Transcript Survey of Economic and Social Conditions in Africa in 2007

Survey of Economic and
Social Conditions in Africa
in 2007
Meeting of the Committee of Experts of the
1st Joint Annual Meetings of
the AU Conference of Ministers of Economy and Finance
and ECA Conference of Ministers of Finance, Planning
and Economic Development
26-29 March 2008. Addis Ababa, Ethiopia
1
Objectives of the Survey
Review recent growth performance at
continental and 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 economic and social policy issues
that deserve the attention of policy makers.
2
The Global Context
World growth slowed down from 3.9 per cent in 2006 to 3.7
per cent 2007 and is expected to slowdown further in 2008.
High oil prices combined with turbulence in financial markets
and slowdown in import demand in the US have contributed
to global slowdown.
But these effects have been partially mitigated by domestic
demand-led growth in other regions.
In this context, Africa has to encourage industrialization
along with increased domestic demand and regional
integration in order to promote international competitiveness
and sustain growth.
3
Africa achieved a 5.8 per cent growth rate
in 2007, up from 5.7 per cent in 2006
Real GDP growth (%), 2005-07
Percent
8
6
5.2
5.6
5.7
4.7
6.1
5.3
5.8
5.7
5.9
4
2
0
2005
2006
Africa
Africa, excl. NA
2007
North Africa (NA)
4
High growers vs. least performers
High growth
variability
across
countries
and
regions,
reflecting
the
vulnerability
of Africa’s
growth to
developments
in
commodity
markets
and political
instability
Angola
21.0
11.0
Sudan
Eq. Guniea
10.0
Liberia
9.5
Ethiopia
9.5
8.5
Malawi
Mozambique
7.5
Egypt
7.0
Gambia
7.0
T anzania
7.0
Mauritania
1.0
Comoros
1.0
Chad
-0.5
Zimbabwe
-2.5
Somalia -3.5
-5
0
5
10
15
20
25
5
Higher growth rates in all regions in 2007
relative to 2006, except North Africa
Growth is
widely shared
across
regions;
raising
regional
growth
requires
addressing
regional
constraints
such as poor
infrastructure
and energy
supply
7
6
6.2 6.0 6.3
5.5
5.8 6.0
6.1
6.0
5.1
5
4.6
5.9
5.7 5.8
5.2
4.7
4.5
4.2
4
3
2.0
2
1
0
East Africa
Southern Africa West Africa
2005
North Africa
2006
Central Africa
Africa
2007
6
Factors explaining Africa’s economic
performance in 2007
Strong commodity demand and continued high prices, especially
for oil and minerals, combined with favorable rainfall in most
countries.
Continued consolidation of macroeconomic stability and
improving macroeconomic management as well as greater
commitment to economic reforms. However,
i.
ii.
iii.
iv.
v.
Fiscal sustainability remains a challenge for oil-importing
countries
Inflationary pressure is intensifying in many African countries
External balances are also a concern for oil importing
countries
Currency appreciation threatens international
competitiveness, and
External debt sustainability is a challenge for many countries;
there is a need to increase non-debt generating external
resources.
7
Factors explaining Africa’s growth
in 2007 (cont’d)
Rising oil production in a number of countries
and increasing non-fuel exports.
Debt relief and increased private capital flows.
Decline in political conflicts and wars,
especially in West and Central Africa, though
peace remains fragile in some parts of the
continent.
8
Sectoral performance shows limited
diversification of the production base



Industry recorded the highest growth rate (5.7 per
cent), followed by agriculture (5.0 per cent).
But industrial growth was driven by high commodity
prices, especially for oil and gas, while manufacturing
growth remains modest.
Africa’s tourism potential remains largely unexploited,
while tourism is becoming a dominant sector in
economic activity worldwide.
9
Economic growth in Africa has not yet translated into
meaningful social development and inclusion of
vulnerable groups
Unemployment remains high at 11.5% and 9.7% in 2006 in NA
and Africa excluding NA, respectively.
Poverty rates are low in NA, but high and almost unchanged in
most countries in the rest of the continent.
Overall primary school enrollment rate increased to about 70%,
but remains below target.
Gender equality improved across Africa, while child and
maternal mortality remain high
HIV/AIDS and other pandemics remain a major challenge for
Africa: 68% of the 33.2 million people living with AIDS in the
world are in Africa. The AIDS prevalence rate was 5% in Africa
excluding NA in 2007.
Africa’s youth continue to face many challenges in the labour
market, while the elderly and the people with special needs
are marginalized.
10
Growth prospects for 2008: brighter outlook
despite risks
7
6.6
6.4
6.1
6
6.2
6.3
5.4
5
4
3
2
1
0
East Africa
West Africa
Nort h Africa
Africa
Sout hern
Africa
Cent ral Africa
11
Factors of medium-term growth
Favourable factors
It is assumed that robust demand for commodity exports and
high prices will continue with high growth in Asia and in the
absence of a significant slowdown in Europe.
Continued effective macroeconomic management, especially
efforts to contain inflationary pressures and ensure sound
exchange rate and commodity revenue management.
Delivery of the promised aid and debt relief beside increased
private capital inflows and domestic savings.
12
Unfavourable factors

Risk of sharper than expected slowdown in the US economy and a
fall in global commodity demand and prices.

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 networks at the regional level

Political instability in some countries

Weather conditions and inadequate agricultural technology (which
amplifies the effects of shocks).
13
Policy recommendations
Africa needs effective national and regional strategies to
address key economic and social development
challenges, including policies to:
Accelerate and sustain growth. This includes:
 Higher investment in infrastructure and energy supply
 Incentives for investment in new activities and sectors to
broaden production and export base.
 Increase domestic resource mobilization
Maximize benefits and confront the challenges of high oil prices
Translate development financing commitments into action
Translate economic growth into social development
Integrate socially excluded groups and provide for their needs
14
Thank You For Your Attention
15