Regional Economic Outlook for Sub-Saharan Africa Economic prospects for 2004 are mixed, but improving overall

• Pages: 144-145

Page 144

In the oil economies in sub-Saharan Africa this year, net exports will drive real GDP growth, which is forecast to average 6.3 percent (see chart, this page). In contrast, for the non-oil economies, private consumption and public investment will be the main sources of expenditure growth. Higher growth in the non-oil economies' agricultural sectors-expected to rise to an average 3.5 percent, the highest rate since 1996-will drive growth on the production side.

Recent developments provide a basis for some optimism. Most countries have continued to make progress in restoring or maintaining macroeconomic stability and should make further strides this year. The outlook for a further easing of inflationary pressures is good, and the generally strong external positions are expected to continue. In the majority of sub-Saharan African countries, inflation rates should fall again in 2004 and are forecast to average 10 percent for the region-a 24-year low (see chart, page 145).

Key caveats

However, several important assumptions supporting higher growth-notably, increased global economic growth and greater import demand in the advanced economies, good crop-growing conditions, and at least some progress in ameliorating intraregional conflicts-are subject to a number of mainly downside risks. In addition to the presumed return of more seasonable weather in most countries, the improved outlook for inflation assumes continued monetary policy restraint, a continuing global trend of declining inflation Zimbabwe). Indeed, conflict, civil strife, drought, and poor domestic policies continue to be clearly evident in those countries experiencing the poorest growth.

As in the past, the regional average masked diverse performances among individual countries and country groupings. While real GDP growth in sub- Saharan Africa's oil-producing countries increased to an average 8.7 percent in 2003, the average for non-oil economies slowed from 2.9 to 2.1 percent. But sharply higher oil production in Equatorial Guinea, Nigeria, and Chad-which achieved the region's highest growth rates at 14.7 percent, 10.6 percent, and 10 percent, respectively- offset contractions in the other oil economies.

Among the most common causes of this slowdown were drought (notably, in Ethiopia, Guinea, Mali, and Rwanda), conflict (Burundi, Central African Republic, Republic of Congo, and Côte d'Ivoire), lower oil production (Angola...