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International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 2017
African Department International Monetary Fund
May 2017
Restarting the Growth EngineRegional Economic Outlook
for Sub-Saharan Africa
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 2017
Outline
2
A Broad-based Slowdown Insufficient Adjustment
Increasing Vulnerabilities Recalibrating the Policy Response
Adjustment
Financing
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 20173
2016 saw a broad-based slowdown, with commodity exporters being particularly hit...
Real GDP Growth, Average 2010–15
SSD GNQ CPV GIN ZAF GMB SWZ MUS SEN MWI UGA NGA ZMB TZA ZWE GHA ETH
CAF MDG GNB MLI STP COG TGO NAM NER RWA COD
COM BDI LSO CMR SLE KEN TCD MOZ
BEN AGO SYC CIV
LBR BFA
GAB
ERI
BWA
0
1
2
3
4
5
6
7
8
≤ –2 –2.0 –1.5 –1.0 –0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8 >8
Fre
qu
en
cy
Percent
Resource-intensive countries
Nonresource-intensive countries
Weighted
average = 5.0Median = 5.1
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 20174
2016 saw a broad-based slowdown, with commodity exporters being particularly hit...
Real GDP Growth, 2016
SSD NGA LBR SWZ ZAF ZWE MWI ZMB MOZ MUS SYC UGA TGORWA KEN TZA ETH
GNQ BDI AGO NAM GMB LSO ERI STP SLE MLI SEN CIV
COG GAB BWA MDG NER GNB
TCD COD GHA CAF GIN
COM CMR BFA
CPV
BEN
0
1
2
3
4
5
6
7
8
≤ –2 –2.0 –1.5 –1.0 –0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8 >8
Fre
qu
en
cy
Percent
Resource-intensive countries
Nonresource-intensive countries
Weighted
average = 1.4
Median = 3.7
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 2017
…and in some cases, compounded by rising food insecurity.
5
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 2017
Inflation is ticking up in many countries in the region.
6
Number of Countries with Inflation Rates Greater than 10 Percent
0
5
10
15
20
25
30
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Nu
mb
er o
f co
un
trie
s
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 2017
Outline
7
A Broad-based Slowdown Insufficient Adjustment
Increasing Vulnerabilities Recalibrating the Policy Response
Adjustment
Financing
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 20178
Fiscal deficits have widened among hardest-hit countries and remain elevated elsewhere.
Fiscal Balance, 2010–16
–6
–4
–2
0
2
4
6
8
Average 2010–13 2016 Average 2010–13 2016 Average 2010–13 2016
Oil exporters Other resource-intensive countries Nonresource-intensive countries
Per
cent
of G
DP
Overall balance (percent of GDP)
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 2017
Fiscal Balance and Real GDP Growth, 2010–16
9
Fiscal deficits have widened among hardest-hit countries and remain elevated elsewhere.
–6
–4
–2
0
2
4
6
8
Average 2010–13 2016 Average 2010–13 2016 Average 2010–13 2016
Oil exporters Other resource-intensive countries Nonresource-intensive countries
Pe
rce
nt
Real GDP growth (percent) Overall balance (percent of GDP)
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201710
Higher borrowing costs have made recourse to external market financing less attractive…
Frontier and Emerging Market Spreads, 2014-17
200
300
400
500
600
700
800
900
1,000
Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17
Bas
is p
oint
s
Emerging markets
Sub-Saharan Africa frontier markets
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201711
...leading to greater recourse to domestic financing,...
Exposure of Commercial Banks to the Government
AGO
BEN
BWA
BFA
BDI
CPV
CMRCAFTCD
COMCOD
COG
CIV
GNQ
GAB GHA
GIN
GNB
KEN
LSO
LBR
MDG
MWI
MLI
MUS
MOZ
NAMNER
NGA
STP
SEN
SYC
SLE
ZAF
SSD
SWZ
TZA
TGO
UGA
ZMB
0
5
10
15
20
25
30
35
0 5 10 15 20 25 30 35Dec
. 201
6 or
late
st a
vaila
ble,
per
cent
of c
omm
erci
al b
ank
asse
ts
Average December 2010–13, percent of commercial bank assets
Increasing Exposure
Decreasing Exposure
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201712
Exchange rates have depreciated, but not sufficiently in some cases with parallel markets spreads emerging…
Depreciation of National Currencies Against the U.S. Dollar since
December 2013 (+ indicates depreciation)
1Unofficial estimates report the spread to be around 20 percent between cash U.S. dollars and domestic bank
deposits and bond notes.
0
10
20
30
40
50
60
70
80
AG
O
NG
A
GH
A
SL
E
ZM
B
DR
C
TZ
A
GIN
ZA
F
NA
M
LB
R
ZW
E¹
UG
A
ST
P
RW
A
KE
N
MU
S
ET
H
BD
I
Oilexporters
Other resource-intensive countries Nonresource-intensive countries
Pe
rce
nt
Spread with parallel rate, latest available
Change in exchange rate, Dec. 2013–Mar. 2017
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201713
… and reserves are trending lower for the region, and acutely so in oil exporters
International Reserves, 2014–16
0
1
2
3
4
5
6
7
Oct
-14
No
v-1
4
De
c-1
4
Jan
-15
Fe
b-1
5
Mar
-15
Ap
r-15
May
-15
Jun
-15
Jul-
15
Au
g-1
5
Se
p-1
5
Oct
-15
No
v-1
5
De
c-1
5
Jan
-16
Fe
b-1
6
Mar
-16
Ap
r-16
May
-16
Jun
-16
Jul-
16
Au
g-1
6
Se
p-1
6
Oct
-16
No
v-1
6
De
c-1
6
Mo
nth
s o
f im
po
rts
Sub-Saharan Africa interquartile range
Oil exporters median
Nonresource-intensive countries median
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 2017
Outline
14
A Broad-based Slowdown Insufficient Adjustment
Increasing Vulnerabilities Recalibrating the Policy Response
Adjustment
Financing
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 2017
Debt levels are on the rise across the region…
15
Public Debt, 2000–16
0
20
40
60
80
100
120
140
160
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Pe
rce
nt o
f GD
P
Sub-Saharan Africa interquartile range
Sub-Saharan Africa median
Oil exporters median
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201716
…and public debt is on the rise, increasing the pressure on debt sustainability...
Public Sector Debt Accumulation, 2010–16
-10
-5
0
5
10
15
2011–13 2014–16 2011–13 2014–16 2011–13 2014–16
Oil exporters Other resource-intensive countries Nonresource-intensive
Sim
ple
ave
rag
e, p
erc
en
tag
e p
oin
ts
-10
-5
0
5
10
15
2011–13 2014–16 2011–13 2014–16 2011–13 2014–16
Oil exporters Other resource-intensive countries Nonresource-intensive
Sim
ple
ave
rag
e, p
erc
en
tag
e p
oin
ts
Primary deficit Real growth and interest rate Exchange rate depreciation Other Change in debt
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201717
…and public debt is on the rise, increasing the pressure on debt sustainability...
Public Sector Debt Accumulation, 2010–16
-10
-5
0
5
10
15
2011–13 2014–16 2011–13 2014–16 2011–13 2014–16
Oil exporters Other resource-intensive countries Nonresource-intensive
Sim
ple
ave
rag
e, p
erc
en
tag
e p
oin
ts
-10
-5
0
5
10
15
2011–13 2014–16 2011–13 2014–16 2011–13 2014–16
Oil exporters Other resource-intensive countries Nonresource-intensive
Sim
ple
ave
rag
e, p
erc
en
tag
e p
oin
ts
Primary deficit Real growth and interest rate Exchange rate depreciation Other Change in debt
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201718
…and public debt is on the rise, increasing the pressure on debt sustainability...
Public Sector Debt Accumulation, 2010–16
-10
-5
0
5
10
15
2011–13 2014–16 2011–13 2014–16 2011–13 2014–16
Oil exporters Other resource-intensive countries Nonresource-intensive
Sim
ple
ave
rage
, per
cent
age
poin
ts
Primary deficit Real growth and interest rate Exchange rate depreciation Other Change in debt
-10
-5
0
5
10
15
2011–13 2014–16 2011–13 2014–16 2011–13 2014–16
Oil exporters Other resource-intensive countries Nonresource-intensive
Sim
ple
ave
rag
e, p
erc
en
tag
e p
oin
ts
Primary deficit Real growth and interest rate Exchange rate depreciation Other Change in debt
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201719
...especially in oil-exporting countries.
External Debt Service-to-Exports
Ratio, 2010-16
Total Debt Service-to-Revenue
Ratio, 2010-16
0
5
10
15
20
25
2010 2011 2012 2013 2014 2015 2016
Interquartile range
Sub-Saharan Africa median
Oil exporters median
0
5
10
15
20
25
2010 2011 2012 2013 2014 2015 2016
Interquartile rangeSub-Saharan Africa medianOil exporters median
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201720
The financial sector is feeling the pinch, with asset quality declining,...
Nonperforming Loans to Total Loans
0
5
10
15
20
25
30
CA
F
SL
E
GN
Q
NE
R
LB
R
GH
A
CM
R
TC
D
AG
O
GIN
TZ
A
ZA
F
BW
A
NG
A
GA
B
NA
M
CO
G
SE
N
MD
G
BD
I
SY
C
SW
Z
RW
A
UG
A
KE
N
MU
S
LE
S
MO
Z
Resource-intensive countries Nonresource-intesnive
Pe
rce
nt
2013
Latest available
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201721
...and credit to private sector slowing sharply.
Change in Credit Growth to the Private Sector, Average 2011–13 vs. 2016
-50
-40
-30
-20
-10
0
10
20
TCD
GA
BC
OG
AG
OG
NQ
CM
RN
GA
ZWE
CA
FG
INZM
BB
FA
LBA
GH
AB
WA
TZA
NA
MN
ER
ZAF
SLE
CO
DM
LIG
NB
GM
BLS
OR
WA
KE
NM
US
UG
ATG
OS
WZ
SE
NB
DI
BE
NC
PV
ST
PE
TH
CO
MM
WI
MD
GE
RI
CIV
SY
CM
OZ
Oil Exporters Other resource-intensive countries Nonresource-intensive countries
Per
cent
age
poin
ts
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201722
The outlook is still subdued with modest growth rebound, subject to downside risks,...
Real GDP Growth
0
1
2
3
4
5
6
2012 2013 2014 2015 2016 2017 2018 2019
Pe
rce
nt
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201723
...and driven by the three largest economies.
Contributions to Regional Real GDP Growth, 2016―17
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 2017
Outline
24
A Broad-based Slowdown Insufficient Adjustment
Increasing Vulnerabilities Recalibrating the Policy Response
Adjustment
Financing
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201725
Three priority areas to ensure a stronger and durable recovery:
Reinforce emphasis on macroeconomic stability
Structural reforms to support healthier macro balances
Stronger emphasis on social protection
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201726
More emphasis on adjustment needed in many cases
Hardest-hit resource-intensive countries:
• Strong fiscal consolidation required, with strong focus on revenue mobilization
• Where available, greater exchange rate flexibility/elimination of exchange restrictions important
Other countries:
• Where growth is still strong, emerging vulnerabilities need to be addressed from position of strength
• Infrastructure investment needs to be addressed through higher revenue mobilization to safeguard debt sustainability
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201727
Reforms needed to support macro objectives
Domestic revenue mobilization
Greater emphasis on safeguarding financial stability
Fostering economic diversification
State-owned enterprise reforms to limit contingent liabilities
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201728
Stronger emphasis on social protection necessary
Low growth and widening macroeconomic imbalances risk aggravating social dislocation and increasing poverty
Social protection programs often fragmented, not well-targeted, and cover a small share of the population
Need to better target these and also use savings from regressive expenditures such as fuel subsidies to help vulnerable groups
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 2017
How about Kenya?
29
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 2017
Kenya is doing better post ConstitutionEconomy
expanding faster
Income rising
steadily
25.50
30.51
14.54
13.76
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2005-10 2011-16
Pe
rce
nt
GDP growth Growth in GDP per capita Population growth
Some changes in trends in 2016:-Slow progress in dealing with weather-related problems (Agriculture).-Slight pick up in manufacturing (From low base).-Deceleration in construction, financial and trade.
-Some bottlenecks removed (transport).-Telecommunications still the brightest spot.-Real estate pick up may be reversing.
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Perc
ent
Sectoral perfomance
2016 5-yr average
Gross capital formation decelerates in 2016
32
0
1
2
3
4
5
6
7
8
Government consumption Private consumption Gross fixed capital formation (extransport)
GDP by expenditure
2016 5-year average
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 2017
Pre-Election Growth
Q1 '06
Q3 '06
Q4 '06
Q1 '07
Q2 '07
Q3 '07 Q4 '07
Q2 '11
Q4 '11
Q1 '12Q2 '12 Q3 '12
Q4 '12
Q1 '13Q4 '15
Q2 '16Q3 '16
Q4 '16
3.0
4.0
5.0
6.0
7.0
8.0
9.0
2007 Elections 2013 Elections 2018 Elections
GD
P g
row
th(%
)
Quarters before the elections
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 2017
Growth before elections influenced by agriculture performance
-6
-4
-2
0
2
4
6
8
10
Per
cen
t
GDP growth
agriculture sector
-2
-1
0
1
2
3
4
5
6
7
8
Per
cen
t
GDP growth
agriculture sector
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 2017
Take aways
• Impact of drought yet to be assessed.
• Some key sectors show deceleration even before the drought.
• Revenue mobilization and prioritization of investment needed to ensure attention to social needs.
35
International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, May 201736
Thank you!
The online edition of the Regional Economic Outlook
for sub-Saharan Africais now available online at
www.imf.org
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