Growth performance in sub-Saharan Africa (SSA) remains buoyant in a wide range of countries despite a continued worsening of the terms of trade of the oil importers.1 Against a background of an easing of demand for imports in advanced countries, average real GDP growth is now expected to decline slightly in 2005 from its strong performance in 2004. The slowdown in 2005, however, is attributable primarily to lower growth in most of the oil-producing countries following the exceptional increases in oil-production capacity established during 2003 and 2004, especially in Nigeria; non-oil-producing countries are expecting average growth of about 4.5 percent, similar to that observed in 2004. Nonetheless, the number of countries anticipated to achieve growth in excess of 5 percent is expected to increase, while the number growing by less than 2 percent is expected to decline. Real GDP growth in SSA is projected to rebound to 5.3 percent in 2006. Growth in SSA, however, remains below the levels observed in other developing country regions and is still insufficient for most countries to achieve the income-poverty Millennium Development Goal (MDG).
An easing of output growth among some oil producers is expected to lower real GDP growth in SSA during 2005 from the eight-year high in 2004 (Table 2.1). After exceptionally strong increases in oil production in Chad and Equatorial Guinea during 2004, output growth rates in these countries have eased this year; output in Nigeria is expected to grow by only 3.9 percent in 2005, down from the 6.0 percent it registered in 2004. Nonetheless, performance continues to be encouraging across a broad range of SSA countries, with real GDP growth in non-oil-producing countries expected to remain at 4.5 percent in 2005. Excluding South Africa and Nigeria, average output is expected to increase by 5.0 percent in 2005, and average per capita real GDP in the region to rise by 2.6 percent.1 Real growth in SSA, however, does not yet match the levels witnessed in other developing country regions. Moreover, growth in five countries (Central African Republic, Comoros, Côte d’Ivoire, Gabon, and Zimbabwe) has remained below 3 percent in each of the past four years, and GDP per capita is continuing to decline.
The average growth rate for SSA as a whole is projected to rebound to 5.3 percent in 2006 primarily because of rising petroleum output in oil-producing countries and some pickup in import growth in advanced countries. Output growth in oil-producing countries is forecast to increase significantly from 4.7 percent to 8.1 percent. This reflects stronger growth in Angola and Nigeria. In the latter, growth is expected to pick up to about 4.9 percent as a major offshore oil field comes onstream. Growth is also expected to be particularly strong in Chad.
Mr. David Coady, Valentina Flamini, and Matias Antonio
Technology is generating a global convergence. A "big bang" of information—and education as well—is improving human lives. And with global interconnectivity growing by leaps and bounds, we are all witness to a rapid spread of information and ideas. But, as we have seen from the prolonged global financial crisis, our interconnectedness carries grave risks as well as benefits. This issue of F&D looks at different aspects of interconnectedness, globally and in Asia. • Brookings VP Kemal Devis presents the three fundamental trends in the global economy affecting the balance between east and west in "World Economy: Convergence, Interdependence, and Divergence." • In "Financial Regionalism," Akihiro Kawai and Domenico Lombardi tell us how regional arrangements are helping global financial stability. • In "Migration Meets Slow Growth," Migration Policy Institute president Demetrios Papademetriou examines how the global movement of workers will change as the economic crisis continues in advanced economies. • "Caught in the Web" explains new ways of looking at financial interconnections in a globalized world. • IMF Managing Director Christine Lagarde provides her take on the benefits of integration and the risks of fragmentation in "Straight Talk." Also in this issue, we take a closer look at interconnectedness across Asia as we explore how trade across the region is affected by China's falling trade surplus, how India and China might learn from each others' success, and what Myanmar's reintegration into the global economy means for its people. F&D's People in Economics series profiles Justin Yifu Lin, first developing country World Bank economist, and the Back to Basics series explains the origins and evolution of money.
The Zimbabwean economy has deteriorated progressively over the past four years. Executive Directors expressed deep concern about this, and stressed the need to implement strong macroeconomic, monetary, fiscal, and structural policies. They urged the Reserve Bank of Zimbabwe to ensure that banks meet all prudential regulations, and are adequately capitalized. They welcomed Zimbabwe's participation in the General Data Dissemination Standards, and urged the authorities to strengthen the country's data base to improve the analytical basis for economic policy formulation and IMF surveillance.
This note discusses the implications of the price shocks for the balance of payments of low-income countries in sub-Saharan Africa. The response by bilateral donors and multilateral institutions will, in practice, need to be country-specific. To this end, the note identifies a list of 18 countries in the region that are especially hard-hit and that consequently face a pressing need for additional balance of payments and budget support. The list reflects country circumstances and underlying assumptions as of May, and is subject to change; it is not meant to be definitive.
The sharp decline in oil and other commodity prices have adversely impacted sub-Saharan Africa. Nevertheless, the region is projected to register another year of solid economic performance. In South Africa, however, growth is expected to remain lackluster, while in Guinea, Liberia, and Sierra Leone the Ebola outbreak continues to exact a heavy economic and social toll. This report also considers how sub-Saharan Africa can harness the demographic dividend from an unprecedented increase in the working age population, as well as the strength of the region's integration into global value chains.
Economic growth in sub-Saharan Africa as a whole has fallen to its lowest level in 15 years, though with large variation among countries in the region. The sharp decline in commodity prices has severely strained many of the largest economies, including oil exporters Angola and Nigeria, and other commodity exporters, such as Ghana, South Africa, and Zambia. At the same time, the decline in oil prices has helped other countries continue to show robust growth, including Kenya and Senegal. A strong policy response to the terms-of-trade shocks is critical and urgent in many countries. This report also examines sub-Saharan Africa’s vulnerability to commodity price shocks, and documents the substantial progress made in financial develop, especially financial services based on mobile technologies.
This paper presents the economic outlook for Sub-Saharan Africa for 2005. Against a background of an easing of demand for imports in advanced countries, average real GDP growth is expected to decline slightly in 2005 from its strong performance in 2004. The slowdown in 2005, however, is attributable primarily to lower growth in most of the oil-producing countries following the exceptional increases in oil production capacity established during 2003 and 2004, especially in Nigeria. Non-oil-producing countries are expecting average growth of about 4.5 percent, similar to that observed in 2004.
Economic growth in sub-Saharan Africa this year is set to drop to its lowest level in more than 20 years, reflecting the adverse external environment, and a lackluster policy response in many countries. However, the aggregate picture is one of multispeed growth: while most of non-resource-intensive countries—half of the countries in the region—continue to perform well, as they benefit from lower oil prices, an improved business environment, and continued strong infrastructure investment, most commodity exporters are under severe economic strains. This is particularly the case for oil exporters whose near-term prospects have worsened significantly in recent months. Sub-Saharan Africa remains a region of immense economic potential, but policy adjustment in the hardest-hit countries needs to be enacted promptly to allow for a growth rebound.