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South Africa's Economy Loses Momentum Amid Record Power Cuts
June 15, 2023--Reforms are urgently needed to resolve the energy crisis and tackle structural unemployment
Newly released data shows the South African economy grew by 0.4 percent between January and March this year. Crippling power cuts, volatile commodity prices and a challenging external environment have contributed to the country's weak growth performance.
By year-end, we project real GDP growth to fall sharply from last year. Though we expect growth to pick up again in 2024, the pace is too slow to reduce unemployment, which at 32.9 percent remains close to an all-time high.
The country has faced rolling blackouts after years of mismanagement of the state-owned utility, Eskom, prompting the authorities to ease the registration process and licensing requirements for energy production to encourage private sector investment. The government also announced a three-year debt relief arrangement to help Eskom establish its commercial viability and mitigate the energy crisis.
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Source: imf.org
African Development Bank Group Annual Report 2022: Bank Group demonstrates strong performance and commitment to African countries
June 14, 2023--US$8.2 billion in approvals to African member countries
The African Development Bank Group has released its 2022 Annual Report. The report shows solid performance over the year, recording a significant increase in lending to the Bank Group's regional member countries in the face of a challenging global environment for Africa.
"Amid multiple global shocks, the [African Development] Bank once again demonstrated its unwavering commitment to African countries through targeted actions tailored to strengthening resilience across the continent," African Development Bank President Akinwumi Adesina said in the foreword to the report.
Africa saw its real gross domestic product growth slow to 3.8 percent in 2022, down from 4.8 percent in 2021, as it reacted to inflation, rising fuel prices and rising geopolitical tensions. The lingering effects of the COVID-19 pandemic, the growing impact of climate change, and adverse weather also played a role in slowing down GDP growth.
view the African Development Bank Group Annual Report 2022
Source: afdb.org
AFDB-African Economic Outlook 2021-The theme of the 2023 African Economic Outlook is Mobilizing Private Sector Financing for Climate and Green Growth in Africa
June 7, 2023--African economies remain resilient amid multiple shocks
The African Economic Outlook 2023 is being published as African countries are dealing with multiple shocks, including the effects of the COVID-19 pandemic, disruptions to global supply chains due to Russia's prolonged invasion of Ukraine and a tightening of global financing conditions.
These shocks have reduced the continent's real GDP growth from 4.8 percent in 2021 to 3.8 percent in 2022. However, African economies remain resilient, with average growth projected to stabilize at 4.1 percent in 2023-24.
The growth outlook is subject to significant downside risks, including i) subdued global growth weighing on Africa's exports, persistence of tight global financial conditions exacerbating debt servicing costs; ii) significant losses and damages due to frequent extreme weather events exacerbating fiscal pressures; iii) the prolongation of Russia's invasion of Ukraine, which is increasing global uncertainty; and iv) persistent disruptions to global supply chains. Other factors include elevated geopolitical risks due to upcoming national elections in some countries.
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Source: African Development Bank
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
