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Louis Kasekende Chief Economist African Development Bank - PowerPoint PPT Presentation


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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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slide1

UNECA

27 June 2008

Louis Kasekende

Chief Economist

African Development Bank

slide2

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

slide3

The commodity boom: a key driver for Africa

Drivers

Global commodity prices 2001-2009

Source: OECD Development Centre / World Bank, 2008

slide4

Improved macroeconomic framework

Drivers

Source: OECD Development Centre / African Development Bank, 2008

* ExcludingZimbabwe

** Estimations for 2007 and predictions for 2008/09

slide5

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

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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

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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

slide8

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).

slide9

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.

slide10

Slow progress,despitegrowth

MDGs

Source: OECD Development Centre / African Development Bank, 2008

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UNECA

27 June 2008

Louis Kasekende

Chief Economist

African Development Bank