Mark
Foreword Nine years ago, when the African Economic Outlook project began, the world was in the midst of what seemed to be a robust growth path. There were bumps, of course, but the general trend was upwards and the interruptions were relatively localised and short-lived. In 2009, however, the picture is very different: the financial crisis has spread throughout the world economy, which is now caught in the deepest and most widespread recession for more than 50 years.
Acknowledgements The African Economic Outlook project is a joint initiative of the African Development Bank, the OECD Development Centre and the United Nations Economic Commission for Africa. The Report was drafted by a core team from the three partner institutions, supported by resource people in selected countries. The AfDB team was led by Barfour Osei and Beejaye Kokil in the Complex of the Chief Economist. The team at UNECA was led by Adam Elhiraika, and the team at the OECD Development Centre was led by Jose Gijon, Head, Africa and Middle East Desk, and Federica Marzo. Kenneth Ruffing served as Co-ordinator. The Outlook was prepared under the overall guidance of Louis Kasekende, Chief Economist, AfDB; Léonce Ndikumana, Director, AfDB Development Research Department; Désiré Vencatachellum, Acting Manager, Networking and Research Partnership Division, AfDB; Kiichiro Fukasaku, Head, Regional Outlooks Division, OECD Development Centre; Javier Santiso, Director, OECD Development Centre; and Mahamat Abdoulahi, Officer-in-Charge of the Trade, Finance and Economic Development Division, UNECA.
Preface This eighth edition of the African Economic Outlook reflects an important advance over previous editions, bringing us within striking distance of covering the entire continent. This has been made possible by an expanded partnership. In addition to continuing a particularly fruitful collaboration among the African Development Bank, the OECD Development Centre and the United Nations Economic Commission for Africa (UNECA), we have expanded the number of independent African research institutions involved in preparing country studies and participating in the dissemination of the AEO. And within the Bank, the country economists of the Operations Departments have played a greater role than ever before. Thus, this year’s edition sees a further increase in the coverage of the continent to 47 countries, up from 35 in 2008, covering 97 per cent of Africa’s population and 99 per cent of its economic output.
Algeria SINCE 2000 ALGERIA HAS CONSOLIDATED its economic growth, and the reforms undertaken are beginning to bear fruit. Growth in 2008 was 3.3 per cent and inflation 4.4 per cent. Having appreciated since 2007, the exchange rate of the dinar (DZD) remained close to its equilibrium value in 2008 (68 dinars to the US dollar [USD]), and unemployment stabilised at around 12 per cent of the active population. Strengthened by an average oil price of USD 99 per barrel in 2008, the Bank of Algeria built up foreign exchange reserves amounting to almost USD 142 billion. Following early repayments, total external debt fell to USD 460 million (0.27 of gross domestic product [GDP]), and internal public debt dropped by nearly 30 per cent. Weak growth of 0.2 per cent is expected in 2009, as a result of falling global demand and reduced prices of oil and gas.
Angola WITH GROWTH AVERAGING 20 PER CENT over the last three years, Angola ranks among the fastest-growing economies in the world. The growth rate slowed to an estimated 15.8 per cent in 2008 and is expected to turn negative in 2009 before rebounding in 2010. After 27 years of civil war, reconstruction is proceeding, largely financed by oil revenues, which have been developed through foreign investment by the major oil companies. Due to rising food prices, inflation increased to 13.2 per cent in 2008 but is expected to diminish as world commodity prices decline and domestic demand falls off. A technical accident lowered oil output in 2008. The fall in oil prices and the reduction of the production quotas of the Organisation of the Petroleum Exporting Countries (OPEC) will dampen growth in 2009.
Benin THE SOCIAL AND POLITICAL SITUATION in Benin has been relatively stable since the wide-ranging national consultation took place between 19 and 28 February 1990. This consultation, known as the Conférence nationale des forces vives (National Conference of Dynamic Forces), put an end to the deep social and political crisis that had existed in the late 1980s. Since 1990, Benin has become a model for political transition in sub-Saharan Africa. During this time, three presidents have taken the helm of the country following democratic presidential elections: Nicéphore Soglo (1991-96), Mathieu Kerekou (1996-06) and Thomas Yayi Boni (April 2006-present). Parliamentary elections also took place in April 2007. These elections ran smoothly, with Yayi’s supporters gaining a majority in parliament. Nevertheless, since local elections in April 2008, the president has been confronted with a rebellion in parliament. Political reshuffling has enabled the opposition to re-establish a majority in parliament, thus making it difficult for the government to deploy its programme.
Botswana BOTSWANA’S REAL ECONOMIC GROWTH is likely to slow in 2009, largely as a result of global economic conditions. The country’s growth rate is estimated at 3.9 per cent for 2008 and forecast at 2.6 per cent and 2.9 per cent for 2009 and 2010 respectively. Several factors are responsible for the slowdown: inflationary pressures in 2008 resulting from rising oil, electricity and imported food prices; a decline in diamond production and an anticipated decline in international demand for diamonds; and falling international commodity prices, especially for copper and nickel. Inflationary pressures from oil prices eased towards the end of 2008, but those from electricity and food prices persisted.
Burkina Faso THE BURKINA FASO ECONOMY PROVED resilient in 2008 despite a difficult national and international economic and financial climate. Prudent economic policy and pragmatic and targeted structural measures supported this outcome. GDP (Gross Domestic Product) growth for 2008 is estimated at 4.2 per cent – short of earlier forecasts for 4.7 per cent – but up from 3.6 per cent in 2007. The economy should continue to be resilient in 2009, with projected growth of 6 per cent and 4.2 per cent in 2010. Growth will be driven by two factors — a decline in raw material prices, which should lead to a drop in production costs and thus spur investment, and a significant shift of revenue to rural areas due to specific support measures for agricultural production and small producers.
Burundi THE MAIN EVENT OF 2008 WAS the signing of peace treaties between the government and the National Liberation Forces, the country’s last rebel movement. These agreements ratify the movement’s participation in the country’s political institutions, security organisations and the release of its prisoners. Nonetheless, on the eve of the 2010 elections, the slow pace of implementing the agreements and an increasingly tense political climate, as a result of numerous restrictions on political freedoms, have had an impact on the country’s social and political stability.
Cameroon REAL ECONOMIC GROWTH ACCELERATED to 4.1 per cent in 2008, up from 3.4 per cent in 2007, thanks to good results in the oil sector, ongoing infrastructure work, increased energy supply and programmes to boost agriculture, livestock and fisheries. It is expected to slow to 3.1 per cent in 2009 due to the global recession pushing down prices and demand for the country’s main commodities exports (chiefly oil, wood, cotton and rubber) and to electricity supply problems resulting from severe drought, but should pick up again in 2010 to reach 3.4 per cent. In view of the economy’s extreme – and growth-compromising – dependence on oil, a major challenge facing the government in 2009 is to increase revenue from the nonoil sector.
Cape Verde CAPEVERDE’S STRONG PERFORMANCE in recent years has left it well placed to weather a slowdown. GDP is estimated to have expanded by 6.1 per cent in 2008. It is expected to slow to 3.6 per cent in 2009, and to register somewhat stronger growth in 2010. That forecast is, however, subject to downside risk, as it is based on the assumption of a 10 per cent decline in tourism receipts in 2009, which may fall yet further as the global economic crisis unfolds.
Central African Republic FOR MANY YEARS, THE Central African Republic (CAR) has had to face political instability and internal conflicts which have weakened public institutions, undermined the economic infrastructures and basic social services, and led to a severe contraction of real Gross Domestic Product (GDP) and people’s incomes. This trend, however, was less pronounced during the 2004-07 period, which saw a gradual return to sociopolitical stability and economic growth. Real GDP growth is estimated at 2.6 per cent for 2008, or 1.6 per cent less than in 2007. This slowdown was due mainly to the combined effects of the external shocks that occurred during the year (soaring oil prices, food crisis, depreciation of the US dollar (USD) against the euro (EUR), to which the CFA franc (XAF) is pegged, the international financial crisis, and the decline in world demand for raw materials and consequent fall in their prices), as well as the electricity crisis that has prevailed in the CAR since June 2008.
Chad IN 2008, OVERALL GROSS DOMESTIC product (GDP) growth remained weak. GDP rose by only 0.2 per cent owing to the poor performance of the oil industry, which had been deteriorating since 2007, despite the strong performance of the agricultural sector. Ongoing conflicts between government forces and rebel groups have also had an impact. The oil industry’s contribution to growth will remain weak in 2009, and this will be exacerbated by a decrease in demand and in world market prices, causing GDP growth to slow by 0.7 percentage points. An improved political climate is expected to cause a recovery in consumption and investment. However, even if this occurs, it will not return Chad to positive growth rates until 2010.
Congo Republic IN THE REPUBLIC OF CONGO, 2008 was marked by a strong upturn in growth (7 per cent), following poor economic performances in 2007. The oil sector’s dominance increased, contributing to 67.3 per cent of Congo’s nominal gross domestic product (GDP). This performance is a direct result of the spiralling oil and gas prices in 2008. Although the upturn in growth affected nearly all areas of the economy, there remains concern regarding the production and distribution of electricity and water because of cuts to supplies, especially in the country’s two major cities.
Democratic Republic of Congo IN 2008, ECONOMIC, FINANCIAL and social performance in the Democratic Republic of Congo (DRC) was low, despite promising prospects in terms of conflict resolution, exploitation of mineral wealth and structural reforms. These results are due both to exogenous factors, such as the global context of the food, energy and financial crisis, and to endogenous factors, in particular the lack of basic transportation and energy infrastructures, not to mention the low level of political and economic governance.
Côte d'Ivoire CÔTE D’IVOIRE HAS BEEN IN A STATE of socio-political crisis since 1990, marked by: i) a coup d’état in 1999; ii) contested elections in 2000, which brought President Laurent Gbagbo to power; and iii) an armed internal conflict since 2002. The situation has caused a slowdown in economic growth. Following a long reconciliation process and the signature, on 4 March 2007, of the Ouagadougou Political Agreement (APO) by all key players in the crisis, the country’s political situation is gradually returning to normal. The holding of the presidential election scheduled for late 2009 is nonetheless crucial to the improvement of the political and economic landscape.
Djibouti DJIBOUTI HAS THE ADVANTAGE OF exceptional geographic placement, located at the confluence of maritime routes to Asia, Europe, the Arabian Peninsula and East Africa. The bulk of its neighbouring countries’ foreign trade passes through its international port. Djibouti is an entry point to the Common Market for Eastern and Southern Africa (COMESA), an economic area of close to 400 million consumers.
Egypt IN 2007/08 EGYPT’S ECONOMY GREW by 7.2 per cent. The prime engines of this robust growth were industry, tourism and revenues from the Suez Canal. Foreign direct investment (FDI) inflows also reached a new high of USD 13.2 billion (US dollars), more than triple the level in 2004/05. According to the World Investment Report 2008, Egypt is the top FDI recipient in North Africa and the second largest in Africa. On the demand side, growth was led by significant increases in consumption and investment. In 2007/08, implemented investments recorded real annual growth of 15.5 per cent, whereas total private and public consumption grew by 5.3 per cent. Rising oil and food prices increased inflation sharply and lowered real incomes, but boosted exports of oil and natural gas.
Equatorial Guinea EQUATORIALGUINEA’S ECONOMY maintained a high level of activity in 2008, with a rate of real gross domestic product (GDP) growth estimated at 9.9 per cent. Growth was driven by increased crude oil and gas production in a favourable global environment. The oil sector dominates the country’s economy and attracts a large share of foreign direct investment by major oil companies. The growth rate is projected to be moderate in 2009 (3.7 per cent) and 2010 (2.9 per cent).
Ethiopia ETHIOPIA’S REAL GDP GROWTH REMAINED strong in 2007/08 at 11.6 per cent, marginally up from 11.5 per cent in 2006/07. This rapid growth was driven mainly by the agriculture and services sectors supported by strong growth of exports and sustained inflows of official development assistance and foreign direct investment. Growth is expected to slow down but remain strong in 2008/09, at 6.5 per cent, owing to a good harvest and sustained high public investment in infrastructure. The expected slowdown in 2008/09 is due to the impact of the global recession on nontraditional exports and slower growth in domestic demand as a result of tighter fiscal and monetary policies.
Gabon ECONOMIC INDICATORS REMAINED positive in 2008 despite the global recession but social indicators still contrast sharply with the country’s wealth and potential. In the medium term, Gabon is exposed to deteriorating world markets as the economy is over-dependent on oil and gas and is based on mineral exports. The forestry sector is already suffering from a strong contraction in demand.
The Gambia THE GAMBIA HAS MADE MAJOR progress towards macroeconomic stability in recent years, with growth averaging 6.5 per cent since 2004 on the back of prudent monetary and fiscal policies alongside structural reforms. For 2008, however, GDP growth is estimated to have slowed to 5.7 per cent because of the global financial and economic crises. Unfavourable global developments are likely to lead to reduced exports, tourism receipts, remittances and foreign direct investment flows which will restrain growth over the near term. GDP growth is projected at 5 per cent in both 2009 and 2010.
Ghana THE GHANAIAN ECONOMY HAS CONTINUED to grow strongly, but must confront deteriorating fiscal and external balances within the context of a darkening global environment. The private sector is responding positively to the government’s development programmes and the improved business environment, with rising bank lending and capital inflows suggesting increasing investor confidence.
Guinea IN 2008, GUINEA’S ECONOMY benefited from an improvement in mining product prices on the international market. The social and economic measures of the Poverty Reduction and Growth Facility (PRGF) negotiated with the International Monetary Fund (IMF) for the 2007 to 2010 period also gave positive results. The first PRGF review in 2008 turned out to be conclusive. Real Gross Domestic Product Growth (GDP) reached 4.7 per cent in 2008, but is not expected to exceed 3.8 and 4.4 per cent in 2009 and 2010, due to the global financial crisis.
Kenya IN 2008 GDP GROWTH IS ESTIMATED to have slowed 2.6 per cent. The forecast is for higher growth rates of 5.0 per cent and 4.3 per cent in 2009-10, respectively. The slowdown in 2008 was partly due to the postelection violence that affected almost all sectors of the economy during the first quarter. The economy rebounded in the second and third quarters but slowed down during the last quarter partly as a result of the global financial crisis. The sectors that recorded positive growth included manufacturing, electricity and water, wholesale and retail trade; and fishing picked up during the second quarter of 2008, leading the recovery. In addition, construction, mining and quarrying, and public administration grew faster during the last half of 2008. Sustained growth in construction has been underpinned by long-term construction activities like roads and extension of the Jomo Kenyatta International airport, while mining and quarrying have benefited from the resulting demand for construction material.
Lesotho LESOTHO’S ECONOMIC GROWTH IN 2008 is estimated to have fallen to 4.2 per cent from 5.1 per cent in 2007. The slowdown is due, in part, to the global financial and economic crisis but high inflation driven by soaring food and oil prices has also played a role. Growth is expected to fall further to 3.8 per cent in 2009 before picking up to 5.3 per cent in 2010.
Liberia LIBERIA HAS CONTINUED TO MAKE PROGRESS in overcoming the devastating effects of years of civil conflict. The country has shown signs of economic recovery and progress in attaining political stability, reconciliation, peace and national security. Liberia’s real Gross Domestic Product (GDP) is estimated to have grown by 7.3 per cent in 2008. That growth is directly related to the resumption of forestry operations; increased diamond and gold exports; higher production of rice; and the continued vibrancy of the services and construction sectors. At the same time, government sources report that the global financial crisis has adversely affected Liberia in a number of ways: a drop in rubber prices of over 63 per cent between October 2008 and January 2009, the loss of income by the Central Bank of Liberia (CBL) from reduced interest rates on its foreign deposits, a fall in inward workers’ remittances from USD 303.3 million (US dollars) at the end of 2007 to USD 181 million at the end of November 2008; salary cuts and lay-offs especially on large rubber plantations and a reduction in both continuing and planned investments. The government has responded by proposing a number of specific tax cuts and a USD 2 million guarantee fund to assist Liberian entrepreneurs.
Libya LIBYA’S ECONOMY IS HEAVILY DEPENDENT on revenues from natural resources with an oil sector that provides nearly all of its export earnings and constitutes more than two-thirds of GDP. This lack of diversification, however, means that its economic growth depends on the international oil market. In 2008, real GDP growth is estimated to have been 6.5 per cent, down from 6.8 per cent in 2007 and is forecast to slow to around 3.4 per cent in 2009.
Madagascar MADAGASCAR POSTED STRONG GDP growth of 7 per cent in 2008. High oil prices in the first half of the year adversely affected Madagascar, which produces almost no oil and is vulnerable to increases in transportation costs given its remote location. The country was relatively insulated from the world food crisis thanks to increased agricultural production, in particular of rice, and favourable contracts concluded with Asian suppliers before prices spiked.
Malawi MALAWI RANKS AMONG THE WORLD’S most densely populated and least developed countries. Nevertheless, its macroeconomic performance has been impressive in recent years, with gross domestic product (GDP) growing by 8.4 per cent in 2008 compared to 7.9 per cent in 2007. Underpinning this has been a good performance by the agricultural sector, although output growth at 10.1 per cent was slightly lower than in the previous fiscal year. The government’s input subsidy programme combined with ample rains across the country has resulted in good harvests in maize and other crops over the past few years.
Mali MALI CONTINUEDWITH ECONOMIC reforms in 2008 that enabled it to soften the external shocks inflicted by the oil, food and financial crises. Economic growth, which had slowed in 2007 due to difficulties in the mining and cotton sectors, recorded a more pronounced decline in 2008, despite the cushioning effects of the Rice Initiative, a stepped-up privatisation process and budgetary support from technical and financial partners. Real GDP growth was estimated at 3.6 per cent in 2008. Growth is expected to pick up in 2009 and 2010, with GDP increasing by 4.2 and 5.1 per cent respectively.
Mauritania IN 2008, REAL GDP GROWTHWAS 5.2 per cent, driven mainly by mining (iron, copper and gold), agriculture and construction. Inflation was held at around 7.4 per cent thanks to price cuts generated by the government’s Special Intervention Programme (SIP) and cautious monetary policy. The budget deficit widened to 3.7 per cent of GDP because of higher public expenditure under the SIP, but the balance of payments currentaccount deficit shrank to 9.3 per cent of GDP, mainly due to buoyant exports. This performance led to a successful third review of the 2006-09 Poverty Reduction and Growth Facility (PRGF) by the International Monetary Fund (IMF) in March 2008.
Mauritius AS A SMALL OPEN ECONOMY FULLY integrated into world markets, Mauritius is vulnerable to external shocks. In the recent past it has had to deal with a sharp reduction in the preferential price of its sugar exports to the European market, as well as high food and oil prices. In spite of those three shocks, the Mauritian economy has been very resilient. However, it is now facing another external shock, namely the global slowdown arising from the financial crisis. As a result, the Mauritian economy grew by 4.8 per cent in 2008, a lower rate than expected, something that can be attributed to the lacklustre performance of the textile and tourism sectors, especially towards the end of the year.
Morocco IN AN INCREASINGLY DIFFICULT international economic context, Morocco retains its confidence in the extensive reform programmes introduced in recent years. The financial and economic crisis is expected to affect four pillars of the country’s economy – exports, foreign direct investment (FDI), remittances from Moroccans residing abroad and tourism – but the authorities are counting on buoyant domestic demand and strong performance by the agricultural sector owing to abundant rainfall. A strong financial sector and the sectoral development programmes in progress should enable the Moroccan economy to weather the international crisis without too much damage, although there will probably be considerable repercussions from the recession in the European countries, Morocco’s main trade partners. Despite the crisis, the economy grew at a rate of 5.7 per cent in 2008, driven by 13.1 per cent growth of primary sector value added. Agricultural GDP expanded by 6.1 per cent over the same period. Morocco’s growth rate is projected to decline slightly to 5.4 per cent in 2009 and 2010.
Mozambique AFTER AVERAGING 8.6 PER CENT SINCE the beginning of the decade, growth in Mozambique fell to 6.2 per cent in 2008 because of disruptive floods and energy shortages. The economy is likely to be relatively shielded from the direct impacts of the current world financial crisis because its financial system is poorly integrated into world capital markets. However, growth is expected to slow in 2009 to 4 per cent as a consequence of falling world demand for commodities, foreign direct investment (FDI) flows and public investment financed with external assistance. It will rebound to 5.2 per cent in 2010, assuming a partial recovery of the international economy and further expansion of agriculture. Inflation rose to 10.4 per cent in 2008 because of high food and fuel prices but it is expected to fall in 2009 following the decline in international prices.
Namibia SURGING OIL PRICES AND THE IMPACT of the world financial crisis on the global economy reduced growth estimates for Namibia to 3.4 per cent, much lower than forecast in last year’s AEO. This is expected to dip to 2.7 per cent, below rates for 2009. If the world economy recovers, Namibia’s economic growth could rebound to 3.1 per cent in 2010. The southern African country continues to face major challenges such as poverty, inequality and high unemployment.
Niger ECONOMIC GROWTH SHOULD CONTRACT significantly in 2008, to 4.8 per cent, as against 5.7 per cent in 2007. This rate is below the level recorded during the previous three years (5.9 per cent), primarily due to falling mining production, particularly uranium extraction.
Nigeria OVER THE PAST YEAR, NIGERIA’S economic situation has been affected by the collapse of oil prices in the second half of 2008 and the near-meltdown of the domestic financial system because of the global financial crisis. Throughout 2008, unrest in the oil-producing Niger Delta region continued.
Rwanda GDP GROWTH IN 2008 WAS ESTIMATED at slightly above 8.5 per cent, significantly higher than the average rate of 7.5 per cent registered during the 2005-07 period. The higher than expected growth in 2008 was largely a result of good climatic conditions that impacted favourably on agricultural production. In 2009, the economy is forecast to register lower growth of about 6.6 per cent. The lower growth forecast is a result of a combination of factors, including among others, a fall in exports, reduced government expenditures and a slowdown in agricultural growth. The weakening of economic growth is projected to extend into 2010, when the economy is expected to grow by 5.7 per cent.
Senegal GROWTH SLOWED TO 3.7 PER CENT in 2008 (from 4.8 per cent in 2007) mainly due to more expensive imports, the global recession and the government’s increasing budget problems, which led to further worrying delays in payments to private contractors. Major investment programmes, including a campaign to grow more food (Grande offensive agricole pour la nourriture et l’abondance – Goana), as well as upgrading roads and ports, should sustain growth over the next few years. But real GDP growth in 2009 is forecast at only 3.5 per cent because of the worldwide recession, with sharply lower world demand reducing exports by emerging and developing countries. Growth may rise slightly to 3.6 per cent in 2010.
Seychelles GROWTH IN THE SEYCHELLES SLOWED sharply in 2008, falling to an estimated 1.5 per cent, down from 5.5 per cent in 2007. The country suffered a severe balance of payments and debt crisis in 2008 brought on by unsustainable macroeconomic policies and imbalances that were exacerbated by external shocks. After defaulting on sovereign bond repayments in October 2008, the Seychellois authorities sought IMF assistance and an emergency stand-by agreement was reached conditional on the immediate implementation of a comprehensive fiscal reform programme. The reforms aim at fundamentally restructuring the country’s policy framework and public sector, one of the most significant of these being the floating of the rupee and the lifting of all foreign exchange controls, implemented in November 2008. In 2009, GDP is expected to contract by 0.4 per cent due to the huge reductions in government spending implicit in the reform package and a drop in tourism earnings brought on by the global economic recession. However, projections for 2010 forecast a recovery as an improved global economic climate revives tourism and foreign investment and lifts GDP growth to 2.9 per cent.
Sierra Leone SIERRA LEONE POSTED RELATIVELY STRONG growth in 2008 with GDP increasing by an estimated 5.4 per cent despite high oil prices. GDP is projected to rise by 6.3 per cent in 2009 and by 5.5 per cent in 2010. The country is still reconstructing following the 1991- 2001 civil war and while recent positive performances may in part reflect catch-up growth they are to be commended given Sierra Leone’s dependence on food and oil imports in a time of global price increases. The challenge going forward will be to consolidate growth and to address the enduring risk factors for conflict such as widespread unemployment and poverty. Reining in inflation, which was 13 per cent in 2008, is also important.
South Africa AFTER SEVERAL YEARS OF ROBUST economic growth of around 5 per cent, growth dropped to 3.1 per cent in 2008. Economic activity was adversely affected by severe energy shortages, slowing domestic consumption and the worsening world recession. In 2009, growth is expected to weaken further to 1.1 per cent while inflation should be curbed as the oil- and food-price increases of the first half of 2008 are reversed. Although its banking system was not directly affected by the international financial crisis, South Africa was affected by the fall in global demand for its mineral exports. Depreciation of the rand and the decline in the price of oil, however, are expected to ease pressure on the trade balance in the medium term.
Sudan SUDAN HAS BEEN EXPERIENCING AN economic upturn, characterised by a long positive episode of growth and relatively low inflation. Real GDP growth was 8.4 per cent in 2008, but is projected to slowdown to about 5.0 per cent in 2009 reflecting the impact of the global financial crisis. The exploitation of oil reserves and "the peace dividend" were the main drivers of this economic success. Direct foreign investment has stimulated recent growth as well as a boom in the service sector, especially transportation and communication. Outside the oil sector, Sudan’s economic growth is narrowly based and limited in reach. The rise of the oil economy also presents new challenges to macroeconomic stability. Some symptoms of a "Dutch Disease" are unfolding with the Sudanese Pound appreciating and traditional exports, such as cotton and gum Arabic, in decline. But the outbreak of the global financial crisis in the second half of 2008 saw the Sudanese Pound (SDB) begin to stabilise and even slightly depreciate against the US dollar (USD).
Swaziland SWAZILAND’S REAL ECONOMIC GROWTH declined to an estimated 2.6 per cent in 2008, down from 3.5 per cent in 2007 (Figure 1). The slowdown was a result of weak private investment, poor implementation of the public investment programme, and lower demand for exports. The global slowdown is expected to hit Swaziland’s exports and access to capital, and so reduce growth further to 2.5 per cent in 2009 and 2 per cent in 2010.
Tanzania TANZANIA’S POLICIES CONCENTRATE on sustaining macroeconomic stability by supporting strong economic growth. They seek fiscal stability through revenue mobilisation, prudent expenditure and controlling the money supply to meet inflation and economic growth targets, as well as maintain foreign exchange reserves. Combined with efforts to support the private sector and promote exports, these policies have enabled Tanzania’s GDP to grow by an average of 7.2 per cent annually over the last five years. Despite the world economic crisis, GDP growth in 2008 is officially estimated at 7.3 per cent. However inflation has been accelerating since 2006 and averaged 10.3 per cent in 2008. The Bank of Tanzania has revised its medium-term inflation objective upward in 2008 from 5 per cent to 7 per cent.
Togo TOGO’S REAL GROSS DOMESTIC PRODUCT (GDP) growth fell to 0.8 per cent in 2008 from 1.9 per cent in 2007, while the inflation rate increased to 8.9 per cent in 2008 from 1.0 per cent in 2007. The rise in international oil and food prices, slow reaction to reforms, and other external factors all caused the tougher conditions.
Tunisia THE RECENT DOWNWARD REVISION of the gross domestic product (GDP) growth estimates for 2008 and 2009 suggests that the Tunisian economy will feel the negative effects of the economic crisis that is affecting developed countries, particularly in Europe. The real GDP growth rate fell considerably, from 6.3 per cent in 2007 to an estimated 5.1 per cent in 2008; it is expected to fall again in 2009 (4.1 per cent) and rebound slightly in 2010 (4.2 per cent). In spite of the fall-off in growth, the economy weathered the shocks resulting from rising oil and food prices in 2008. The consumer price index rose by only 5 per cent, mainly as a result of continued subsidies for basic food commodities and fuel.
Uganda THE UGANDAN ECONOMY GREW AN IMPRESSIVE 7 per cent in 2008 despite the turmoil in the world economy and regional instability. Growth has been led by the service and industrial sectors, while agriculture has stagnated. Numerous challenges include post-election violence in Kenya at the beginning of 2008, which disrupted the crucial trade link with Mombasa port, the depletion of fish stocks in Lake Victoria, soaring oil prices in the first half of the year and most recently the worsening global slump. The global downturn threatens the Ugandan financial system, dampens demand for exports and reduces remittances from abroad. As a consequence of these shocks, growth is expected to slow to 5.6 per cent in 2009 before recovering to 6.1 per cent in 2010. High fuel and food prices pushed inflation up to an estimated 12 per cent in 2008. The government is pressing ahead with a fiveyear National Development Plan (NDP) focusing on infrastructure and agricultural development in a bid to increase exports and remove constraints to further growth. Uganda continues to be a leader in social progress in Africa with poverty reduction and improvements in health and education but much remains to be done.
Zambia IN 2008, ZAMBIA’S GROWTH DECLINED TO 5.5 per cent from 6.21 per cent in 2007 due mainly to the sharp decline in copper prices. A further reduction in growth to 2.8 per cent is expected for 2009 due to the global recession. The increase in food and oil prices overall were the main causes of the substantial increase in inflation in 2008, which reached 16.6 per cent yearon- year in December. For 2009 and 2010, average inflation is expected to decline to single-digit levels as oil and food prices are expected to remain at their levels of end 2008.
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