ 2:23 PM