Overview of Recent Economic and Social Conditions in Africa

1
Overview of Recent Economic and Social Conditions
in Africa

• Economic Commission for Africa
• Addis Ababa

2
Outline of Presentation

• Africas Recent Economic Performance
• Comparison Across Regions
• Explanations for Africas Economic Performance
• Relation to the Millennium Development Goals
• The Way Forward

3
Africas Recent Economic Performance

• Relative to the 1980s and the early 1990s, there
  has been an improvement in Africas economic
  performance
• Annual average growth rate of real GDP was 2.1
  over the period 1980-90 5.4 in 1995-96 and
  3.2 in 2000-2001
• In 2003, real GDP growth rate in the region was
  3.6, up from 3.2 in 2002.

4
.distribution of the 2003 growth rate is uneven
across sub-regions
5
How does Africas economic Performance Compare to
those of other regions?
6
Explaining Africas Economic Performance

• As in the past, global and domestic factors
  account for Africas recent economic performance

7
Global Factors

• Strengthening of growth in the global economy
• World output increased from 3.0 in 2002 to 3.9
  in 2003. Africas growth rate in 2003 is close to
  that of world output.
• Events in the global economy affect Africa
  because countries in the region depend on exports
  for revenue as well as foreign exchange needed
  for imports of intermediate and final goods used
  by domestic firms and consumers

8

• Increase in commodity prices, mostly in the
  second half of 2003. This has a positive effect
  on growth because several countries in the region
  depend on export of commodities
• HIPC debt relief has eased debt burdens in
  recipient countries thereby boosting growth.

9
Domestic Factors

• An improvement in the macroeconomic policy
  environment
• Low current account deficit
• Better fiscal management
• Low inflation
• Relatively good weather condition, especially in
  North Africa
• Reduction of political instability in several
  countries Liberia, Angola, Democratic Republic
  of Congo etc.

10
Why has Recent Growth Performance Been Modest?

• The negative contagious effect of continuing
  political instability in some countries in the
  region Cote dIvoire, Zimbabwe
• Higher oil prices, which have negative effects on
  growth in oil importing countries in the region
• Slow pace of recovery in the Euro Area, an
  important trading partner of several African
  countries.

11
Relation to Millennium Development Goals

• Recent improvements in economic performance in
  Africa are insufficient to address the key
  development challenge of the continent
• There is the need to find ways to increase as
  well as ensure the sustainability of growth in
  the region
• This is particularly important because, if
  current growth trends continue, several countries
  in the region cannot achieve the Millennium
  Development Goals (MDGs)

12
In 2003, only 4 countries achieved the growth
target required to meet the MDGs
13
The Way Forward

• Achieving sustained economic growth and poverty
  reduction remains the key challenge facing the
  African region
• Confronting this challenge effectively requires
  actions at the domestic as well as international
  level.

14
Domestic Actions

• Sustained macroeconomic stability as well as an
  improvement in the investment environment
• Reducing the incidence of conflicts
• Increasing the pace of regional integration
• Dealing with the HIV/AIDS pandemic

15

• Instituting a credible commitment mechanism to
  reduce the risk of policy reversals and
  implementation failures. The African Peer Review
  Mechanism can play a vital role here
• Paying more attention to the nature and quality
  of growth to ensure that it is pro-poor
• Maximizing the gains from the PRSP process by,
  for example, ensuring that funds released from
  HIPC debt relief are used for projects that have
  significant impact on poverty

16
International Actions

• Finding more effective solutions to the debt
  issue. Improving the HIPC process will be a good
  start
• Dealing effectively with the marginalization of
  Africa in the global economy
• More market access
• Reduction of OECD agricultural support
• Enhanced Special and Differential Treatment
  Provisions
• More and better aid flows

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• Enhanced mutual accountability between Africa and
  its development partners
• Strengthening the PRSP process
• More local ownership
• More resources
• Paying attention to infrastructure provision