World Economic and Financial Surveys

Regional Economic Outlook

Sub-Saharan Africa

Navigating Headwinds

APR 15

©2015 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: 978-1-49832-984-2 (paper)

ISBN-13: 978-1-47551-995-2 (Web PDF)

The Regional Economic Outlook: Sub-Saharan Africa is published twice a year, in the spring and fall, to review developments in sub-Saharan Africa. Both projections and policy considerations are those of the IMF staff and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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

E-mail : publications@imf.org

www.imf.org

www.elibrary.imf.org

Contents

• Abbreviations

• Acknowledgments

• Executive Summary

• 1. Navigating Headwinds

  • Global Backdrop: Not What It Has Been

  • Outlook: Growing (with) Pain

  • Falling Commodity Prices: A Tale of Two Africas

  • External Financing Conditions: The Times They Are A-Changin’?

  • The Impact of the Ebola Outbreak

• 2. How Can Sub-Saharan Africa Harness the Demographic Dividend?

  • Sub-Saharan Africa’s Demographic Transition

  • The Demographic Dividend: Channels and Challenges

  • The Demographic Dividend: International Experiences

  • Policy Options for Sub-Saharan Africa

  • Policy Scenarios

  • Conclusions

• 3. Global Value Chains: Where Are You? The Missing Link in Sub-Saharan Africa’s Trade Integration

  • International and Regional Integration Over the Last 20 Years

  • Trade Openness and Macroeconomic Performance

  • What Can Support Further Integration into Global Value Chains?

  • Conclusions

  • Annex 3.1. Recent Trends in Regional Financial Integration in Sub-Saharan Africa

  • Annex 3.2. Description of Econometric Models Used and List of Country Groups

• Statistical Appendix

• Bibliography

• Publications of the IMF African Department, 2009–15

• Boxes

• 1.1. Oil Price Shocks in Historical Perspective

• 1.2. Retail Gasoline Prices in Sub-Saharan Africa: The Impact of Lower International Fuel Prices

• 1.3. The Determinants of Sovereign Spreads

• 2.1. Defining Demographic Transition

• 2.2. Differing Transitions within Sub-Saharan Africa

• 2.3. Mauritius: Demographics and Development

• 2.4. Empirical Estimates of Demographic Dividends

• 3.1. Value Added Trade and Global Value Chains

• Tables

• 1.1. Sub-Saharan Africa: Real GDP Growth, 2015

• 1.2. Sub-Saharan Africa: Real GDP Growth

• 1.3. Sub-Saharan Africa: Other Macroeconomic Indicators

• 1.4. Sub-Saharan Africa: Terms of Trade

• 2.1. Assumptions of Policy Scenarios

• Figures

• Chapter 1

• 1.1. Sub-Saharan Africa: Real GDP Growth, 2008–16

• 1.2. Selected Commodity Prices, Change from June 2014–March 25, 2015

• 1.3. Sub-Saharan Africa: Real GDP Growth Projection 2015, Change from October 2014

• 1.4. Sub-Saharan Africa: Nominal Exchange Rate, National Currency to U.S. Dollar, September 2014–March 2015

• 1.5. Sub-Saharan African Oil Exporters: Fiscal Oil Revenue versus Oil Exports Share, 2013

• 1.6. Sub-Saharan African Oil Exporters: Fiscal Balance, 2014–16

• 1.7. Sub-Saharan African Oil Exporters: Current Account Balance, 2014–16

• 1.8. Sub-Saharan Africa: Budgetary Price of Oil, 2014–15

• 1.9. Sub-Saharan African Oil Exporters: Fiscal Adjustment and Impact on Real GDP Following the Oil Shock, Cumulative Decline Over 2015–16 under Different Scenarios

• 1.10. Sub-Saharan Africa: Real GDP Growth during Episodes of Oil Price Declines

• 1.11. Sub-Saharan African Oil Exporters: Fiscal Deposits and Projected Deficits, 2015–16

• 1.12. Sub-Saharan African Oil Exporters: External Reserve Assets and Projected Deficits, 2015–16

• 1.13. Sub-Saharan Africa: Commodity Exporters

• 1.14. Sub-Saharan Africa: Change in Terms-of-Trade Index, 2015 versus 2014

• 1.15. Sub-Saharan Africa: Selected Other Non-Oil Commodity Exporters, Fiscal Revenue Breakdown, 2013

• 1.16. Emerging Market Spreads: 2013–15 (as of March 25)

• 1.17. Selected Economies: Change in Sovereign Spreads since June-2013 and Fiscal Balance over 2015

• 1.18. Sub-Saharan Africa: Eurobond Issuances in Relation to Public Sector Contribution to Current Account Deficits, 2013–14

• 1.19. Sub-Saharan African Market Access Countries: Current Account Balance

• 1.20. Sub-Saharan African Market Access Countries: Change in Current Account Balance and Fiscal Balance, 2010–14

• 1.21. Sub-Saharan African Market Access Countries: Sovereign Spreads

• 1.22. New Confirmed Ebola Virus Disease Cases per Week

• 1.23. Sub-Saharan Africa: Real GDP Growth Forecasts, 2015

• 1.24. Changes in 2014–15 Revenue and Fiscal Balance Excluding Grants Compared to Summer 2014 Projections

• Chapter 2

• 2.1. Change in Working Age Population

• 2.2. Sub-Saharan Africa: Population Structure, 1950–2100

• 2.3. Sub-Saharan Africa: Population Under Three Scenarios, 1950–2100

• 2.4. Selected Countries: Share of Working Age Population at Different Stages of Transition, 1950–2100

• 2.5. Sub-Saharan Africa: Evolution of Shares of Working Age Population (SWAP)

• 2.6. Sub-Saharan Africa: Share of Working Age Population and Real GDP per Capita, 2010

• 2.7. Sub-Saharan Africa: Under-five Mortality and Fertility Rates, 2010–15

• 2.8. Real GDP per Capita and Fertility Rates

• 2.9. Sub-Saharan Africa: Population Trends by Region, 1950–2100

• 2.10. Global Trends in Share of Working Age Population, 1950–2100

• 2.11. Changes in Working Age Population: 1960–2060

• 2.12. Share of World Labor Force

• 2.13. Selected Regions: Real GDP per Capita Index

• 2.14. Selected Regions: Median Fertility Rates

• 2.15. Selected Regions: Median Share of Working Age Population

• 2.16. Selected Regions: Median Share of Agriculture in GDP

• 2.17. Selected Regions: Median Export Share in GDP

• 2.18. Selected Regions: Change in Share of Working-Age Population and Change in Exports Between t = 0 and t = 25

• 2.19. Selected Regions: Median Private Saving

• 2.20. Selected Regions: Median Public Saving

• 2.21. Selected Regions: Change in Share of Working Age Population and Change in Private Saving Between t = 0 and t = 25

• 2.22. Selected Regions: Median Public Saving and Share of Working Age Population from t = 0 to t = 25

• 2.23. Quality of Education Index, Median, 2014

• 2.24. Gross Secondary School Enrollment, Median, 2005 and 2014

• 2.25. Sub-Saharan Africa: GDP per Capita Under Various Scenarios

• 2.26. Sub-Saharan Africa: Demographic Dividend Relative to Scenario 1

• 2.27. Sub-Saharan Africa: Dividends Under Different Fertility Scenarios

• Chapter 3

• 3.1. Sub-Saharan Africa: Goods Export Shares by Partner, 1995–2013

• 3.2. Sub-Saharan Africa: Change in Export Shares, 1995–2013

• 3.3. Sub-Saharan Africa: Real Export Value Decomposition, 1981–2013

• 3.4. Sub-Saharan Africa: Change in Export Shares, 1995–2013

• 3.5. World Trade Centrality per Region, 2000–13

• 3.6. Sub-Saharan Africa: Regional Trade Centrality, 2013

• 3.7. Sub-Saharan Africa: Trade Openness, 1983–2011

• 3.8. Sub-Saharan Africa: Annual Growth in GDP per Capita

• 3.9. Selected Regions: Trade Openness and GDP per Person Employed, 1990–2011

• 3.10. Sub-Saharan Africa: Trade Flows Compared with Other Regions

• 3.11. Sub-Saharan Africa: Potential Increase in Trade

• 3.12. Depth of Integration in Global Value Chains and Real GDP per Capita, Average 1991–95 and 2008–12

• 3.13. Participation in Global Value Chains, Average 1991–95 and 2008–12

• 3.14. Sub-Saharan Africa and Comparator Countries: Depth of Integration into Global Value Chains, Average 2008–12

• 3.15. Sub-Saharan Africa: Depth of Integration into Global Value Chains, Average 1991–95 versus 2008–12

• 3.16. Selected Sub-Saharan African Countries: Contributions to Change in Share of Foreign Value Added in Exports by Sector, 1991–95 to 2008–12

• 3.17. Sub-Saharan Africa: Share of Manufacturing in the Economy, 2010 versus 1995

Abbreviations

African Development Bank

Brazil, Russia, India, and China

Bourse des Valeurs Mobilières d’Afrique Centrale

Bourse régionale des valeurs Mobilières

Economic and Monetary Community of Central Africa

Common Market for Eastern and Southern Africa

Direction of Trade Statistics

Domestic value added

East African Community

Community of West African States

Food and Agriculture Organization of the United Nations

Foreign direct investment

Flexible System of Global Models

Foreign value added

Gross domestic product

Global value chains

Inter-American Development Bank

International Monetary Fund

Input output

Organisation for Economic Co-operation and Development

Ordinary least squares

Regional Economic Outlook

Southern African Customs Union

Southern Africa Development Community

Sub-Saharan Africa

Share of the working age population

Unconventional monetary policy

United Nations Conference on Trade and Development

West African Economic and Monetary Union

Working age population

World Economic Outlook

World Food Programme of the United Nations

World Trade Organization

Acknowledgments

This April 2015 issue of the Regional Economic Outlook: Sub-Saharan Africa (REO) was prepared by a team led by Céline Allard under the direction of Abebe Aemro Selassie.

The team included Rahul Anand, Jorge Iván Canales Kriljenko, Wenjie Chen, Paulo Drummond, Idan Elmelech, Richard Erlebach, Jesus Gonzalez-Garcia, Cleary Haines, Mumtaz Hussain, Emmanouil Kitsios, Bhaswar Mukhopadhyay, Marco Pani, Francisco Roch, George Rooney, Vimal Thakoor, Juan Treviño, and John Wakeman-Linn.

Specific contributions were made by Derek Anderson, Sebastian Corales, Daniela Marchettini, Dirk Vaughn Muir, and Mauricio Villafuerte.

Natasha Minges was responsible for document production, with typesetting assistance from Charlotte Vazquez. The editing and production were overseen by Joanne Creary Johnson of the Communications Department with assistance from Martha Bonilla.