The global financial crisis: implication for the health sector in the African Region

Abstract

BACKGROUND 1. Since 2008, the severe reduction in global demand for commodities, goods and services as a result of the liquidity crisis and the loss of trust in the financial sector in the United States of America and Europe has considerably slowed down the global economy. According to the International Monetary Fund, world output was expected to contract by 1.4% in 2009 and to gradually pick up in 2010 to reach a growth rate of 2.5%.1 Although Africa registered a real average gross domestic product (GDP) growth rate of above 5% between 2000 and 2008,2 the growth rate declined to 2.8% in 2009.3 2. The GDP in the African Region shrank by US$ 94.48 billion between 2008 and 2009; 27 countries recorded a decrease in GDP, varying widely from US$ 0.007 billion to US$ 15 billion (Annex 1). Similarly, GDP per capita decreased by between US$ 6 and US$ 6183 in 31 countries1 (Annex 2). 3. The contraction of GDP has been attributed to declines in private household expenditures, business enterprise purchases, government revenues, and exports of goods (e.g. crude oil, minerals, agricultural products) and services (e.g. tourism).4,5 Other impacts of the crisis include falls in foreign exchange rates,5 reduced foreign direct investment, decreased official development assistance (ODA) and other donor support, increased interest rates and risk premiums, and reduced remittances from abroad.6 4. There is lack of evidence on the impact of past economic crises on health in Africa. However, there is ample evidence in Asia and Latin America showing that similar crises resulted in cuts in expenditures on health, lower utilization of health services, and deterioration of child and maternal nutrition and health outcomes.7 The ministries of health in the African Region are continuously monitoring the effects of global economic crisis on government and donor funding for health development, prices of medicines and basic foodstuffs, devaluation and unemployment.