Macroeconomic Environment for Development: SADC Region

1. Macroeconomic Environment for Development: SADC Region Dr. A. Mondlane SADC SECRETARIAT 22 March 2010

2. The SADC Region was mainly affected by the secondary effects of the Global Economic Crisis

3. Cont’d • The region’s real GDP increased marginally by an estimated 0.1 per cent in 2009 down from an increase of 5.9 per cent recorded in 2008 • As a result of the depressed economic growth, the positive trend in per capita income recorded since 2006 was reversed in 2009. • Growth in per capita income was estimated to have declined by 1.2 per cent in 2009. • The rising food and fuel prices of late 2007 and 2008 resulted in high inflation for the region, i.e. above the targeted single digit. • Inflation has since slowed down but still in double digit by close of 2009.

4. Cont’d • Declining demand on the international market affected exports of the region. • The current account deteriorated due to unfavourable terms of trade. • Foreign reserves declined due to low exports and as countries drew down their reserves to complement falling government revenues. • With falling economic growth and exports, government revenues were affected resulting in widening fiscal balances which were partly offset by borrowing as indicated by increases in external borrowing.

5. Cont’d • Prospects for 2010 look assuring with most of the indicators expected to improve. • The challenge for the region remains the need for: • Diversified economies • Additional sectors that are flexible to complement the traditional sectors. • Improvements in productivity in the existing sectors (agriculture). • Skilled labour force that can add to improvements in productivity and generate new sectors even in the event of a crisis.