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2.1 Growth performance II: Economic Report on Africa 2007

Guest post by: United Nations Economic Commission for Africa

Article Overview: Subregional growth performance varies substantially

2.1 Growth performance II: Economic Report on Africa 2007

Growth performance exhibits substantial disparities across the five subregions (see
figure 2.2). North Africa recorded the highest acceleration in GDP growth, from
5.2 per cent in 2005 to 6.4 per cent in 2006, followed by Southern Africa, from 5.6
to 5.9. There was a notable deceleration in growth momentum in West Africa, from
5.4 per cent in 2005 to 4.2 per cent in 2006. Heavy dependence on primary commodities
remains a common feature of production, exports and growth in all subregions.
This exposes the continent to external shocks and makes economic diversification
a top priority for growth policies on the continent.

Stronger growth performance in North Africa was mainly the result of higher oil
prices, especially for Algeria, Libya, Sudan, and Mauritania. Mauritania achieved
the highest increase in GDP growth rate (from 5.4 per cent in 2005 to 14.1 per cent
in 2006) owing to the start of commercial exploitation of crude oil in 2006. Also
steady growth in secondary and tertiary sectors (especially tourism) continued to
help economic performance in North Africa. Adequate management of oil revenue
is needed for the subregion to sustain the growth momentum.

Growth in Southern Africa improved in 2006 largely because of economic recovery
in Malawi and Lesotho and sustained good performance in most other countries of
the subregion. With increased public spending and high FDI flows, South Africa
maintained the same growth rate of 2005 through 2006 although private consumption
declined due to higher oil prices. Notwithstanding the slowdown in oil production,
Angola remains the fastest growing economy in Southern Africa (17.6 per cent)
followed by Mozambique (7.9 per cent), Malawi (6.9 per cent) and Zambia (6 per
cent). Zimbabwe, though still on the negative side (-4.4 per cent in 2006 from –7.1
per cent in 2005), and Malawi recorded the largest improvements in growth, thanks
to favourable weather conditions and commodity markets, although recovery from
the 2005 drought is still incomplete. Growth in Mauritius also improved considerably
despite stiff competition from Asia in the textile market, thanks to increased
investment and notable growth in the service sector. Growth in Lesotho picked up
in 2006 as a result of increased investment in manufacturing and mining, resulting in higher textile and diamond exports. Swaziland continued to record a low growth
rate (1.2 per cent), owing to drought and a decline in the textile industry.
Growth in Central Africa was underpinned by higher oil prices – Republic of Congo
(7.5 per cent), Equatorial Guinea (5.4 per cent), Cameroon (3.8 per cent) and Chad
(1.0 per cent). In spite of sustained increases in oil prices, Chad and Equatorial
Guinea experienced the greatest decline in GDP growth in 2006, followed by the
Republic of Congo, because of slowdown in crude oil production. Oil production
declined in Chad in 2006 because of technical problems. Cameroon, Central African
Republic, and São Tomé and Príncipe were the only three countries in the subregion
with higher growth rates in 2006 than in 2005, thanks to the improved prices
for such agricultural commodities as coffee and cocoa (up to 2nd Quarter of 2006).

In East Africa, weather conditions as well as export commodity prices remained
largely favourable despite sporadic drought in the Horn of Africa. East Africa was
the best performing subregion in 2004 and 2005 but experienced a slight decline
in growth rate in 2006. Higher oil prices were the main factor that prevented the
subregion from achieving a higher growth rate as all the countries of East Africa are
oil importers. Economic performance remained robust in Ethiopia (8.5 per cent),
Kenya (5.5 per cent), Tanzania (5.8 per cent), and Uganda (5.0 per cent) owing to
higher commodity prices, especially tea and coffee. The Democratic Republic of
Congo (DRC), Burundi and Rwanda achieved higher growth rates in 2006 (6.4, 3.8,
and 4.2 per cent, respectively), thanks to growth in construction, trade and manufacturing,
as economic activity is benefiting from the gradual restoration of peace in the
region. The mining sector also contributed significantly to growth in DRC.

Although improving, economic performance remains low in Comoros (1.2 per
cent), due to low revenue from vanilla exports and a decline in the tourism sector.
Eritrea also recorded low growth (2 per cent), owing to low investment and other
adverse effects of border conflicts. Seychelles recorded a notable improvement in
economic performance (from –1.5 per cent in 2005 to 1.0 per cent in 2006) owing
to a gradual recovery from the adverse effects of the tsunami of 2005 and the decline
in tourism and tuna exports in the previous two years.

West Africa experienced the greatest decline in GDP growth in 2006 due to a decline
in growth in Nigeria from (6.0 per cent in 2005 to 4.2 per cent in 2006) as a result of
social unrest in the Niger delta. Growth remained low in Côte d’Ivoire (1.2 per cent)
due to political instability, which disrupted agriculture and industry. Among non-oil
economies, growth in Senegal (4.0 per cent), though still strong, slowed down because
of weaker industrial performance as a consequence of high oil prices and failure to
renew the country’s fishing accord with the EU. Liberia sustained its strong post-conflict
growth recovery. Gambia achieved 5.3 per cent growth rate in 2006 compared to 5 per cent in 2005 thanks to good rainfall and increased tourism activity. Growth in
other countries in the subregion in 2006 was similar to that of 2005.

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Article Tags: commodity prices, East Africa, GDP growth, GDP growth, GDP growth rate, growth performance, growth rate, growth rates, Malawi, North Africa, North Africa Adequate, oil prices, performance, South Africa, Southern Africa, steady growth, subregion, subregion, subregions



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