Download Survey of Economic and Social Conditions in Africa, 2006

Survey of Economic and
Social Conditions in Africa,
2006
Economic Commission for Africa
Fortieth Session of the Conference of African Ministers
of Finance, Planning and Economic Development
Presented by:
Trade, Finance and Economic Development Division
1
Objectives of the Survey
Review recent growth performance at
continental and sub-regional levels
Discuss the underlying factors of performance
Examine the progress made in achieving key
targets in social development
Highlight factors likely to affect growth
prospects
Highlight key areas that deserve the attention
of policy makers, focusing on the need for
diversification away from the resource sector
2
I. The Global Context
World economy sustains moderate growth from 3.5% in
2005 to 3.8% in 2006.
Global growth underpinned by high growth in Asian
economies.
High oil prices, massive global macroeconomic imbalances
and tight macroeconomic stances in advanced economies
constrain global growth
Increased economic diversification, increased domestic
demand and regional integration are essential for Africa to
promote international competitiveness and sustain growth.
3
II. Overall Strong Performance in Africa in
2006
Africa sustains improved overall economic performance (5.7%), up
from 5.3% in 2005 and 5.2% in 2004
5.7
6
5.2
5.4
5.3
5.2
4.7
5
4
3
2
1
0
Africa
2004
2005
SSA
2006
4
High growers vs. least performers: growth at the top and
stagnation at the bottom
Only 3 of the
top 5
performers
in 2006 were
among top
performers
during 19982006 but the
least 5
performers
remained
the same
during 19982006.
Angola
17.6
Mauritania
14.1
Sudan
9.6
Ethiopia
8.5
Libya.
8.1
Liberia
8.1
Mozambique
Congo, R.
7.9
7.5
Malawi
6.9
Congo DR
6.4
Swaziland
1.2
Comoros
1.2
Cote d'Ivoire
1.2
Seychelles
-4.4
-6
1
Zimbabwe
-1
4
9
14
19
5
Factors explaining improved economic
performance in Africa in 2006
1) Global economy: Strong global demand for key African export
commodities, resulting in high export prices, especially for crude
oil, metals and minerals.
2) Improvement in macroeconomic management in many countries



Improved domestic balances, but pressure from oil prices threatens
price stability
Overall external balances remain stable
Sustainability of both internal and external balances is a major
challenge for oil importers and landlocked countries
3) Debt relief and external capital flows, especially ODA and FDI
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Factors explaining improved economic
performance in 2006 (cont’d)
4) Strong performance in key sectors:




Agriculture remains the main driver of growth in
many countries; increased value added through
agriculture-related activities such as horticulture
(e.g. Kenya and Ethiopia)
Tourism is an important source of foreign exchange
earnings in many countries (South Africa, Egypt and
Morocco)
Industry is still resource-based
The service sector is large, growing, but remains
fragile.
5. Increased political stability (decline in conflicts)
7
Oil economies sustained the same high growth rate (6.1%) in 2006
and 2005, while non-oil economies increased growth from 4.6%
in 2005 to 5.2% in 2006.
7
6
5
4
3
6.1
6.1
5.9
5.2
4.1
4.6
2
1
0
2004
2005
Non-oil producers
2006
Oil producers
8
Non-oil non-mineral-rich countries grew even faster than mineral-rich
countries thanks to debt relief, aid flows, and improved
macroeconomic management, among other factors.
5.8
4.8
Percentage
6
5
4.9
4.8
4.1
3.7
4
3
2
1
0
2004
Non-oil Mineral-rich countries
2005
2006
Non-Oil Non-Mineral Countries
9
Resources remain the key factor explaining
variations in sub-regional performance
7
6 .4
6 .4
6 .1
5.8
5.6
6
5.4
5.1
Growth rate (%)
6 .3
5.9
5.2
5.2 5.3
5.2
5.7
4 .8
5
4 .2
3 .6
4
3 .7
3
2
1
0
East Africa
Southern
Africa
2004
West Africa
2005
North Africa Central Africa
Africa
2006
10
Despite improvement, Africa’s growth is
insufficient to meet its development goals
From 1998 to 2006, 25 per cent of African
countries recorded a growth rate of less than
3%.
The growth rates remain very low for the
majority of African countries
Only 5 countries achieved an average growth
rate of 7% or higher from 1998 to 2006.
At this pace, most countries will be unable to
reach the MDGs by 2015.
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IV. Social development remains limited: Slow progress
towards the MDGs especially in SSA
Poverty rate remained virtually unchanged in SSA (44.6% in 1990
and 44% in 2004) and increased in North Africa from 2.2% to
2.4%.
Literacy rates rose from 67.4% to 73.1% in SSA and from 66.3%
to 84.3% in North Africa.
Gender equality improved, with the gender parity ratio rising
from 0.8 to 0.88 for SSA and from 0.73 to 0.91 for North Africa.
Child and maternal mortality remain high
HIV/AIDS and other pandemics remain a major challenge for
Africa, calling for more budget allocations for prevention and
treatment
More needs to be done for Africa to improve access to sanitation
and safe water and to ensure environmental sustainability.
12
V. Growth prospects for 2007: Positive outlook for
2007
Projected real GDP growth in 2007 by region
7
6.6
6.0
5.8
6
5.4
4.9
5
3.5
4
3
2
1
0
North
Africa
East Africa
Africa
Southern
Africa
West
Africa
Central
Africa
13
Factors of medium-term growth
Favourable factors

Global demand for African products is expected to remain
upbeat due to economic recovery in major industrialized
countries

Continued improvements in macroeconomic
fundamentals

Delivery of the promised aid and debt relief will allow
African countries to boost expenditures in key sectors
including infrastructure and social services.
14
Unfavourable factors

Lack of diversification of production and export base

High oil prices will hurt oil importers through the current
account and inflationary pressures

Inefficient public infrastructure and unreliable energy
supply at the national level as well as poor integration of
transportation and energy network at the regional level

Political instability in some countries

Weather conditions and fluctuations in commodity prices
15
Policy recommendations
Africa needs to increase and sustain growth to
accelerate social development through:
1. Improved macroeconomic management
2. Increased domestic investment which requires
mobilization of internal and external resources
3.
Diversification away from resource sectors and
promoting international competitiveness
16
Policy recommendations contd.
4. Improved infrastructure (especially
transport and energy supply)
5. Adoption of a more innovative
approach to growth and pro-poor
policies
6. Fighting HIV/AIDS and other diseases
17
Thank You For Your Attention
18