Title: AFRICAN ECONOMIC OUTLOOK
1African Economic Outlook 2004/2005
African Development Bank / OECD Development Centre
2Outline of Presentation
- The African Economic Outlook (AEO) Project
- Highlights of the 2004/2005 Report
- Major Development Challenges facing African
Countries
3The AEO Project...
- Joint Publication of the ADB and the OECD
Development Centre - Objective Independent analysis of African
countries using a common methodology and targeted
at a broad audience - Core work Analysis of individual countries,
overall review of African economy, and focus on a
major theme each year SMEs in 2004/05 - Improvements in successive editions
- More intensive peer-review process
- Improved modelling and data harmonisation
- Broader Coverage
4Coverage 2004/2005 29 African countries
89 of GDP, 86 of population
5Highlights of 2004/2005 AEO
6Africa had the best GDP growth rate in eight
years ...
7Excluding N. Africa and S. Africa, GDP Growth
Rate was even better ...
8Considerable regional variations were observed
9Newer oil producers are growing most rapidly
2004 (e) 2005 (p)
Angola 10,9 14,7
Chad 31,3 10,8
Congo 4,0 9,4
Equatorial Guinea 59,8 -4,7
Real GDP growth rates, expected (e) and forecast
(p). (Source AEO).
10But reforming oil-importers are also doing quite
well
2004 (e) 2005 (p)
Ghana 5.8 5.9
Senegal 6.0 6.3
Mozambique 7.8 7.7
Tanzania 6.4 7.0
Uganda 5.9 5.4
Real GDP growth rates, expected (e) and forecast (p). (Source AEO). Real GDP growth rates, expected (e) and forecast (p). (Source AEO). Real GDP growth rates, expected (e) and forecast (p). (Source AEO).
11Factors Behind Improved Growth Performance
- External Factors
- Internal Factors
12OECD recovery has spurred African economies
Rates of real GDP growth (Sources AEO, IMF,
OECD).
13Rising oil and metals prices
14Africa is also benefiting from increased aid
flows...
DAC Members ODA 1990-2003 and simulations to
2006 and 2010, based on Monterrey and subsequent
commitments
15Decline in Debt / GDP ratio, although still high
for poor countries
16Internally, political stability is improving
17Macroeconomic management is improving Inflation
is largely under control ...
18Significant variations in regional inflation
rates
19Fiscal discipline is also generally good and
improving
20Regional variations in fiscal balance
21Despite recent improvements, major development
challenges remain
- Meeting the Millennium Development Goals (MDGs)
remains a major challenge for most African
countries - African economies remain highly vulnerable to
both external and domestic shocks
22Meeting the MDGs remains a challenge
23Further Reforms Required to Make Progress towards
the MDGs
- Maintain stable macroeconomic framework by
building on recent gains prudent use of
windfall gains is essential - Push through structural reforms and improve the
investment climate - Privatization of SOEs
- Governance reforms and institution
building/strengthening - Financial sector reforms
24Greater effort at diversification has to be made
Libya 1,17
Angola 1,19
Equatorial Guinea 1,23
Nigeria 1,26
Congo 1,52
Guinea Bissau 1,61
Chad 1,65
Burundi 1,66
Gabon 1,70
Sudan 1,71
Congo Democratic Republic 1,78
Africa 7,73
Export Diversification Index (inverse of sum of
squared shares of each exported good lower
numbers less diversified Source AEO).
25Regional cooperation and integration efforts need
to be strengthened
- Take advantage of the NEPAD initiative
- Streamline regional economic groupings
- Greater focus on promoting investment in addition
to trade - Greater effort to remove bureaucratic and other
barriers that still hinder trade and investment
26More efficient use of resources for human capital
development
- Africa would also need to build its human capital
to compete globally - More countries are increasing their investments
in education and health - Improving service delivery is now a major
challenge for most
27External Support will remain critical
- ODA -- Commission for Africa recommendation of
doubling ODA to Africa by 2010 -- 25
billion/year - Debt Relief UK proposal -- 100 percent debt
relief on debt owed to the IFIs - Trade Doha Round
- Dismantling of remaining trade barriers removal
of agricultural subsidies - Developing Africas Capacity to trade
28Conclusion
- Africa doing better due to favorable external
environment but, as importantly, due to internal
factors - Prospects for sustained improvement are good
- African countries would need to deepen their
reforms and carry out remaining structural
reforms - Africas development partners should scale up
their support in line with commitments
29Thank you!