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1 UNECA Louis Kasekende Chief Economist African Development Bank 27 June 2008 UNECA.

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Presentation on theme: "1 UNECA Louis Kasekende Chief Economist African Development Bank 27 June 2008 UNECA."— Presentation transcript:

1 1 UNECA Louis Kasekende Chief Economist African Development Bank 27 June 2008 UNECA

2 2 Growth Africa continues steady growth Total OECD Africa Source: OECD Development Centre / African Development Bank, 2008 Real GDP Growth Real GDP growth expected to exceed 5% for the sixth consecutive year in 2008, and reach 5.9% 2007: 25 countries over 5% 2008: 31 countries over 5% 2007: 13 countries between 3-5% 2008: 16 countries between 3-5% Growth in 2009 will remain sustained at 5.9%

3 3 UNECA Drivers The commodity boom: a key driver for Africa Global commodity prices Source: OECD Development Centre / World Bank, 2008

4 4 UNECA Drivers Improved macroeconomic framework * Excluding Zimbabwe ** Estimations for 2007 and predictions for 2008/09 Source: OECD Development Centre / African Development Bank, 2008 Fiscal Balance % GDPCurrent account % GDPInflation Average Average ** Average Average ** Average Average ** Central1.68.6Central Central East East East68.7 North-1.26North North South South South* West West West AFRICA AFRICA0.83.8AFRICA*86.4

5 5 UNECA Growth Oil exporters and importers: future re-convergence? Source: OECD Development Centre / African Development Bank, 2008 Net Oil exporters: Algeria, Angola, Cameroon, Chad, Congo, Côte d'Ivoire, Congo DRC, Egypt, Equatorial Guinea, Gabon, Libya, Nigeria, Sudan Real GDP Growth Growth rates for oil importer and oil exporter countries diverged significantly in 2007 and 2008 Growth will remain strong in 2008 with 31 countries showing GDP growth above 5% However, this difference is set to narrow in 2009, due to: - Slower growth of oil production in Angola - Growth recovery in Kenya and South Africa

6 6 UNECA Oil Exporters Performance and threats Source: OECD Development Centre / African Development Bank *: African Economic Outlook forecasts …but poor diversification & governance Strong growth… Oil-exporting countries have a historical opportunity to pull ahead, yet many remain mired in poor governance, not using oil windfalls to finance broad development. Good performers’ assets: Sustained and prolonged growth Improving macro management Rising Investment in non-oil sectors Challenges: Poor diversification and governance Structural declining productivity of oil fields Capitalise on windfall gains and maximise spillover to rest of the economy Avoid Dutch Disease

7 7 UNECA Oil Importers Performance and threats 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. However, rising inflation, food prices and lower global demand for non-resource exports signal rougher waters ahead. Good performers’ assets : Sustained and prolonged growth Prudent macroeconomic policies Good Diversification Decreasing poverty Challenges: Contain fiscal deficits, streamline spending High dependency on ODA Finance widening trade deficit Prioritise poverty reduction Vulnerability to climatic and price shocks Good performance… …yet challenges rising

8 8 UNECA Challenges Energy crises threaten prospects Natural causes Oil price shock Conflict / Post-conflict High growth/ low investment / structural issue Source: Briceno-Garmendia (2006); Eberhard and others (2008). Countries Vulnerable to Energy Shortages: Installed capacity in SSA is insufficient to respond to high growth rates and increasing demand 25 countries currently experiencing severe energy shortages. Crises have been worsened by South Africa shortages, Kenyan political crisis, droughts and high oil prices. A combination of high growth and low investment in energy infrastructures has created severe bottlenecks to development

9 9 UNECA Challenges Is political instability still declining in Africa? Qualitative data obtained from Marchés Tropicaux et Méditerranéens. Data is used to construct two indicators referring to: Political instability: occurrence of strikes, demonstrations, violence and coup d’état. Hardening of the political regime : incarcerations of opponents, measures threatening democracy such as dissolution of political parties, violence perpetrated by the police and the banning of demonstrations or public debates. AEO political stability indicators Political troubles and regime hardening Regime Hardening (LHS) Source: OECD Development Centre

10 10 UNECA MDGs Slow progress, despite growth Goal 1 Goal 2 Goal 3 Goal 4 Goal 5 Goal 6 Goal 7 Source: OECD Development Centre / African Development Bank, 2008

11 11 UNECA Louis Kasekende Chief Economist African Development Bank 27 June 2008 UNECA


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