Download Africa and the global crisis: Will growth hold?

23 April 2009
Africa and the global crisis:
Will growth hold?
Kigali
28 July, 2009
Alex M. Mubiru
Principal Research Economist
African Development Bank
UNECA
AEO
Measuring Africa’s economies since 2001
1. Economic overview & annual thematic focus
2006: Transport
2007: Water and sanitation
2008: Technical & vocational skills
2009: Innovation & ICT
2010: Fiscal Governance, Aid & Domestic Resource Mobilization
2. 47 country chapters
3. Statistical annex and indicators
4. New & expanding accompanying website
UNECA
Lead partner
Junior partners
African think tanks
Local consultants
Experts Network
Key financial backer
Coverage 2009: 47 Countries
AEO
Tunisia
New in 2009:
Morocco
Burundi
Algeria
Libya
Egypt
CAR
Mauritania
Djibouti
Niger
Mali
Chad
Senegal
Gambia
Guinea-Bissau
Eritrea
Sudan
Burkina
Faso
Guinea
Nigeria
Sierra Leone
Gambia
Djibouti
Guinea
Ethiopia
Togo
Côte
d'Ivoire
Lesotho
Central African
Republic
Ghana
Liberia
Cameroon
Mauritania
Somalia
Equatorial Guinea
Uganda
Congo
Gabon
Dem.Rep.
Congo
Seychelles
Kenya
Rwanda
Burundi
Seychelles
Tanzania
99% of GDP
Angola
Swaziland
Malawi
Sudan
Zambia
97% of population
Togo
Mozambique
Zimbabwe
Madagascar
Namibia
Botswana
Mauritiu
s
Swaziland
Lesotho
South
Africa
UNECA
Sierra Leone
→
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Outline of Presentation
An Update on Growth
Aspects of Trade
Private Financial Flows
Some Key Macro Numbers
The Global Crisis and its Impact
Some Key Messages
UNECA
Africa still growing despite the Crisis
Growth
Real GDP Growth (%)
8
6
4
Δ = -3.5%
Δ = - 4.8%
2
Δ = - 4.1%
0
Δ = - 6.6%
-2
-4
-6
2000
2001
2002
2003
2004
Africa (May 2009 forecast)
Total OECD
Source: OECD Development Centre / African Development Bank, 2009
UNECA
2005
2006
2007
2008(e) 2009(p) 2010 (p)
Africa (February 2009 forecast)
Taking a toll on Africa’s general prospects
Growth
GDP growth %
Downside risk in GDP Growth projections
7
6
April 08
5
Nov 08
4
Feb 09
May 09
3
2
1
0
2007
2008(e)
2009(p)
2010 (p)
Africa (April 2008 forecast)
Africa (November 2008 forecast)
Africa (May 2009 forecast)
Africa (February 2009 forecast)
Source: OECD Development Centre / African Development Bank. 2008
UNECA
Growth
Regional disparities (May forecasts)
2007
2008(e)
2009(p)
2010(p)
February
May
February
May
GDP Growth Rate in percentage
Central Africa
4.0
5.0
2.8
2.0
3.6
3.2
Eastern Africa
8.8
7.3
5.5
5.1
5.7
5.5
Northern Africa
5.3
5.8
3.3
3.5
4.1
4.1
Southern Africa
7.0
5.2
0.2
-1.0
4.6
3.6
Western Africa
5.4
5.4
4.2
3.3
4.6
3.4
AFRICA
6.1
5.7
2.8
2.3
4.5
4.0
Sub-Saharan Africa
6.4
5.5
2.4
1.4
4.7
3.8
Oil-exporting countries
6.8
6.6
2.4
2.5
4.5
4.1
Oil importing countries
5.4
4.6
3.3
2.1
4.5
3.8
Memorandum items
Southern Africa hit severely: Oil (Angola); Minerals (Botswana)
UNECA
→
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An Update on Growth
Aspects of Trade
Private Financial Flows
Some Key Macro Numbers
The Global Crisis and its Impact
Some Key Messages
UNECA
The global trade collapse is now hitting Africa
Trade
• A cold shower for hard commodity exporters
• Soft commodity exports prove more resilient
• After years of boom, World Trade is expected to contract by 13% in 2009
400
350
300
250
200
150
100
50
0
Hard commodities
14000
12000
10000
8000
6000
4000
2000
0
Petroleum
Copper
Aluminium
Gold
Soft Commodities
200
- 94%
Source: Datastream, 2009
Cocoa
Coffee (arabica)
Coffee (robusta)
Tea
USD Billion
400
Baltic Exchange Dry Index
0
Source: African Economic Outlook, based on World Bank, 2009
UNECA
150
120
90
60
30
0
-30
Africa Trade balance
- 112%
Source: African Economic Outlook, 2009
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An Update on Growth
Aspects of Trade
Private Financial Flows
Some Key Macro Numbers
The Global Crisis and its Impact
Some Key Messages
UNECA
Private financial flows
A global retrenchment of capital
• Flows to Africa grew by 17% to over USD 60 billion in 2008, despite the global slowdown
• Remittances to Sub-Saharan Africa are set to decline from between 4.5% to 8% over 2009
• Stock markets have taken a severe hit
70
60
USD Billion
USD billion
Foreign Direct investment
50
Remittances
Stock Markets
45
180
40
160
35
30
40
25
30
20
(MSCI price index local currency)
140
120
100
15
20
10
10
0
Source: OECD Development Centre , based on UNCTAD 2009
UNECA
80
60
5
40
0
20
Source: OECD Development Centre , based on World Bank, 2009
EGYPT
NIGERIA
Source: Thomson Datastream 2009
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An Update on Growth
Aspects of Trade
Private Financial Flows
Some Key Macro Numbers
The Global Crisis and its Impact
Some Key Messages
UNECA
…deteriorating significantly
% of GDP
% of GDP
Key Macro Numbers…
20
15
10
5
0
-5
-10
Fiscal balance
Overall fiscal
balance* (%
GDP)
2008 (e)
2009 (p)
Feb
2009 (p)
May
2.8
-5.4
-5.8
2008 (e)
2009 (p)
Feb
2009 (p)
May
3.3
-4.4
-5.3
Current Account
15
10
5
External
Current
Account* (%
GDP)
0
-5
-10
Inflation
inflation %
20
10
2008 (e)
2009 (p)
Feb
2009 (p)
May
11.6
8.1
8.4
0
2000-05
Central
South
2006
2007
2008(e)
2009(p)
East
West
Source: OECD Development Centre, African Economic Outlook, 2009
UNECA
2010(p)
North
AFRICA
Consumer
prices
* Including grants
** Excluding Zimbabwe, Estimations for 20078and
predictions
for 2009/10
Source: OECD Development Centre / African Development Bank, 2008
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•
•
•
•
•
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An Update on Growth
Aspects of Trade
Private Financial Flows
Some Key Macro Numbers
The Global Crisis and its Impact
Some Key Messages
UNECA
Global Crisis A patchwork of impacts
African growth has taken a serious hit:
2008: near 6%
2009: below 3%
• Oil exporters are taking the most
severe hit
• More globally integrated
economies, such as South Africa
and Egypt, are strongly affected
Growth deceleration
• Low-income / non-oil exporting
countries are less affected,
because:
2008 - 2009
Greater than 3 %
- 2 to- 3 %
Zero to – 1.9 %
1. decrease in energy bill
Increased growth
between 2008-09
2. less integration to the
world economy
Source: African Economic Outlook, 2009
UNECA
Global Crisis Exposure to the crisis for LICs
UNECA
Global Crisis
Staggered impacts are to be expected
•Weak fundamentals and dependent on one commodity
• Guinea, Eritrea, Malawi, Mauritania, DRC
• Stronger fundamentals but dependent on one/few commodity/ies
Time
• Botswana, Algeria, Cameroon, Rwanda, Benin
•Weak fundamentals but less dependent on one commodity
• Gambia, Liberia, Sierra Leone, Ethiopia
•Strong fundamentals and less dependent on one commodity
• Tunisia, Uganda, Kenya
UNECA
Global Crisis Oil exporters and importers
Real GDP Growth
9
8
7
6
5
4
3
2
1
0
-1
-2
-3
-4
-5
2001
Africa
2002
2003
2004
2005
Oil-exporting countries
2006
2007
2008(e) 2009(p) 2010(p)
Oil importing countries
Total OECD
Source: African Economic Outlook, OECD, 2009
Net Oil exporters: Algeria, Angola, Cameroon, Chad, Congo, Côte d'Ivoire, Congo DRC, Egypt, Equatorial Guinea, Gabon, Libya, Nigeria, Sudan
UNECA
Oil Exporters
The price of having all eggs in one basket
Taking a clear hit from
the oil price fall…
…and little room left for
manoeuvre
• Many oil exporters did not
take advantage of commodity
windfalls to improve
governance and diversify
their economies
• Nevertheless, some oil
exporters have performed
well in terms of lowering
levels of external debt
Source: OECD Development Centre / African Development Bank
*: African Economic Outlook forecasts
UNECA
Oil Importers
Proving resilient… so far
…yet challenges rising
Holding up against the crisis so far…
Oil-importing countries have performed well,
diversifying their sources of growth over recent
years. While lower energy and food prices
subsequent to the crisis have helped importers,
difficult times lie ahead
Good performers’ strengths:
•
•
•
Sustained and prolonged growth
Prudent macroeconomic policies
More Diversification
Challenges:
•
•
•
•
•
Source: OECD Development Centre / African Development Bank
*: African Economic Outlook forecasts
UNECA
Poor capacity in mobilizing domestic
resources
Contain fiscal and current account deficits
High dependency on ODA
Prioritise poverty reduction
Difficulty adjusting to price shocks
Beyond the crisis
Africa today is more resilient to exogenous shocks
• Over recent years, terms of trade improved
and good macro management in many
countries strengthened fiscal balances
Fiscal balance,
% GDP
Current
Account, % GDP
2000-05
2008(e)
-1.4
2.8
0.6
3.3
• HIPC initiative significantly reduced debt
levels and composition in many countries
• Politically more stable than in past decades
• Africa is more integrated with the world
economy and less dependent on traditional
OECD markets
• Governments’ efforts in nurturing private
sector and enterprise resulted in steady
improvements in business climate indicators
UNECA
Total external
Debt/GDP, %
Debt service /
exports, %
2005
2008
110.6
20.8
20.8
4.7
Total trade with China has increased
tenfold in the past decade to reach
USD 106 billion in 2008
Risks
How will the crisis impact the MDGs?
African Development Bank indicator of Progress
Towards MDGs 2009
Source: African Development Bank, 2009
UNECA
→
•
•
•
•
•
•
An Update on Growth
Aspects of Trade
Private Financial Flows
Some Key Macro Numbers
The Global Crisis and its Impact
Some Key Messages
UNECA
AEO
Some Key Messages
• Africa has been hit severely; However, the impact varies across
countries and sectors
• Changes in the direction of trade, prudent macroeconomic policies
and debt relief make Africa better positioned to weather the
current crisis.
• African governments have to preserve the gains obtained in the
recent past, by pursuing structural reforms, infrastructure
development and targeting poverty reduction.
• With the right combination of domestic policy reforms, Africa can
continue to grow despite the crisis, while setting the stage to faster
growth for the future.
UNECA
AEO.org
Africa’s economic portal for policymakers
www.africaneconomicoutlook.org
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Africa’s economies
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AEO
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• Complete and updated
country notes
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institutions
UNECA
Useful Links
• www.africaneconomicoutlook.org
• www.afdb.org/aec
• www.afdb.org
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