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Louis Kasekende Chief Economist African Development Bank

UNECA. 27 June 2008. Louis Kasekende Chief Economist African Development Bank. Africa continues steady growth. Growth. 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%

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Louis Kasekende Chief Economist African Development Bank

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

  2. Africa continues steady growth Growth 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 willremainsustainedat 5.9% Africa Total OECD Source: OECD Development Centre / African Development Bank, 2008

  3. The commodity boom: a key driver for Africa Drivers Global commodity prices 2001-2009 Source: OECD Development Centre / World Bank, 2008

  4. Improved macroeconomic framework Drivers Source: OECD Development Centre / African Development Bank, 2008 * ExcludingZimbabwe ** Estimations for 2007 and predictions for 2008/09

  5. Oil exporters and importers: future re-convergence? Growth Real GDP Growth • Growth rates for oil importer and oil exporter countries diverged significantly in 2007 and 2008 • 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 Growth will remain strong in 2008 with 31 countries showing GDP growth above 5% 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

  6. Performance and threats Oil Exporters Strong growth… …but poor diversification & governance • 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 Source: OECD Development Centre / African Development Bank *: African Economic Outlook forecasts

  7. Performance and threats Oil Importers …yet challenges rising Good performance… • 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 Source: OECD Development Centre / African Development Bank *: African Economic Outlook forecasts

  8. Liberia Challenges Energy crises threaten prospects 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 Conflict / Post-conflict Natural causes Oil price shock High growth/ low investment / structural issue Source: Briceno-Garmendia (2006); Eberhard and others (2008).

  9. Is political instability still declining in Africa? Challenges AEO political stability indicators Political troubles and regime hardening Regime Hardening (LHS) Source: OECD Development Centre 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.

  10. Slow progress,despitegrowth MDGs Source: OECD Development Centre / African Development Bank, 2008

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

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