African Economic Outlook

The 2019 African Economic Outlook (AEO) analyses macroeconomic developments and prospects in Africa.  The analysis shows that Africa’s GDP growth is estimated at 3.5 percent in 2018. Growth for 2019 and 2020 is projected at 4  and 4.1 percent, respectively, thanks to factors such as mild recovery in commodity prices, improved macroeconomic stability. However, this growth performance is not sufficient to address the challenges of structural transformation. A rebalancing of Africa’s imports from consumption to intermediate and capital goods is critical to help countries benefit from scale and scope economies, exploit knowledge transfers and promote structural transformation. Deep reforms in public financial management are also required to improve revenue mobilization, and ease debt vulnerabilities.

Africa still faces a huge job challenge and despite industry’s potential to create high-quality jobs, Africa has de-industrialized prematurely. There is thus an urgent need in creating job in higher productivity sectors by developing a strong manufacturing sector. However, this would not be achieved if constraints to doing business such as poor governance, low institutional quality, and inadequate infrastructure, continue limiting firm survival and dynamism with an estimated 1.3–3 million jobs lost (~2 percent of the new entrants to the labor force) every year. Reviving Africa’s industrialization particularly through regional industrial policies will be needed to benefit from externalities’ and agglomerations’ effects. 

New and timely analytics show that the Continental Free Trade Agreement (CFTA) can offer substantial gains for all African countries. For instance, a first scenario where today’s applied bilateral tariffs are eliminated would bring an estimated gain of $2.8 billion in real income; and increase intra-African trade by 15 percent. Additionally removing nontariff barriers could increase total real income gains by $37 billion; and  intra-African trade by 107.2 percent. Pushing further and implementing the World Trade Organization’s Trade Facilitation Agreement (TFA) would yield total gain of about $100 billion; and boost intra-African trade by 132.7 percent. To reach such a deep level of integration, further progress should be made on rules of origin, free movement of persons, financial governance frameworks, and regional public goods (infrastructure and regional bodies).

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

Chapter 1 - Africa’s macroeconomic performance and prospects

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.

Chapter 2 - Jobs, growth, and firm dynamism

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.

Chapter 3 - Integration for Africa’s economic prosperity

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.

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