restarting the growth engine - wordpress.com · 2017. 5. 18. · international monetary fund,...

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


Outline

2

A Broad-based Slowdown Insufficient Adjustment

Increasing Vulnerabilities Recalibrating the Policy Response

Adjustment

Financing


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


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


…and in some cases, compounded by rising food insecurity.

5


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


Outline

7



Adjustment

Financing


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)


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)


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


...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


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


… 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


Outline

14



Adjustment

Financing


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



…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


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




-10

-5

0

5

10

15

2011–13 2014–16 2011–13 2014–16 2011–13 2014–16


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


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


Sim

ple

ave

rage

, per

cent

age

poin

ts


-10

-5

0

5

10

15

2011–13 2014–16 2011–13 2014–16 2011–13 2014–16


Sim

ple

ave

rag

e, p

erc

en

tag

e p

oin

ts



...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


0

5

10

15

20

25

2010 2011 2012 2013 2014 2015 2016

Interquartile rangeSub-Saharan Africa medianOil exporters median


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


...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


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


...and driven by the three largest economies.

Contributions to Regional Real GDP Growth, 2016―17


Outline

24



Adjustment

Financing


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


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


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


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


How about Kenya?

29


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


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


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


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


Thank you!

The online edition of the Regional Economic Outlook

for sub-Saharan Africais now available online at

www.imf.org

http://www.imf.org/

restarting the growth engine - wordpress.com · 2017. 5. 18. · international monetary fund,...

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