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Mr. Sanjeev Gupta, Mr. Kevin J Carey, and Mr. Ulrich Jacoby

Abstract

What is the impact on trade in sub-Saharan Africa of the recent rapid growth in China and other Asian countries, and the associated commodity price boom? This paper looks at how trading patterns (both destinations and composition) are changing in sub-Saharan Africa. Has the region managed to diversify the products it sells from commodities to manufactured goods? Has it expanded the range of countries to which it exports? And what about the import side? The time is ripe for sub-Saharan African countries to climb up the value chain of their commodity-based exports and/or achieve an export surge based on labor-intensive manufacturing.

Mr. Sanjeev Gupta, Mr. Kevin J Carey, and Mr. Ulrich Jacoby

United States. Because the calculations in Table 12 reflect characteristics of a trading pair, they cannot be exclusively interpreted in terms of the sub-Saharan African trading partner. 26 For example, sub-Saharan Africa’s large overtrading with China is a reflection of China’s high participation in global trade, although the calculation does plausibly indicate that overtrading is highest with the resource-intensive group. The results for the United States again point to resource-driven trade, although the big difference between calculated undertrading for coastal

International Monetary Fund

markets Global growth is expected to gradually strengthen, from 3.3 percent in 2013–14 to 3.8 percent in 2015 ( Figure 1.1 ). The acceleration is projected to be largely driven by advanced economies, most notably the United States and the United Kingdom. The euro area has exited recession, but growth remains anemic, hampered by high unemployment, large debt stocks, and tight private sector borrowing conditions in some countries. Meanwhile, activity is expected to decelerate in emerging markets in 2014, including in key sub-Saharan African trading partners, before

Francisco Arizala, Mr. Matthieu Bellon, Ms. Margaux MacDonald, Mr. Montfort Mlachila, and Mustafa Yenice

annual rate of growth of real GDP, sub-Saharan African trading partner growth refers to the weighted average rate of growth of the trading partners from sub-Saharan Africa for each country at time t . Non-sub-Saharan Africa trading partner growth corresponds to the weighted average rate of growth of the trading partners from outside the region for each country at time t ( Arora and Vamvakidis 2005 ; Chen and Nord 2017 ). The weights used in averaging refer to export shares in the previous year. The vector X of controls includes variables capturing regional and

Francisco Arizala, Mr. Matthieu Bellon, Ms. Margaux MacDonald, Mr. Montfort Mlachila, and Mustafa Yenice
After close to two decades of strong economic activity, overall growth in sub-Saharan Africa decelerated markedly in 2015–16 as the largest economies experienced negative or flat growth. Regional growth started recovering in 2017, but the question remains of how trends in the economies stuck in low gear will spill over to the countries that have maintained robust growth. This note illuminates the discussion by identifying growth spillover channels. The focus is on trade, banking, financial, remittance, investment, fiscal, and security channels, which are the most prominent and most likely to transmit growth trends across borders. In addition to bringing together findings from a broad array of existing research, the note identifies countries that are the most likely sources of regional spillovers and those that are most likely to be impacted, and provides estimates for the size of these channels. It finds that intraregional trade and remittance flows are an important channel for growth spillovers, while banking channels are less important but will remain a risk going forward. Finally, the note documents other important spillover channels through financial markets contagion, revenue-sharing arrangements in fiscal unions, commodity-pricing policies, corporate investment, and forced migration. The main takeaway is that the level of interdependence among sub-Saharan countries is higher than is generally assumed. Consequently, there is a need for additional emphasis on regional surveillance and spillover analysis, along with traditional bilateral surveillance.
International Monetary Fund. African Dept.

surprised on the upside in the euro area and China and was strong in India, the three export destinations that account for the bulk of sub-Saharan Africa’s exports to the rest of the world ( Figure 1.3 ). Figure 1.3. Sub-Saharan Africa Trading Partners: Real GDP Growth, 2010–17 Source: IMF, World Economic Outlook database. Note: The width of the bars corresponds to the countries’ share of exports as a percentage of total sub-Saharan African exports in 2016. Avg. = average. Low commodity prices continue to weigh heavily on sub-Saharan Africa’s growth

International Monetary Fund. African Dept.

? Impulse responses suggest that independent shocks to credit conditions in Europe, such as those that would take place under episodes of European banking stress, would tend to contract economic activity in the main sub-Saharan African trading partners. The contraction of credit in Europe would adversely affect credit conditions in South Africa, commodity-exporting, and developing sub-Saharan African economies. Although small, the effect is non-negligible. On the other hand, credit dynamics in sub-Saharan African frontier markets appear to be unrelated to those in Europe