World Bank The fourth volume of Africa’s Pulse was released on September 19, 2011. It provides an analusis on the economic outlook for Sub-Saharan Africa and Sub-Saharan Africa’s employment challenge.
Summary of findings:
1- Economic Outlook for Sub-Saharan Africa:
- Recent developments in high-income countries have pulled down global growth and significantly weakened overall prospects for the global economy.
- Sub-Saharan African countries appear to be resilient to global events.
- Notwithstanding a more difficult global economic environment and the effects of a devastating drought in some parts, the Africa region’s GDP growth is forecast to attain pre-crisis levels in 2012.
- Global GDP is now projected to increase by 2.8% in 2011 (versus 3.2% in June forecasts by the World Bank). However, developing country growth has been marked down less noticeably to 6.1% (from 6.3% in June).
- For Sub-Saharan African economies, trade, especially with Europe, remains the main channel through which the current perturbations in the global economy will be transmitted.
- Oil prices, which have fallen by 11.3% from their highs earlier this year, are likely to curtail growth prospects in oil-exporting Sub-Saharan African economies. At the same time, they are bringing relief to the region’s oil importers.
- Foreign direct investment is another important channel for transmitting growth shocks in the EU and in other major partner countries, which is likely to be exacerbated in Africa because it is closely linked to mineral prices.
- With agriculture accounting for about 20% to 40% of GDP in most sub-Saharan African countries, the impact of poor rains can be significant. Initial estimates suggest that in the average Sub-Saharan African economy, every percentage decline in growth in the agricultural sector could cut GDP growth by 0.26 percentage points.
- Non-fragile countries are showing particular strength on macroeconomic management, with an average score of 3.9 in the Country Policy and Institutional Assessment (CPIA) scores, compared with 2.8 for fragile states in Africa and 3.7 for IDA countries in other regions.
2- Sub-Saharan Africa’s employment challenge:
- Like other regions Sub Saharan Africa’s growth has not created enough productive jobs to absorb the 7-10 million young people entering the labor force each year.
- Unlike other regions, most Africans are not unemployed—they are working in low-productivity jobs in the informal sector.
- Although there has been a decline in the percent of employed who are poor, the fact remains that the majority of African workers are engaged in low-productivity, low skills jobs.
- Even rapid growth of the formal sector is unlikely to keep pace with the number of new entrants in the labor force.
- The challenge for policymakers is to lift the productivity of jobs in the frequently ignored informal sector.
The fourth volume of Africa’s Pulse is available here.
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