My analysis
When will the World Bank stop this nonsense about economic growth. Of course, economic growth is a necessarybut not a sufficient condition for development. We must move away from economic growth accumulation (economic development) to economic growth distribution(human development). There was certainly a lot of growth during Gadaffi’s Libya –but can we call that meaningful development . The best countries to be such as; Norway, Denmark and Sweden are not ranked basing on economic growth per se but rather by economic growth distribution(human development).
Economic growth or economic growth distribution: Sub-Saharan Africa economic growth remains robust – World Bank
The Gross Domestic Problem
Beyond GDP: New measures for a new Economy
http://www.demos.org/sites/default/files/publications/BeyondGDP_0.pdf
http://www.demos.org/publication/beyond-gdp-new-measures-new-economyThe IMF Says The World's In A Mess - But Not Africa
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The IMF’s latest World Economic Outlook makes sobering reading for most of the world. Headlines have focused on the IMF’s warning that the world economy may never return to the pace of expansion it enjoyed before the global financial crisis; in the meantime, it has cut its global growth forecasts for 2014 to 3.3% and for 2015 to 3.8%, both of them downgrades from previous expectations.
But there’s a bright side: Africa.
The most readable emerging markets economist, Charles Robertson of Renaissance Capital, had this to say this morning. “The IMF 6-monthly release of economic data is a little dose of heaven to this economist. The world can focus on gloomy headlines about the IMF downgrading its projections, but… there are growth stories: They’re in Africa, which is taking the lead from Asia.”
![Africa_satellite_orthographic]()
You can download the IMF report here. It includes figures on projected real GDP percentage growth in 2014, and a close look at the data shows why Robertson is so excited: six of the the top 10 countries, and 11 of the top 20, are in Africa. While Asian countries are still in there – in fact, the top 19 are all in Africa or Asia – they are no longer the majority.
They are perhaps not the obvious names. Most portfolio investment into Africa goes into South Africa or, more recently, Nigeria, with Egypt popular pre-revolution, Kenya and Ghana attracting increasing attention, and Morocco occasionally favoured despite its modest stock market size. None of those countries appear in the top 10; Nigeria, the only one in the top 20, ranks 17th. Instead, we have oil and gas stories (Chad and Mozambique – plus, outside of Africa, the number one country on the list, weird and wonderful Turkmenistan), mining plays (The DRC and Sierra Leone), soft commodities (Cote d’Ivoire) and, a relative outlier, Ethopia, which Robertson calls “more an investment led story driven by the government”. Incidentally, the Asian countries rounding out the top 10 are a resource play (Mongolia), an emergence play (Myanmar) – and China, which ranks 10th, at 7.4% growth. Looking at African countries elsewhere in the top 20, aside from established Nigeria (now officially the 21st largest economy in the world following the rebasing of its GDP), there is a newly opened market (Tanzania), and countries at either end of the wealth and education spectrum, The Gambia at one end, Mauritania and Burkina Faso at the other. Overall, sub-Saharan Africa grew by 5.1% in 2013, and the IMF projects it to hit the same figure in 2014 and 5.8% in 2015.
The IMF says: “Economic activity in sub-Saharan Africa has continued to grow robustly – on the back of supportive external demand conditions and strong growth in public and private investment – and the outlook is elected to remain favourable for the lion’s share of the region’s countries.”
All well and good. But two points occur. One, strong economic growth does not automatically equate to a positive experience for investors. And two… Ebola.
To take the second point first, nobody really knows how bad Ebola could be. The IMF, whose blunt tone must be forgiven in what is, after all, an economic report, writes: “Beyond the severe humanitarian implications, the ongoing outbreak of the Ebola virus is exacting a heavy economic toll in Guinea, Liberia and Sierra Leone.” The man who discovered Ebola back in the 1970s, Dr Peter Piot, was quoted this week as saying: “I am so worried about Nigeria as well. The country is home to mega-cities like Lagos and Port Harcourt, and if the Ebola virus lodges there and begins to spread, it would be an unimaginable catastrophe.”
Even without that, African countries face other challenges. The IMF highlights a rapid buildup of fiscal vulnerabilities in a few countries, increasing security threats, and the risk caused by a tightening in global financing conditions (which is always a possibility when the US starts raising interest rates again).
Despite these issues, portfolio flows in both debt and equity in recent years have demonstrated renewed enthusiasm for exposure to Africa. In the bond market, for example, one sovereign after another has brought a bond to the international markets and found it heavily oversubscribed, recent examples being Kenya and Cote d’Ivoire.
Every country is different, of course; speaking of Africa as a homogenous continent makes no sense at all, given the combination of relatively mature middle-income countries like South Africa, oil-rich countries in turmoil like Libya, densely populated West African countries, places with dire security situations like the Central African Republic and South Sudan, and post-war rebounds like Angola and Mozambique. The successful investor will need to distinguish the opportunities from the duds. “In many countries,” writes the IMF, “activity will continue to benefit from the boost generated by infrastructure projects, the expansion of productive capacity, buoyant services sectors, a rebound in agricultural production, or combinations of those factors. In some middle income countries and oil exporters, however, the picture is more mixed. In South Africa, a muted recovery is expected to take hold only in 2015.”
It’s a market that many investors are only prepared to venture into through mutual funds, whether debt or equity, with a clear focus on on-the-ground expertise. There’s no question Africa presents enormous investment opportunity, but finding the best way to play it is, for the moment, a professional’s game.
![WEO]()
Chapter 1: Recent Developments, Prospects, and Policy Priorities
Chapter 2: Country and Regional Perspectives
Chapter 3: Is It Time for an Infrastructure Push? The Macroeconomic Effects of Public Investment
Chapter 4: Are Global Imbalances at a Turning Point?
But there’s a bright side: Africa.
The most readable emerging markets economist, Charles Robertson of Renaissance Capital, had this to say this morning. “The IMF 6-monthly release of economic data is a little dose of heaven to this economist. The world can focus on gloomy headlines about the IMF downgrading its projections, but… there are growth stories: They’re in Africa, which is taking the lead from Asia.”
You can download the IMF report here. It includes figures on projected real GDP percentage growth in 2014, and a close look at the data shows why Robertson is so excited: six of the the top 10 countries, and 11 of the top 20, are in Africa. While Asian countries are still in there – in fact, the top 19 are all in Africa or Asia – they are no longer the majority.
They are perhaps not the obvious names. Most portfolio investment into Africa goes into South Africa or, more recently, Nigeria, with Egypt popular pre-revolution, Kenya and Ghana attracting increasing attention, and Morocco occasionally favoured despite its modest stock market size. None of those countries appear in the top 10; Nigeria, the only one in the top 20, ranks 17th. Instead, we have oil and gas stories (Chad and Mozambique – plus, outside of Africa, the number one country on the list, weird and wonderful Turkmenistan), mining plays (The DRC and Sierra Leone), soft commodities (Cote d’Ivoire) and, a relative outlier, Ethopia, which Robertson calls “more an investment led story driven by the government”. Incidentally, the Asian countries rounding out the top 10 are a resource play (Mongolia), an emergence play (Myanmar) – and China, which ranks 10th, at 7.4% growth. Looking at African countries elsewhere in the top 20, aside from established Nigeria (now officially the 21st largest economy in the world following the rebasing of its GDP), there is a newly opened market (Tanzania), and countries at either end of the wealth and education spectrum, The Gambia at one end, Mauritania and Burkina Faso at the other. Overall, sub-Saharan Africa grew by 5.1% in 2013, and the IMF projects it to hit the same figure in 2014 and 5.8% in 2015.
The IMF says: “Economic activity in sub-Saharan Africa has continued to grow robustly – on the back of supportive external demand conditions and strong growth in public and private investment – and the outlook is elected to remain favourable for the lion’s share of the region’s countries.”
All well and good. But two points occur. One, strong economic growth does not automatically equate to a positive experience for investors. And two… Ebola.
To take the second point first, nobody really knows how bad Ebola could be. The IMF, whose blunt tone must be forgiven in what is, after all, an economic report, writes: “Beyond the severe humanitarian implications, the ongoing outbreak of the Ebola virus is exacting a heavy economic toll in Guinea, Liberia and Sierra Leone.” The man who discovered Ebola back in the 1970s, Dr Peter Piot, was quoted this week as saying: “I am so worried about Nigeria as well. The country is home to mega-cities like Lagos and Port Harcourt, and if the Ebola virus lodges there and begins to spread, it would be an unimaginable catastrophe.”
Even without that, African countries face other challenges. The IMF highlights a rapid buildup of fiscal vulnerabilities in a few countries, increasing security threats, and the risk caused by a tightening in global financing conditions (which is always a possibility when the US starts raising interest rates again).
Despite these issues, portfolio flows in both debt and equity in recent years have demonstrated renewed enthusiasm for exposure to Africa. In the bond market, for example, one sovereign after another has brought a bond to the international markets and found it heavily oversubscribed, recent examples being Kenya and Cote d’Ivoire.
Every country is different, of course; speaking of Africa as a homogenous continent makes no sense at all, given the combination of relatively mature middle-income countries like South Africa, oil-rich countries in turmoil like Libya, densely populated West African countries, places with dire security situations like the Central African Republic and South Sudan, and post-war rebounds like Angola and Mozambique. The successful investor will need to distinguish the opportunities from the duds. “In many countries,” writes the IMF, “activity will continue to benefit from the boost generated by infrastructure projects, the expansion of productive capacity, buoyant services sectors, a rebound in agricultural production, or combinations of those factors. In some middle income countries and oil exporters, however, the picture is more mixed. In South Africa, a muted recovery is expected to take hold only in 2015.”
It’s a market that many investors are only prepared to venture into through mutual funds, whether debt or equity, with a clear focus on on-the-ground expertise. There’s no question Africa presents enormous investment opportunity, but finding the best way to play it is, for the moment, a professional’s game.
Legacies, Clouds, Uncertainties
October 2014
Despite setbacks, an uneven global recovery continues. Largely due to weaker-than-expected global activity in the first half of 2014, the growth forecast for the world economy has been revised downward to 3.3 percent for this year, 0.4 percentage point lower than in the April 2014 World Economic Outlook (WEO). The global growth projection for 2015 was lowered to 3.8 percent.
Downside risks have increased since the spring. Shortterm risks include a worsening of geopolitical tensions and a reversal of recent risk spread and volatility compression in financial markets. Medium-term risks include stagnation and low potential growth in advanced economies and a decline in potential growth in emerging markets.
Given these increased risks, raising actual and potential growth must remain a priority. In advanced economies, this will require continued support from monetary policy and fiscal adjustment attuned in pace and composition to supporting both the recovery and longterm growth. In a number of economies, an increase in public infrastructure investment can also provide support to demand in the short term and help boost potential output in the medium term. In emerging markets, the scope for macroeconomic policies to support growth if needed varies across countries and regions, but space is limited in countries with external vulnerabilities. And in advanced economies as well as emerging market and developing economies, there is a general, urgent need for structural reforms to strengthen growth potential or make growth more sustainable.
Contents
Front Matter
Chapter 1: Recent Developments, Prospects, and Policy Priorities
Despite setbacks, an uneven global recovery continues. In advanced economies, the legacies of the precrisis boom and the subsequent crisis, including high private and public debt, still cast a shadow on the recovery. Emerging markets are adjusting to rates of economic growth lower than those reached in the precrisis boom and the postcrisis recovery. Overall, the pace of recovery is becoming more country specific. Read more...
Chapter 2: Country and Regional Perspectives
After a slowdown in the first half of 2014, global growth is forecast to strengthen to 3.5 percent in the second half of 2014 and 3.8 percent in 2015. But growth is uneven and still weak overall and remains susceptible to many downside risks. Production disruptions or sharply higher global oil prices—due to geopolitical tensions—would reduce global growth, as would an unexpected tightening in financial conditions owing to higher-than-expected U.S. long-term interest rates or increased risk aversion. Over the medium term, protracted weak demand in advanced economies could result in lower growth everywhere, including, in part, through negative supply-side effects.
Chapter 3: Is It Time for an Infrastructure Push? The Macroeconomic Effects of Public Investment
This chapter finds that increased public infrastructure investment raises output in both the short and long term, particularly during periods of economic slack and when investment efficiency is high. This suggests that in countries with infrastructure needs, the time is right for an infrastructure push: borrowing costs are low and demand is weak in advanced economies, and there are infrastructure bottlenecks in many emerging market and developing economies. Debt-financed projects could have large output effects without increasing the debt-to-GDP ratio, if clearly identified infrastructure needs are met through efficient investment.
Chapter 4: Are Global Imbalances at a Turning Point?
Global current account (“flow”) imbalances have narrowed significantly since their peak in 2006, and their configuration has changed markedly in the process. The imbalances that used to be the main concern—the large deficit in the United States and surpluses in China and Japan—have more than halved. But some surpluses, especially those in some European economies and oil exporters, remain large, and those in some advanced commodity exporters and major emerging market economies have since moved to deficit. This chapter argues that the reduction of large flow imbalances has diminished systemic risks to the global economy. Nevertheless, two concerns remain.
Annex
Statistical Appendix
- Assumptions
- What's New
- Data and Conventions
- Classification of Countries
- General Features and Composition of Groups in the World Economic Outlook Classification
- Table A. Classification by World Economic Outlook Groups and Their Shares in Aggregate GDP, Exports of Goods and Services, and Population, 2013
- Table B. Advanced Economies by Subgroup
- Table C. European Union
- Table D. Emerging Market and Developing Economies by Region and Main Source of Export Earnings
- Table E. Emerging Market and Developing Economies by Region, Net External Position, Status as Heavily Indebted Poor Countries, and Low-Income Developing Countries
- Table F. Key Data Documentation
- Box A1. Economic Policy Assumptions Underlying the Projections for Selected Economies
| List of Tables Part A (Download PDF) | |||
| A1. | Summary of World Output | ||
| A2. | Advanced Economies: Real GDP and Total Domestic Demand | ||
| A3. | Advanced Economies: Components of Real GDP | ||
| A4. | Emerging Market and Developing Economies: Real GDP | ||
| A5. | Summary of Inflation | ||
| A6. | Advanced Economies: Consumer Prices | ||
| A7. | Emerging Market and Developing Economies: Consumer Prices | ||
| A8. | Major Advanced Economies: General Government Fiscal Balances and Debt | ||
| A9. | Summary of World Trade Volumes and Prices | ||
| A10. | Summary of Current Account Balances | ||
| A11. | Advanced Economies: Balance on Current Account | ||
| A12. | Emerging Market and Developing Economies: Balance on Current Account | ||
| A13. | Summary of Financial Account Balances | ||
| A14. | Summary of Net Lending and Borrowing | ||
| A15. | Summary of World Medium-Term Baseline Scenario | ||
| List of Tables Part B(Download PDF - available on the web only) | |||
| B1. | Advanced Economies: Unemployment, Employment, and Real GDP per Capita | ||
| B2. | Emerging Market and Developing Economies: Real GDP | ||
| B3. | Advanced Economies: Hourly Earnings, Productivity, and Unit Labor Costs in Manufacturing | ||
| B4. | Emerging Market and Developing Economies: Consumer Prices | ||
| B5. | Summary of Fiscal and Financial Indicators | ||
| B6. | Advanced Economies: General and Central Government Net Lending/Borrowing and Excluding Social Security Schemes | ||
| B7. | Advanced Economies: General Government Structural Balances | ||
| B8. | Emerging Market and Developing Economies: General Government Net Lending/ Borrowing and Overall Fiscal Balance | ||
| B9. | Emerging Market and Developing Economies: General Government Net Lending/ Borrowing | ||
| B10. | Advanced Economies: Exchange Rates | ||
| B11. | Emerging Market and Developing Economies: Broad Money Aggregates | ||
| B12. | Advanced Economies: Export Volumes, Import Volumes, and Terms of Trade in Goods and Services | ||
| B13. | Emerging Market and Developing Economies by Region: Total Trade in Goods | ||
| B14. | Emerging Market and Developing Economies by Source of Export Earnings: Total Trade in Goods | ||
| B15. | Summary of Current Account Transactions | ||
| B16. | Summary of External Debt and Debt Service | ||
| B17. | Emerging Market and Developing Economies by Region: External Debt by Maturity and Type of Creditor | ||
| B18. | Emerging Market and Developing Economies by Analytical Criteria: External Debt by Maturity and Type of Creditor | ||
| B19. | Emerging Market and Developing Economies: Ratio of External Debt to GDP | ||
| B20. | Emerging Market and Developing Economies: Debt-Service Ratios | ||
| B21. | Emerging Market and Developing Economies, Medium-Term Baseline Scenario: Selected Economic Indicators | ||
| World Economic Outlook, Selected Topics | |||