SOUTHERN AFRICA ECONOMIC OUTLOOK

Transcription

1 SOUTHERN AFRICA ECONOMIC OUTLOOK Growth and Transformation Economic Governance and Knowledge management (ECVP) Abidjan, April 9, 2018

2 Outline Africa s economic performance is improving Southern Africa s growth performance is below average Despite a positive outlook, the Region is facing serious economic challenges Opportunities for diversification and infrastructure financing Suggested policy priorities for growth and employment 2

3 1. Africa s economic performance is improving: Growth in real output recovered in 2017 After tepid annual growth of 2.2 percent in 2016, average real GDP rebounded, reaching 3.6 percent in It is projected to grow 4.1 percent a year in 2018 and African countries grew above 5 percent in countries grew above 3 percent Growth was driven by: - improved global economic conditions; - better macroeconomic management; - recovery in commodity prices (mainly oil and metals); - sustained domestic demand, partly met by import substitution, and - improvements in agriculture production. 3

4 2. Southern Africa s growth performance is below average Growth projections for 2018 and 2019 are 2.0% and 2.4% respectively, still insufficient for poverty reduction. North Africa 2018: 5.1% 2019: 4.5% 8 7 Africa West Africa 2018: 3.6% 2019: 3.8% Central Africa 2018: 2.4% 2019: 3.0% East Africa 2018: 5.9% 2019: 6.1% Southern Africa Africa : 3.6% 2019: 3.8% Southern Africa (e) 2018: 2.0% 2019: 2.4% 4

5 Southern Africa s growth is led by: Botswana, Madagascar, Mozambique and Zambia South Africa, the Region s economic powerhouse, performed below potential. 4 countries led growth in : Botswana (4.3%), Madagascar (4.1%), Mozambique (4.3%), and Zambia (3.8%). Their outlook is positive Southern Africa - Real GDP Growth, Main sectoral drivers: Services (3.9% during ) and Industry (3.2%). Agriculture contracted by -1.0% due to the drought, affecting several countries. Main demand side drivers: household consumption (70%) and public investment (24%) Southern Africa Angola Botswana Lesotho Madagascar Malawi Mauritius Mozambique Namibia South Africa Swaziland Zambia Zimbabwe (e) 2018(p) 2019(p) 5

6 3. Despite the positive outlook Southern Africa is facing serious economic challenges Southern Africa: Age Pyramid in 2016, Thousands The Industry sector declined from 30.8% of GDP in to 24.9% in South Africa s manufacturing s share in GDP declined from 21.2% in 1995 to 18.5% in 2005, and further to 5.7% in Like all of Africa, the region is facing severe job deficits and challenging demographics Income inequality: South Africa, the Region s most advanced economy, has the highest Gini coefficient in the word: 0.65 (2016). Other countries of the Region also have high inequality and poverty levels D3?:E3$ F:E3$

7 Exports have declined dramatically since 2012 and many of the top export products are unprocessed with little value addition Southern Africa Total Exports to Top 5 Destinations (Millions of US$) * EXPORTS, FOB Total Exports 205, , , , ,395 The Five Largest Destinations of Southern Africa Exports China 47,728 48,218 40,647 22,806 21,765 United States 15,678 13,267 10,540 7,835 8,282 India 11,322 10,712 10,166 7,368 7,223 South Africa 9,053 8,205 7,233 6,259 5,793 Germany 4,510 4,288 4,801 4,677 5,738 Main Products Exported from Southern Africa Petroleum oils, oils from bitumin. materials, crude 68,869 65,641 56,510 31,522 26,236 Pearls, precious & semi-precious stones 8,462 9,839 11,447 8,444 10,034 Silver, platinum, other metals of the platinum group 7,992 8,524 6,557 6,518 6,054 Motor vehicles for the transport of persons 4,133 3,782 4,459 4,783 5,321 Copper 6,789 7,188 7,255 5,710 4,782 Source: UNCTAD STAT *: estimates 7

8 It s a generic African problem: There is urgent need for structural transformation to accelerate economic diversification. Single most important export product, 1985 Single most important export product, 2015 Oil Food / Drinks Metals / Minerals Precious Metals Minerals Wood products Textile / Apparel Other Oil Food / Drinks Metals / Minerals Precious Metals Minerals Wood products Textile / Apparel Other 8

9 Dependence on commodities is reflected in low tax rates, which limit the government capacity

10 Debt trends must be monitored carefully The Bank is helping with new analytical work Total and External Debt Trends in Africa, Public Debt in a Sample of Southern African Countries (2016) External Debt (% of GDP) Total Debt (% of GDP) Mozambique /20 Zimbabwe 72 44/56 Mauritius 67 22/78 Malawi 54 61/39 Angola South Africa Lesotho % of GDP External/Domestic (% of total) 75/25 10/90 91/9 10

11 4. Opportunities for diversification and infrastructure financing At the global level: Upturn in commodity prices & positive FDI outlook New markets opening up for African exports Sustained growth and productivity improvements in large MICs open up new competitive niches and industrialization opportunities for LICs At the regional level: Rich endowment in mineral resources Well developed human capital base Increasing domestic demand from a growing middle class New momentum for regional integration, mainly via SADC & COMESA Large potential in agricultural industrialization, manufacturing, modern services including tourism 11

12 There are new potential sources of financing for Africa s infrastructure Assets managed by African institutional investors to rise from $670b. to $1.85 trillion Taxes $500 b. ODA $27 b. Remittances $63 b., $33 to SSA FDI $59 b. African Institutional Investors $670 b. Southern Africa Declining FDI, from 34 bn in 2013 to 22 bn in 2016 Declining ODA, from 8.5 bn to 7 bn during the same period Type of investor 2012 ($ billion) 2020 ($ billion) Pension funds 300 1,100 Insurance companies Sovereign wealth funds Total 670 1,845 12

13 5. Suggested Policy Priorities for Growth and Employment Strengthen macro policies fiscal, monetary, exchange rate and domestic resource mobilization; Improve debt management and public investment (Advisory services) Promote specific sectors/industries with high potential for economic transformation, diversification, with a special focus on agriculture and industrialization (Blueprints for staple crop processing zones, SEZs, and industrial parks and projects and programs) Proactive strategies to attract FDI and more private funding to infrastructure projects, focusing on risk mitigation (Advice on pragmatic approaches to prioritize infrastructure strategically and identify new financing instruments, Africa Investment Forum, knowledge products, and technical assistance). 13

14 Post-Scriptum: Expected GCI dividends the Bank, would be able to scale up its production of customized knowledge and other nonlending services Analytical and Advisory Activities, with a uniquely African perspective Granular research and timely policy reports Capacity building for economic policymaking (local stakeholders and thinktanks involved in our work) Targeted technical assistance The Bank as a knowledge institution: Sample of analytical work undertaken in Southern Africa Botswana: Technical Assistance to Privatization. Botswana: Water Sector Study (2017). Madagascar: Public Financial Management Modernization Plan (PSMPF) Zimbabwe: Policies for Jobs and Prosperity Zambia: Transport Sector Master Plan (2017). Zambia: Cost of Service Study Energy Sector (ongoing). Madagascar: Review of Governance Practices in the Electricity Subsector (ongoing). South Africa: Study on Effective Delivery of SOEs Development Mandate (2018). 14

15 Thank you. Merci beaucoup. Ngiyabonga. enkosi. Amesegnalehu. Yakenele. Mahadsanid. Layout and Design: Communications and External Relations Department 15