Economic growth in sub-Saharan Africa this year is set to drop to its lowest level in more than 20 years, reflecting the adverse external environment, and a lackluster policy response in many countries. However, the aggregate picture is one of multispeed growth: while most of non-resource-intensive countries—half of the countries in the region—continue to perform well, as they benefit from lower oil prices, an improved business environment, and continued strong infrastructure investment, most commodity exporters are under severe economic strains. This is particularly the case for oil exporters whose near-term prospects have worsened significantly in recent months. Sub-Saharan Africa remains a region of immense economic potential, but policy adjustment in the hardest-hit countries needs to be enacted promptly to allow for a growth rebound.
The five Regional Economic Outlooks published biannually by the IMF cover Asia and Pacific, Europe, the Middle East and Central Asia, Sub-Saharan Africa, and the Western Hemisphere. In each volume, recent economic developments and prospects for the region are discussed as a whole, as well as for specific countries. The reports include key data for countries in the region. Each report focuses on policy developments that have affected economic performance in the region, and discusses key challenges faced by policymakers. The near-term outlook, key risks, and their related policy challenges are analyzed throughout the reports, and current issues are explored, such as when and how to withdraw public interventions in financial systems globally while maintaining a still-fragile economic recovery.These indispensable surveys are the product of comprehensive intradepartmental reviews of economic developments that draw primarily on information the IMF staff gathers through consultation with member countries.
Ms. Nancy Louise Happe, Mr. Mumtaz Hussain, and Ms. Laure Redifer
This paper describes why the international community needs to act now to stand a chance of meeting the Millennium Development Goals (MDGs). The paper gives example of Ethiopia, one of the poorest countries in the world, with an estimated per capita income of about US$100. According to the World Bank, recent national household surveys find 44 percent of the people in Ethiopia cannot meet basic needs. The paper discusses that Ethiopia in many ways epitomizes why the MDGs are important and why more money is needed to achieve them.
Agriculture is an important sector of the Zimbabwean economy. At independence, land ownership was highly skewed, as the sector was dominated by a few commercial farms. The initial phases of land reform, along with liberalization of the agricultural sector throughout the 1990s, helped to increase Zimbabwe’s agricultural productivity, but these gains have been reversed over the past few years. After the bumper crop season of 1999/2000, yields have plummeted, owing to droughts and the disruption of commercial farming under the Fast-Track Land Reform Program. The future of the sector is largely dependent on the success of resettled farmers, which requires better weather conditions, the availability of inputs and capital, and a stable economic environment. Preliminary data for the 2002/03 crop season indicate that, for many of Zimbabwe’s main crops, production continues to be low.
Against the backdrop of lower commodity prices and a less-supportive global environment, economic activity in sub-Saharan Africa has decelerated sharply. The region’s output is only expected to expand by 1.4 percent in 2016, the worst growth performance in more than 20 years, and the loss in momentum over the last two years has been on par with the deep slowdowns of previous decades (Figure 1.1). While a modest recovery is in the cards for next year, to slightly less than 3 percent, even this will only be feasible provided there is prompt action to address the significant macroeconomic imbalances and heightened policy uncertainty prevalent in several of the region’s largest economies.
As elsewhere, exchange rate regimes in sub-Saharan African countries vary greatly, and have evolved over time. Recent IMF work on exchange rate regimes suggests that there is no single prescription, and that the appropriate regime for a country depends on the macroeconomic challenges facing the country and its particular circumstances (see Ghosh, Ostry, and Tsangarides 2010). The exchange rate regime in turn has bearing on economic outcomes, but alongside other macroeconomic policies as well as the strength and depth of institutions.
The 2014–15 Ebola epidemic in West Africa and the 2016 droughts induced by El Niño in parts of Eastern and Southern Africa have brought to the fore the economic and social costs posed by natural disasters in sub-Saharan Africa. Policymakers have struggled to manage the impact of these crises, which have had adverse effects on macroeconomic performance. The significant international spillovers and scale of humanitarian relief needs drive home the point that these challenges are a concern of global as well as regional scale.
The global economic environment continued to provide little stimulus for SSA in 2003.2 While world economic growth increased from 3 percent in 2002 to 3.8 percent last year, world import demand did not keep pace and expanded by only 3.2 percent in the advanced economies, where most SSA exports are marketed. In addition, the external terms of trade for the region as a whole were largely unchanged, improving by about 2 percent for the oil exporters and declining by a similar amount for the non-oil economies. Some non-oil exporters received a boost to their terms of trade from stronger commodity prices, especially cotton (up 37 percent), groundnuts (up 30 percent), and robusta coffee (up 25 percent). However, despite these price increases, most key commodity prices remain very low relative to historical averages. On the positive side, world inflation remained low, helping contain inflation in SSA countries with exchange rate pegs. In addition, lower world interest rates kept domestic interest rates in SSA lower than would otherwise have been.