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African Economic Outlook
This year’s African Economic Outlook from the African Development Bank shows that the continent’s general economic performance continues to improve. Gross domestic product reached an estimated 3.5 percent in 2018, about the same as in 2017 and up from 2.1 percent in 2016. Africa’s GDP growth is projected to accelerate to 4.0 percent in 2019 and 4.1 percent in 2020.
But even that growth is not fast enough to address persistent fiscal and current account deficits and unsustainable debt. Indeed, countries have to move to a higher growth path and increase the efficiency of growth in generating decent jobs. The 2019 Outlook shows that macroeconomic and employment outcomes are better when industry leads growth.
The special theme this year is regional integration for Africa’s economic prosperity—integration not just for trade and economic cooperation but also for the delivery of regional public goods.
New research for this Outlook shows that five trade policy actions could bring Africa’s total gains to 4.5 percent of its GDP, or $134 billion a year. First is eliminating all of today’s applied bilateral tariffs in Africa. Second is keeping rules of origin simple, flexible, and transparent. Third is removing all nontariff barriers on goods and services trade on a most-favored-nation basis. Fourth is implementing the World Trade Organization’s Trade Facilitation Agreement to reduce the time it takes to cross borders and the transaction costs tied to nontariff measures. Fifth is negotiating with other developing countries to reduce by half their tariffs and nontariff barriers on a most-favored-nation basis.
The 2019 Outlook also looks at the gains possible from regional public goods, such as synchronizing financial governance frameworks, pooling power, opening skies to competition, and opening borders to free movements of people, goods, and services.
In its last part, the report provides short-to-medium term forecasts on the evolution of key macroeconomic indicators for all 54 regional member countries, as well as analysis on the state of socio-economic challenges and progress made in each country. This adds granularity to the more aggregated analysis conducted in the first part of the report.
2019 Edition by chapter
After tepid real GDP growth of only 2.1 percent in 2016, Africa’s economy recovered with 3.6 percent growth in 2017 and 3.5 percent growth in 2018. Growth is projected to accelerate to 4 percent in 2019 and 4.1 percent in 2020, higher than in other emerging and developing economies as a whole but lower than in China and India. In 2019, 40 percent of African countries are projected to see growth of at least 5 percent. The challenge is to achieve a higher growth path that is inclusive and pro-employment.
Africa’s working-age population is projected to increase from 705 million in 2018 to almost 1 billion by 2030.1 As millions of young people join the labor market, the pressure to provide decent jobs will intensify. At the current rate of labor force growth, Africa needs to create about 12 million new jobs every year to prevent unemployment from rising. Strong and sustained economic growth is necessary for generating employment, but that alone is not enough. The source and nature of growth also matter.
Africa has been integrating along various dimensions for the past 60 years. In a first phase, during the 1960s and 1970s, inwardlooking integration reflected the desire to develop independently from the former colonial rulers. Economic unification was to be the solution to Africa’s development dilemma, and many thought that this required a political union. But most leaders of the young African states were reluctant to encourage the erosion of national sovereignty and the emergence of a supranational authority to coordinate and manage the affairs of the African Union.
Regional Economic Outlook Reports
Each report analyses the respective region’s economic growth, its drivers and implications and offers short and medium-term forecasts on the main socio-economic factors, while at the same time examining the challenges and progress.