Download Africa`s Recent Economic Performance

Overview of Recent Economic
and Social Conditions in Africa
Economic Commission for Africa
Addis Ababa
Outline of Presentation
Africa’s Recent Economic Performance
 Comparison Across Regions
 Explanations for Africa’s Economic
Performance
 Relation to the Millennium Development
Goals
 The Way Forward

Africa’s Recent Economic Performance

Relative to the 1980s and the early 1990s, there
has been an improvement in Africa’s economic
performance

Annual average growth rate of real GDP was
2.1% over the period 1980-90; 5.4% in 1995-96;
and 3.2% in 2000-2001

In 2003, real GDP growth rate in the region was
3.6%, up from 3.2% in 2002.
….distribution of the 2003 growth rate is
uneven across sub-regions
4 .7
N o rt h A f ric a
3 .7
C e n t ra l A f ric a
3 .6
We s t A f ric a
2 .5
E a s t A f ric a
2 .5
S o u t h e rn A f ric a
3 .6
A F R IC A
0 .0
1.0
2 .0
p e rc e nt
3 .0
4 .0
5 .0
How does Africa’s economic Performance
Compare to those of other regions?
2002
2003
World Output
3.0
3.9
United States
2.2
3.1
Euro Area
0.9
0.4
Japan
-0.3
2.7
United Kingdom
1.7
2.3
Brazil
1.9
-0.2
China
8.0
9.1
India
4.7
7.4
Africa
3.2
3.6
Explaining Africa’s Economic
Performance

As in the past, global and domestic factors
account for Africa’s recent economic
performance
Global Factors

Strengthening of growth in the global economy

World output increased from 3.0% in 2002 to
3.9% in 2003. Africa’s growth rate in 2003 is
close to that of world output.

Events in the global economy affect Africa
because countries in the region depend on exports
for revenue as well as foreign exchange needed
for imports of intermediate and final goods used
by domestic firms and consumers

Increase in commodity prices, mostly in
the second half of 2003. This has a positive
effect on growth because several countries
in the region depend on export of
commodities

HIPC debt relief has eased debt burdens in
recipient countries thereby boosting
growth.
Domestic Factors

An improvement in the macroeconomic policy
environment:

Low current account deficit

Better fiscal management

Low inflation

Relatively good weather condition, especially in
North Africa

Reduction of political instability in several
countries: Liberia, Angola, Democratic Republic
of Congo etc.
Why has Recent Growth Performance Been
Modest?

The negative contagious effect of continuing
political instability in some countries in the
region: Cote d’Ivoire, Zimbabwe

Higher oil prices, which have negative effects on
growth in oil importing countries in the region

Slow pace of recovery in the Euro Area, an
important trading partner of several African
countries.
Relation to Millennium Development Goals

Recent improvements in economic performance
in Africa are insufficient to address the key
development challenge of the continent

There is the need to find ways to increase as
well as ensure the sustainability of growth in the
region

This is particularly important because, if current
growth trends continue, several countries in the
region cannot achieve the Millennium
Development Goals (MDGs)
…In 2003, only 4 countries achieved the growth
target required to meet the MDGs
1999
2000
2001
2002
2003
Negative growth rate
0
1
5
5
7
Zero and positive rate
53
52
48
48
45
a) low (0-3.9%)
26
37
19
27
21
b)Medium (4%-7%)
23
14
24
16
20
c)High (>7%)
4
1
5
5
4
The Way Forward

Achieving sustained economic growth and
poverty reduction remains the key
challenge facing the African region

Confronting this challenge effectively
requires actions at the domestic as well as
international level.
Domestic Actions

Sustained macroeconomic stability as well as an
improvement in the investment environment

Reducing the incidence of conflicts

Increasing the pace of regional integration

Dealing with the HIV/AIDS pandemic

Instituting a credible commitment mechanism to
reduce the risk of policy reversals and
implementation failures. The African Peer
Review Mechanism can play a vital role here

Paying more attention to the nature and quality
of growth to ensure that it is pro-poor

Maximizing the gains from the PRSP process by,
for example, ensuring that funds released from
HIPC debt relief are used for projects that have
significant impact on poverty
International Actions

Finding more effective solutions to the debt issue.
Improving the HIPC process will be a good start

Dealing effectively with the marginalization of
Africa in the global economy
 More market access
 Reduction of OECD agricultural support
 Enhanced Special and Differential Treatment
Provisions
 More and better aid flows

Enhanced mutual accountability between
Africa and its development partners

Strengthening the PRSP process
 More local ownership
 More resources
 Paying attention to infrastructure
provision