1.0 Recent Economic Trends and Prospects for 2007: Economic Report on Africa 2007

Developments in the world economy have important implications for African economies

through various channels, including demand for African export commodities,

the impact on the trade balance and the cost of external borrowing (via world interest

rates). These developments are influenced by monetary, fiscal and trade policies

adopted by major industrialized countries as well as by exogenous events such as oil

price shocks.

Growth in the world economy remains dominated by the Asian economies, which

continue to grow at more than 8 per cent per annum. In contrast, growth in advanced

economies remains modest and is yet to reach the pre-2001 level. Key constraints to

growth include the massive global macroeconomic imbalances along with tight macroeconomic

stances in advanced economies, which prevent demand-led recovery.

High oil prices also undermine growth in both advanced and developing countries

through high production costs.

Some positive developments in the world economy are likely to sustain growth in

African countries. These include high export prices for export commodities due to

high demand especially from Asia, delivery of promised aid and debt relief, and

rising inflows of foreign direct investment (FDI) with an increasing share coming

from China and India, and higher inflows of workers’ remittances. However, these

developments need to be supported by adequate domestic pro-growth policies to

maximize the gains from increased external resources.


The United Nations Economic Commission for Africa (ECA) is the regional arm of the United Nations, mandated to support the economic and social development of its member States, foster intra-regional integration, and promote international cooperation for Africa's development.

Go Deeper | Website

Want More?

New Graphic
Subscriber Counter