UN Report Projects Modest Growth Pickup in Africa
Economic growth is expected to experience a modest recovery in Africa this year, according to the United Nations’ World Economic Situation and Prospects 2017(WESP 2017) report. The document, which was released on 18 January, is the result of a joint effort between several UN institutions – the United Nations Department of Economic and Social Affairs (UN/DESA), the United Nations Conference on Trade and Development (UNCTAD) and the five UN regional commissions.
African GDP should grow by 3.2 percent in 2017 and 3.8 percent in 2018, according to the report. This “modest” pickup follows last year’s important growth deceleration on the continent, with an estimated growth rate of only 1.7 percent in 2016.
The WESP 2017 report also projects a similar trend at the global level for 2017 and 2018, with growth rates expected to reach 2.7 and 2.9 percent, respectively. In 2016, the world economy grew by only 2.2 percent, the lowest level recorded since the 2008-2009 global economic and financial crisis.
The document warns, nonetheless, that this timid recovery should not be interpreted as signalling the return to robust global growth, which is “not expected for several years unless there are concerted policy efforts to stimulate investment and productivity.”
“The global economy is trapped in a self-perpetuating cycle of weak investment, dwindling world trade, flagging productivity growth and high debt,” notes the report, adding that such a situation could jeopardise the prospects for a successful implementation of the UN’s Sustainable Development Goals (SDGs).
In Africa, important differences are observed between subregions and countries, with various factors at play.
As indicated in the report, the anticipated increase in commodity prices on global markets is contributing to the modest improvement of growth prospects in heavily commodity-dependent countries, such as Algeria, Angola, and Nigeria, although a strong growth recovery seems unlikely.
Other countries with stronger economic fundamentals, whose recent economic performance has been driven more by robust private consumption, investment in infrastructure, and business climate reforms, enjoy more promising growth prospects.
This is the case in East Africa, which is set to perform the best among all African subregions in 2017 and 2018 according to the report, as well as in some West African countries, such as Côte d’Ivoire, Ghana, and Senegal. While East Africa’s GDP is expected to expand by 6 percent in the next two years, growth is projected to reach 3.1 percent in West Africa, after having stagnated in 2016.
Southern Africa, in contrast, should only experience a limited improvement from last year’s pale 1-percent growth. The subregion’s GDP is expected to expand by 1.8 percent in 2017, and 2.6 percent in 2018, “as commodity prices increase and drought effects dissipate,” notes the report. In North and Central Africa, growth is projected to increase to 3.5 and 3.4 in 2017, up from 2.6 and 2.4 percent in 2016, respectively.
Projections for LDCs well below SDG-target
Looking at LDCs in particular (including non-African LDCs), the seven UN institutions underline that despite an expected increase in growth rates in 2017 and 2018 compared with 2016, it is likely that the group will not achieve its growth target contained in the Sustainable Development Goals.
While LDCs’ aggregate GDP growth in 2016 is estimated at 4.6 percent, the report indicate that it should reach 5.2 percent in 2017 and 5.5 percent 2018. Although this trend might be seen as positive and encouraging, such a growth level remains significantly below the objective set out in SDG 8, target 1, of attaining and sustaining a growth rate of “at least 7 percent” in the LDCs.
Such a failure to meet the 7-percent SDG target constitutes a significant risk “to both critical expenditure and sufficient private financing for achieving the SDGs,” warns the document. As a striking example, it notes that if the current growth trajectory is maintained, nearly 35 percent of the population of LDCs will still be living in extreme poverty by 2030.
Against this backdrop, the report calls on strengthened efforts to close the investment gap and mobilise more resources, both at the domestic and international levels, to meet the considerable financing needs of LDCs, while also reaffirming the crucial role of trade in sustainable development.