Overview II: Economic Report on Africa 2007
Overview II: Economic Report on Africa 2007
years, recording an overall real GDP growth rate of 5.7 per cent in 2006 compared
to 5.3 per cent in 2005 and 5.2 per cent in 2004. As many as 28 countries
recorded improvements in growth in 2006, relative to 2005. Only Zimbabwe
recorded a negative growth rate in 2006. Africa’s growth performance in 2006,
as in previous years, was underpinned by improvement in macroeconomic management
in many countries, and strong global demand for key African export
commodities, sustaining high export prices, especially for crude oil, metals and
minerals.
However, for most African countries, real growth rates have remained low relative
to their development goals. With only five countries recording an average real
GDP growth rate of 7 per cent or more during 1998-2006, few African countries
are positioned to achieve the Millennium Development Goals (MDGs) by
2015. Meanwhile, growth performance exhibits substantial disparities across the
five subregions. North Africa recorded the highest acceleration in GDP growth,
followed by Southern Africa. There was a deceleration in growth in West Africa
and East Africa, whereas Central Africa maintained the same growth rate as in
2005. Heavy dependence on primary commodities remains a common feature of
production, exports and growth in all the subregions. This exposes the continent
to external shocks and makes economic diversification a top priority for growth
policies on the continent.
Oil-exporting African countries as a group contributed 57.5 per cent of the continent’s
5.7 per cent growth rate in 2006, compared to 53.4 per cent in 2005. Efficient
management of oil revenues and economic diversification are essential for oilexporting
African economies to reduce vulnerability to oil price shocks, ensure that
gains from oil revenue are broadly shared, and achieve sustainable growth.
Improved economic management and increases in non-oil commodity prices have
more than offset the negative impact of high oil prices on the real GDP of African oil
importers. The growth impact of higher oil prices was particularly moderate for nonoil
and non-mineral-rich economies, where growth performance improved from 4.1
per cent in 2005 to 5.8 per cent in 2006, thanks to debt relief and increased aid flows as well as improved agricultural production and high agricultural commodity
prices. The growth rate in non-oil, mineral-rich African countries was unchanged in
2006 relative to 2005, as gains from the higher prices of minerals were dampened by
the effects of rising oil prices.
To minimize the effects of high oil prices on inflation and macroeconomic stability
in general, African governments need to pursue prudent policies, especially by
avoiding monetization of deficits. In the meantime, the international donor community
and international financial institutions should provide special support to
oil-importing, low-income African countries to mitigate the impact of higher oil
prices. In particular, debt relief and additional non-debt-generating external financing
of fiscal deficits are critically needed to assisting African oil-importing countries
to sustain economic growth and achieve the MDGs.
Overview II Economic Report on Africa 2007 - To learn more about this author, visit United Nations Economic Commission for Africa's Website.
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African economies continue to sustain the growth momentum of previous
years, recording an overall real GDP growth rate of 5.7 per cent in 2006 compared
to 5.3 per cent in 2005 and 5.2 per cent in 2004. As many as 28 countries
recorded improvements in growth in 2006, relative to 2005. Only Zimbabwe
recorded a negative growth rate in 2006. Africa’s growth performance in 2006,
as in previous years, was underpinned by improvement in macroeconomic management
in many countries, and strong global demand for key African export
commodities, sustaining high export prices, especially for crude oil, metals and
minerals.
However, for most African countries, real growth rates have remained low relative
to their development goals. With only five countries recording an average real
GDP growth rate of 7 per cent or more during 1998-2006, few African countries
are positioned to achieve the Millennium Development Goals (MDGs) by
2015. Meanwhile, growth performance exhibits substantial disparities across the
five subregions. North Africa recorded the highest acceleration in GDP growth,
followed by Southern Africa. There was a deceleration in growth in West Africa
and East Africa, whereas Central Africa maintained the same growth rate as in
2005. Heavy dependence on primary commodities remains a common feature of
production, exports and growth in all the subregions. This exposes the continent
to external shocks and makes economic diversification a top priority for growth
policies on the continent.
Oil-exporting African countries as a group contributed 57.5 per cent of the continent’s
5.7 per cent growth rate in 2006, compared to 53.4 per cent in 2005. Efficient
management of oil revenues and economic diversification are essential for oilexporting
African economies to reduce vulnerability to oil price shocks, ensure that
gains from oil revenue are broadly shared, and achieve sustainable growth.
Improved economic management and increases in non-oil commodity prices have
more than offset the negative impact of high oil prices on the real GDP of African oil
importers. The growth impact of higher oil prices was particularly moderate for nonoil
and non-mineral-rich economies, where growth performance improved from 4.1
per cent in 2005 to 5.8 per cent in 2006, thanks to debt relief and increased aid flows as well as improved agricultural production and high agricultural commodity
prices. The growth rate in non-oil, mineral-rich African countries was unchanged in
2006 relative to 2005, as gains from the higher prices of minerals were dampened by
the effects of rising oil prices.
To minimize the effects of high oil prices on inflation and macroeconomic stability
in general, African governments need to pursue prudent policies, especially by
avoiding monetization of deficits. In the meantime, the international donor community
and international financial institutions should provide special support to
oil-importing, low-income African countries to mitigate the impact of higher oil
prices. In particular, debt relief and additional non-debt-generating external financing
of fiscal deficits are critically needed to assisting African oil-importing countries
to sustain economic growth and achieve the MDGs.
Overview II Economic Report on Africa 2007 - To learn more about this author, visit United Nations Economic Commission for Africa's Website.
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