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South Africa: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for South Africa
June 6, 2023--Summary:
South Africa's strong economic recovery from the COVID-19 pandemic is petering out. Growth moderated from 4.9 percent in 2021 to 2.0 percent in 2022 as the country was buffeted by Russia's war in Ukraine, global monetary policy tightening, severe floods, and an unprecedented domestic energy crisis.
Inflation rose above the target band though inflation expectations remained anchored. The current account moved back into a deficit after a temporary commodity-price driven surplus.
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Source: imf.org
African Currencies Are Under Pressure Amid Higher-for-Longer US Interest Rates
May 15, 2023--Weaker currencies make the fight to curb inflation harder given the region's dependence on imports
Most sub-Saharan African currencies have weakened against the US dollar, fanning inflationary pressures across the continent as import prices surge. This, together with a growth slowdown, leaves policymakers with difficult choices as they balance keeping inflation in check with a still-fragile recovery.
As the Chart of the Week shows, the average depreciation for the region since January 2022 is about 8 percent. The extent varies by country, however. Ghana’s cedi and Sierra Leone’s leone depreciated by more than 45 percent.
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Source: imf.org
IMF-African Currencies Are Under Pressure Amid Higher-for-Longer US Interest Rates
May 15, 2023--Weaker currencies make the fight to curb inflation harder given the region's dependence on imports
Most sub-Saharan African currencies have weakened against the US dollar, fanning inflationary pressures across the continent as import prices surge.
This, together with a growth slowdown, leaves policymakers with difficult choices as they balance keeping inflation in check with a still-fragile recovery.
As the Chart of the Week shows, the average depreciation for the region since January 2022 is about 8 percent. The extent varies by country, however. Ghana's cedi and Sierra Leone's leone depreciated by more than 45 percent.
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Source: imf.org
Africa to Become Fastest Growing Region, Outpacing Asia
May 1, 2023--Africa is now projected to become the fastest growing region globally, outpacing Asia, according to a new report by Mo Ibrahim Foundation.
It is reported that six out of the ten fastest growing economies in 2023 are African countries.
With a ready market of more than 1.4 billion people, the African Continental Free Trade Area (AfCFTA) surpasses the European Union (EU) single market, US-Mexico-Canada Agreement (USMCA) and Southern Common Market (MERCOSUR) combined.
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Source: allafrica.com
Africa: Promoting Investment to Power Africa's Single Market
March 29, 2023--Regional investment initiatives have existed in Africa for some time and provide valuable lessons for the AfCFTA.
The landmark African Continental Free Trade Area (AfCFTA) aims to increase Africans' prosperity through more intra-African trade by eliminating tariff and non-tariff barriers.
There is however the question of the production of the goods and services that will be traded.
Scaling up production will require an injection of local and foreign investment into African industries. The increased focus on investment is a logical next step in the AfCFTA's implementation process.
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Source: allafrica.com
IMF-South Africa: Staff Concluding Statement of the 2023 Article IV Mission
March 22, 2023--South Africa's economic and social challenges are mounting, risking stagnation amid an unprecedented energy crisis, increasingly binding infrastructure and logistics bottlenecks, a less favorable external environment, and climate shocks.
A recovery in the services sector supported job creation in 2022; however, employment remains below pre-pandemic levels and unemployment close to record highs, on the back of already high poverty and inequality.
In addition, the economy remains exposed to external shocks and capital flow volatility, in the context of tighter global financial conditions, and volatile commodity prices related to Russia's war in Ukraine.
The elevated public debt significantly limits the fiscal space available to respond to economic and climate shocks and meet social and developmental needs. Long-standing rigidities in product and labor markets, and governance and corruption vulnerabilities also weigh on growth and employment prospects, threatening social cohesion.
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Source: imf.org
Africa's Digital Economy Will Rise to $712bn By 2050-AfDB
March 15, 2023--The president, African Development Bank Group (AfDB), Dr Akinwumi A. Adesina, has said the size of Africa's digital economy will rise from $115 billion today to $712 billion by 2050.
He said this Tuesday at the official launch of the Investment in Digital and Creative Enterprises (I-DICE) by Vice President Yemi Osinbajo at the State House Conference Centre, Abuja.
I-DICE, which is an initiative of the Federal Government of Nigeria to promote entrepreneurship and innovation in the digital technology and creative industries to create jobs, especially for young people, is supported by the AfDB, Agence Francaise de Developpement (AFD) and Islamic Development Bank with the Bank of Industry designated as executing agency.
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Source: allafrica.com
South African economy slumps in Q4 as power crisis escalates
March 7, 2023--Q4 GDP down 1.3% q/q seasonally adjusted
Analysts had predicted 0.4% contraction
Seven out of 10 industries shrink
Rand slips after data released
South Africa's economy contracted more than expected in the last quarter of 2022, as an escalation in rolling power cuts contributed to most sectors from agriculture to mining shrinking.
The data means South Africa could be heading for recession and highlights the damage that the worst electricity outages on record are doing to Africa’s most industrialised economy.
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Source: reuters.com
Africa's Agribusiness Sector Should Drive the Continent's Economic Development-Five Reasons Why
February 17, 2023--Africa's agriculture sector accounts for about 35% of the continent's gross domestic product, and provides the livelihood of more than 50% of the continent's population. These shares are more than double those of the world average and much higher than those of any other emerging region.
Dependence on agriculture has declined in other emerging regions.
For example in Southeast Asia, agriculture's share of GDP dropped from 30-35% in 1970 to 10-15% in 2019. In Africa it has remained unchanged for decades, according to World Bank data. At the same time, Africa's agriculture sector is the world's least developed, with the lowest levels of labour and land productivity. Value added per worker in agriculture is about a quarter of the world's average and less than a fifth of China's.
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Source: allafrica.com
IMF Staff Country Report-Nigeria: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Nigeria
February 16, 2023--Summary:
Economic recovery continued to broaden in 2022. Higher oil prices are yet to deliver tangible benefits amid contraction of oil production and costly fuel subsidies. Elevated inflation and lingering external sector pressures, if left unaddressed, may exacerbate macroeconomic instability.
This could impact growth, food security and ultimately social cohesion given extreme inequality and high poverty. The upcoming elections provide an opportunity for the new administration to advance structural reforms and offer a more prosperous future.
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Source: imf.org
