Africa and the global crisis: Can Africa continue to grow?
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The document discusses the significant impact of the global crisis on Africa's growth, highlighting regional disparities in economic performance and growth projections. Oil exporters are the hardest hit, while oil-importing countries show resilience due to diversification and prudent macroeconomic policies. It emphasizes the need for African governments to implement structural reforms and maintain focus on poverty reduction to sustain growth despite the crisis.
Africa and the global crisis: Can Africa continue to grow?
- 1. Léonce Ndikumana Director, Research Department African Development Bank 23 April 2009 Africa and the global crisis: Can Africa continue to grow? 9th Intenational Economic Forum on Africa, Paris, 5 June, 2009
- 2. Growth Africa still growing but slowdown is significant Source : OECD Development Centre / African Development Bank. 2008 Real GDP Growth (%)
- 3. Global Crisis Taking a toll on Africa’s growth prospects GDP Growth projections – then and now Source : OECD Development Centre / African Development Bank. 2008 April 08 Nov 08 Feb 09 May 09
- 4. Growth Regional disparities (May forecasts) Southern Africa hit severely: Oil (Angola) Minerals (Botswana) 2007 2008(e) 2009(p) 2010(p) February May February May GDP Growth Rate in percentage Central Africa 4.0 5.0 2.8 2.0 3.6 3.2 Eastern Africa 8.8 7.3 5.5 5.1 5.7 5.5 Northern Africa 5.3 5.8 3.3 3.5 4.1 4.1 Southern Africa 7.0 5.2 0.2 -1.0 4.6 3.6 Western Africa 5.4 5.4 4.2 3.3 4.6 3.4 AFRICA 6.1 5.7 2.8 2.3 4.5 4.0 Memorandum items Sub-Saharan Africa 6.4 5.5 2.4 1.4 4.7 3.8 Oil-exporting countries 6.8 6.6 2.4 2.5 4.5 4.1 Oil importing countries 5.4 4.6 3.3 2.1 4.5 3.8
- 5. Trade The global trade collapse is now hitting Africa A cold shower for hard commodity exporters Soft commodity exports prove more resilient After years of boom, world trade is expected to contract by 13% in 2009 Source : African Economic Outlook, based on World Bank, 2009 Hard commodities Soft Commodities Source : Datastream, 2009 - 94% Source : African Economic Outlook, 2009 - 112%
- 6. Private financial flows A global retrenchment of capital Source : OECD Development Centre , based on UNCTAD 2009 Source : OECD Development Centre , based on World Bank, 2009 Remittances Foreign Direct investment Flows to Africa grew by 17% to over USD 60 billion in 2008, despite the global slowdown Remittances to Sub-Saharan Africa are set to decline by 4.5%- 8% over 2009 Stock markets have taken a severe hit Stock Markets (MSCI price index local currency) Source : Thomson Datastream 2009
- 7. Global Crisis A patchwork of impacts Source: African Economic Outlook, 2009 Oil exporters are taking the most severe hit More globally integrated economies, such as South Africa and Egypt, are strongly affected Low-income / non-oil exporting countries are less affected, because: 1. decrease in energy bill 2. less integration to the world economy - 2 to- 3 % Zero to – 1.9 % Greater than 3 % Increased growth between 2008-09 Growth deceleration 2008 - 2009 African growth has taken a serious hit: 2008: near 6% 2009: below 3%
- 8. Oil Exporters The price of having all eggs in one basket Source : OECD Development Centre / African Development Bank *: African Economic Outlook forecasts … and little room left for manoeuvre Many oil exporters did not take advantage of commodity windfalls to improve governance and diversify their economies Nevertheless, some oil exporters have performed well in terms of lowering levels of external debt Taking a clear hit from the oil price fall…
- 9. Oil Importers Proving resilient… so far Source : OECD Development Centre / African Development Bank *: African Economic Outlook forecasts Oil-importing countries have performed well, diversifying their sources of growth over recent years. While lower energy and food prices subsequent to the crisis have helped importers, difficult times lie ahead Good performers’ strengths : Sustained and prolonged growth Prudent macroeconomic policies More Diversification Challenges: Poor capacity in mobilizing domestic resources Contain fiscal and current account deficits High dependency on ODA Prioritise poverty reduction Difficulty adjusting to price shocks Holding up against the crisis so far… … yet challenges rising
- 10. Crisis Main messages Africa has been hit severely; the impact varies across countries and sectors Changes in the direction of trade, prudent macroeconomic policies and debt relief make Africa better positioned to weather the current crisis. African governments have to preserve the gains obtained in the recent past, by pursuing structural reforms, infrastructure development and targeting poverty reduction. With the right combination of domestic policy reforms, Africa can continue to grow despite the crisis, while setting the stage to faster growth for the future.
- 11. Léonce Ndikumana Director, Research Department African Development Bank 23 April 2009 Africa and the global crisis: Can Africa continue to grow? 9th Intenational Economic Forum on Africa, Paris, 5 June, 2009