Front Matter

Front Matter

Author(s):
International Monetary Fund. African Dept.
Published Date:
October 2012
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    © 2012 International Monetary Fund

    Cataloging-in-Publication Data

    Regional economic outlook. Sub-Saharan Africa.—Washington, D.C.: International Monetary Fund, 2003–

    v. ; cm.—(World economic and financial surveys, 0258-7440)

    Twice a year.

    Began in 2003.

    Some issues have thematic titles.

    1. Economic forecasting—Africa, Sub-Saharan—Periodicals. 2. Africa, Sub-Saharan—Economic conditions—1960–—Periodicals. 3. Economic development—Africa, Sub-Saharan—Periodicals. I. Title: Sub-Saharan Africa. II. International Monetary Fund. III. Series: World economic and financial surveys.

    HC800.A1 R445

    ISBN-13: 978-1-47551-079-9

    Publication orders may be placed online, by fax, or through the mail:

    International Monetary Fund, Publication Services

    P.O. Box 92780, Washington, DC 20090 (U.S.A.)

    Tel.: (202) 623-7430 Telefax: (202) 623-7201

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    Contents

    Abbreviations

    AMCON

    Asset Management Company of Nigeria

    AREAER

    Annual Report on Exchange Arrangements and Exchange Restrictions

    BEAC

    Banque des Etats de L’Afrique Centrale

    BIS

    Bank for International Settlements

    BRIC

    Brazil, Russia, India, and China

    CBN

    Central Bank of Nigeria

    CDS

    credit default swaps

    CEMAC

    Economic and Monetary Community of Central Africa

    CFA

    Currency zone of CEMAC and WAEMU

    CPI

    consumer price index

    EAC

    East African Community

    ECA

    excess crude account

    ECOWAS

    Economic Community of West African States

    EITI

    Extractive Industries Transparency Initiative

    FSB

    Financial Stability Board

    GDP

    gross domestic product

    GIIPS

    Greece, Ireland, Italy, Portugal, and Spain

    GNI

    gross national income

    GVAR

    global vector autoregression

    HDI

    Human Development Index

    HIPC

    Heavily Indebted Poor Countries

    LIC

    low-income country

    MDG

    Millennium Development Goals

    MDRI

    Multilateral Debt Relief Initiative

    MENA

    Middle East and North Africa

    MIC

    middle-income country

    MOU

    memorandum of understanding

    NEPAD

    New Partnership for Africa’s Development

    NGO

    nongovernmental organization

    NPL

    nonperforming loans

    OECD

    Organisation for Economic Co-operation and Development

    OLS

    ordinary least square

    PPP

    purchasing power parity

    QIE

    Quality of Institutions Estimate

    REER

    real effective exchange rate

    REO

    Regional Economic Outlook

    SACU

    Southern African Customs Union

    SBA

    stand-by arrangement

    SDR

    special drawing rights

    SEZ

    special economic zone

    SME

    small and medium-sized enterprises

    SSA

    sub-Saharan Africa

    SADC

    Southern Africa Development Community

    TFP

    total factor productivity

    UNCTAD

    United Nations Conference on Trade and Development

    UNDP

    United Nations Development Program

    USDA

    United States Department of Agriculture

    VIX

    Chicago Board of Options Exchange Volatility Index

    WAEMU

    West African Economic & Monetary Union

    WEO

    World Economic Outlook

    Acknowledgments

    This October 2012 issue of the Regional Economic Outlook: Sub-Saharan Africa (REO) was prepared by a team led by Alfredo Cuevas and Montfort Mlachila, under the direction of Séan Nolan.

    The team included Jorge Iván Canales-Kriljenko, Emily Forrest, Rodrigo Garcia-Verdu, Cheikh Gueye, Promise Kamanga, Seok Gil Park, Gonzalo Salinas, Jon Shields, Alun Thomas, Juan Treviño, and John Wakeman-Linn. Specific contributions were made by Trevor Alleyne, Antonio David, Floris Fleermuys, Nikoloz Gigineishvili, Ragnar Gudmundsson, Farayi Gwenhamo, Mumtaz Hussain, Christian Josz, Estelle Liu, Carla Macario, Calvin McDonald, Jean-Claude Nachega, Sweta Saxena, Yingying Shi, Sukhwinder Singh, Saji Thomas, Jean van Houtte, Oral Williams, and Kevin Wiseman; and with editorial assistance from Jenny Kletzin DiBiase. Natasha Minges was responsible for document production, with assistance from Anne O’Donoghue, and publishing assistance from Charlotte Vazquez. The editing and production was overseen by Joe Procopio of the External Relations Department.

    The following conventions are used in this publication:

    • In tables, a blank cell indicates “not applicable,” ellipsis points (…) indicate “not available,” and 0 or 0.0 indicates “zero” or “negligible.” Minor discrepancies between sums of constituent figures and totals are due to rounding.

    • An en-dash (–) between years or months (for example, 2009–10 or January–June) indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months (for example, 2005/06) indicates a fiscal or financial year, as does the abbreviation FY (for example, FY2006).

    • “Billion” means a thousand million; “trillion” means a thousand billion.

    • “Basis points” refer to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).

    In Brief

    Chapter 1: Maintaining Growth in an Uncertain World

    • Economic conditions in sub-Saharan Africa have remained generally robust against the backdrop of a sluggish global economy. Most low-income countries continue to grow, although drought in many Sahel countries and political instability in Mali and Guinea-Bissau have undermined economic activity. The situation is less favorable for many of the middle-income countries, especially South Africa, that are more closely linked to European markets. Inflation has been slowing, as pressures on food and fuel prices eased following a surge during 2011. The easing of inflation has been particularly noticeable in eastern Africa, helped by monetary tightening.

    • The near-term outlook for sub-Saharan Africa remains broadly positive, and growth is projected at 5¼ percent a year in 2012–13. Strong domestic demand, including from investment, is expected to support growth in many low-income countries, while a weak external environment will be a drag on growth in middle-income countries with significant trade links to Europe. With global commodity prices projected to remain soft and domestic climatic conditions improving, inflation is expected to decline to around 8 percent in 2012, and about 7 percent in 2013. The recent surge in international cereal prices is likely to exacerbate food insecurity in some places, and could be a threat to inflation if it intensifies.

    • Downside risks have intensified, mostly stemming from the uncertain global economic environment. Deteriorating conditions in the world economy could quickly spill over into sub-Saharan Africa, potentially reducing the regional growth rate by about 1 percent a year, with the actual impact dependent on both the severity and the duration of the global downturn. The impact would be most severe in countries where exports are undiversified and policy buffers low.

    • Policy settings should reflect specific country conditions. Policymakers should rebuild fiscal and external buffers where these remain low and where growth is as robust as envisaged under the baseline. If the global economy experiences a significant downturn, with knock-on effects on the region, then avoiding pro-cyclical fiscal contraction would be an imperative so long as the wider deficits can be financed. Many countries will be able to manage a downturn, via a mix of fiscal, monetary, and exchange rate measures—with the appropriate mix dependent on exchange rate arrangements, the ability to finance wider deficits, and the inflation situation.

    Chapter 2: Nigeria and South Africa: Spillovers to the Rest of Sub-Saharan Africa

    • South Africa’s linkages with the rest of sub-Saharan Africa are steadily intensifying, but are significant mainly within southern Africa. Countries in the Southern African Customs Union (SACU) and the Southern African Development Community, receive some spillovers through export demand effects, direct investment, and, in some cases, migration flows, although these spillovers are typically modest. Developments in South Africa appear to have minimal impact on the rest of sub-Saharan Africa.

    • Nigeria is an important export market only for a few neighboring countries, but financial linkages with countries further afield are growing with the regional expansion of Nigerian banks. Porous borders produce complex trade flows at the sub-regional level that are heavily influenced by tax/subsidy policies in Nigeria. Inflation in neighboring countries is sensitive to inflation developments in Nigeria.

    Chapter 3: Structural Transformation in Sub-Saharan Africa

    • Some degree of structural transformation—understood as the shift of workers from low to high average productivity activities and sectors—has been observed in most sub-Saharan African countries since 1995. There is significant heterogeneity within sub-Saharan Africa. Most oil exporters have seen sustained increases in average labor productivity through spillovers into the non-oil sector. In most middle-income countries, the pattern of structural transformation observed has included positive average labor productivity growth in the agricultural sector, as well as a declining share of agriculture in total GDP. In most non-fragile low-income countries agricultural productivity growth has been positive, although it is still low compared to middle-income countries and to other regions. In contrast, significant structural transformation is nearly absent in most fragile countries, which have generally experienced low and irregular growth.

    • The path to structural transformation seems to vary across sub-Saharan African countries. Depending on resource endowments, labor skills, and other factors, some sub-Saharan African countries may follow the Asian structural transformation path through low-wage manufacturing. Others, instead, may transform through services, while still others through the transformation of their agricultural sector. Irrespective of the path followed, structural transformation in sub-Saharan Africa could be accelerated through higher agricultural productivity growth, which requires investing more in the sector, and by narrowing the skills gap, improving the investment climate, and removing infrastructure bottlenecks.

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