After a weak ending to the year 2012,

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1 Africa & Global Economic Trends Quarterly Statistical Review Statistics Department First Quarter Volume 13 - April 26, 2013 Contents 1 World Economy 1.1. Economic growth & unemployment 1.2. Inflation and financial developments 2 Africa in the World Economy 2.1. Economic growth Focus: Ghanaian economy 2.2. Merchandise trade 2.3. Commodity trends 2.4. Inflation & money supply 2.5. Financial indicators 3 Data sources and descriptions Mthuli Ncube Chief Economist & Vice President (ECON) m.ncube@afdb.org Charles Leyeka Lufumpa Director, Statistics Department (ESTA) c.lufumpa@afdb.org ` Victor Murinde Director, African Development Institute (EADI) v.murinde@afdb.org At a glance After a weak ending to the year 2012, the global economy picked up during the first months of 2013, driven by resilience in emerging economies. The outlook for the first half of 2013 is for a return to slow but steady growth in the United States and Canada, and an improving outlook in Japan. In Europe a meaningful recovery is likely to take longer. Generally, the performance of emerging economies remains much more robust than that of advanced countries, although with significant variations across regions. Business confidence has generally improved since the start of the year, supported by improvements in equity markets in particular. In the eurozone however, confidence weakened in March and remains well below 50, which is the borderline between expansion and contraction. 70,000 64,954 59,908 54,862 49,816 44,770 39,724 34,678 29,632 Global economy : business confidence (monthly data) Global economy : business confidence (monthly data) Continuing shocks emanating from the eurozone, including the aftermath of Cyprus s recent sovereign debt crisis, have acted as a rein on the global recovery. World trade growth of 2.0% in 2012 was down sharply compared to the 5.2% recorded in Despite this, transmission to African economies has been tempered by more intensive financial and trade linkages between the continent and other economically dynamic regions. The importance of countries such as China, Brazil, and India as trading partners, export destinations, and sources of investment in Africa is growing. Africa s merchandise exports to developing economies in 2011 accounted for almost 42% of total exports, compared to 28% in There has been a marked shift toward Asia as an export destination, which accounted for 25% of total export flows in 2011, compared to just 16% in Africa : Merchandise exports by destination (shere in %) Steve Kayizzi-Mugerwa Director, Development Research Department, (EDRE) s.kayizzi-mugerwa@afdb.org This brief was prepared by Louis Kouakou (Statistician, ESTA1), Anouar Chaouch (Statistical Assistant, ESTA1) under the supervision of Beejaye Kokil, (Manager, Economic & Social Statistics Division, ESTA.1). For access to development data on African countries, please visit the AfDB Data Portal Web Site at: or the Statistics Least developed economies Department Web Site:

2 2 Statistics Department First Quarter Volume 13 - April 26, 2013 World Economy Economic Growth World economy : economic growth & unemployment Gradual recovery in global economy Economic developments over the past 12 months have been bumpy, punctuated by slowing real activity in advanced economies, large swings in investor sentiment, amid periods of relative calm and improving prospects. Output in the second half of 2012 was constrained, buffeted by a noticeable slowdown in emerging markets and developing economies. However, the pace of the global economy picked up in the first quarter of 2013 from the lows posted at year-end Global activity is evolving at a three-speed pace. Growth is regaining strong momentum in emerging economies; activity picking up substantially in the US, Canada and Japan; but the eurozone is experiencing stagnation, reflecting a lack of investor confidence and weak consumer demand triggered by stringent austerity measures undertaken in many countries. Taking these factors into account, global output is forecast to increase by 3.3% in 2013, driven mainly by 5.3% GDP growth in emerging and developing economies. In the US, economic figures for the first quarter of 2013 were stronger than expected. Unemployment is falling gradually, consumer spending is increasing and sales of new and previously owned homes are performing well. Nonetheless, the federal government s fiscal difficulties could weigh on growth later in the year, as an increase in payroll tax and cuts in federal spending start to take hold. Political gridlock in the US may be easing, which could open the way for more targeted measures to be introduced to support the recovery. The Federal Reserve has signaled that its most recent program of quantitative easing will not be withdrawn, but as the economy picks up, transitioning to a less accommodative policy stance could prove challenging. The IMF is forecasting real GDP growth of just below 2% for the US in Lagging recovery in the eurozone In the fourth quarter of 2012, GDP in the eurozone contracted by 0.6% after a decline of 0.1% in the previous quarter. The decrease in exports exerted a drag on GDP growth, while domestic demand remained depressed. During the first quarter of 2013, both business and consumer confidence in the eurozone remained subdued in the face of disappointing economic figures. Although the German economy showed positive growth in the first quarter, the downturn in the rest of the eurozone appears to be intensifying. According to the IMF, only one of the big four economies Germany can expect to see positive growth in 2013, at just 0.6%. This is weaker even than the forecast for the UK. France is expected to follow last year s zero growth with a contraction of 0.1%, while Italy and Spain will see growth slump by around 1.5% in For the advanced countries of Europe as a whole, the WEO s projected real GDP growth figure for 2013 has been revised downward to -0.3%. Graph 1. Advanced economies / GDP growth (Quarterly data, % change on previous quarter) 5,00 3,75 2,50 1,25 0-1,25-2,50-3,75-5, Graph 2. Emerging economies / GDP growth (Quarterly data, % change on same quarter of previous year Graph 3. Harmonized unemployment rate (% of active population) In addition to declining manufacturing output, average unemployment in the eurozone has hit 12%. Figures from the Eurostat show that the overall unemployment rate in the 17-member currency union has risen steeply since February 2012, when the rate was 10.9%. Across the wider, 27-country EU the total number of jobless is a record 26.3 million. In Greece, the youth unemployment rate is nearing 60% while in Spain it is 56%. Fiscal stimulus measures in Japan In Japan, a new government has prioritized a sizable fiscal stimulus package and a more accommodative monetary policy as a way to spur economic growth and trade. Investors have watched the yen weaken by around 20% against the dollar since mid This has led to warnings by the US Treasury that Japan should refrain from competitive devaluation of its currency. Such an approach renders Japanese goods (e.g. automobiles) more attractive in the global marketplace compared to goods from competitor nations such as South Korea. The WEO (April 2013) projects growth of around 1.5% for Japan in

3 Statistics Department First Quarter Volume 13 - April 26, World Economy Inflation and financial developments World economy : inflation and financial developments The slowdown in emerging economies during 2012 reflected slackening manufacturing output due to decreasing orders from advanced economies, combined with domestic monetary policy tightening. The first quarter of 2013 saw a slowing of China s growth to 7.7%, missing forecasts for 8% year-on-year growth, with mining stocks significantly hit. Nonetheless, with consumer demand resilient and exports reviving, most regions of Asia, Latin America, and Sub-Saharan Africa are expected to maintain strong growth in Inflation generally subdued Graph 4. Inflation / Consumer prices (monthly data, % change on same month of previous year) 10,00 6,25 2,50 In most advanced economies, low underlying inflation rates allow headroom for monetary policy action to accelerate recovery. In the US, inflation eased in March to 1.5%, down from 2.0% in February; this was largely due to lower gasoline prices. Core inflation also edged down to 1.9% in March, from 2.0% in the previous month. In the eurozone, inflation fell marginally to 1.8% in the first quarter of 2013, compared to 2.3% in the fourth quarter of last year. -1,25-5,00 China posted a 2.1% inflation rate in March, down from a 10-month high 3.2% in February. February s spike was caused by increased food spending due to the Lunar New Year holiday. China s leadership has targeted annual economic growth at 7.5% and inflation at 3.5%. The Bank of Japan has adopted an aggressive monetary stimulus approach, by committing to inject about US$ 1.4 trillion into the economy in less than two years. By so doing, it aims to end nearly two decades of stagnation and raise inflation to 2%. One measure it has taken is to abandon interest rates as a target and become the only major central bank to focus primarily on the monetary base the amount of cash in circulation. To achieve its target, the BoJ will purchase more government bonds and other types of assets. Moreover, the average maturity on purchased securities will rise to seven years from the previous three years. The announcement of this measure led to a 3% depreciation of the yen against the US dollar while yields on the 10-year government bond plummeted to a record low. The US dollar continued appreciating against major currencies in March 2013, gaining 3.0% on the euro and 1.7% against the Japanese yen. The appreciation of the US dollar against the yen continued after the BoJ s monetary stimulus announcement, which led to a monthly average parity of per US dollar in March. Whether the dollar continues to strengthen against other currencies will depend on a number of other indicators, including the jobless numbers, in the months ahead. Recession in the eurozone has weakened the single currency, leading in March 2013 to an average exchange rate of 1 = US$ The recession in Europe has lessened the pressures that drive inflation such as the demand for energy, while high unemployment has kept a lid on wage rises. Buoyant financial markets The first quarter of 2013 saw investors return in large numbers to equity markets, as a reaction to low interest rates and a shift away from bonds. Equity markets continue to hit new highs, but the rally remains narrow and is mostly driven by the US and Japan. The S&P 500 is now just a few points off its all-time high. The remarkable resilience shown by the US economy to weather the fiscal cliff headwinds is boosting investors confidence in US equities, which are outperforming their global counterparts. Graph 5. Exchange rates (US$ per national currency) Graph 6. Stock market indexes (January 2010 = 100)

4 4 Statistics Department First Quarter Volume 13 - April 26, 2013 World Economy Financial Indicators WORLD ECONOMY: Summary of world statistics Table 1 : Real GDP Growth (seasonally adjusted data) Country f 2011 Q Q Q Q Q Q.4 i % change on previous year i % change on previous quarter United States Japan Eurozone France Germany Italy i % change on previous year i % change on same quarter of previous year China India Brazil Russia Table 2 : Inflation (consumer prices, %) Country Q Q Q Q Q Q Q.1 i % change on previous year i % change on same quarter of previous year United States Japan China India Eurozone (HCP) France Germany Italy Table 3 : Financial indicators Country Q Q Q Q Q Q Q.1 Stock markets (end of period quotes) USA (S&P 500) Japan (Nikkei 225) U.K (FTSE 100) Europe (Eurotop) Hong Kong (HSI) Brazil (BVSP) Exchange rates (national units per US-Dollar, period average) Euro Yen Yuan Interest rates (% per annum, period average) United States Japan Eurozone

5 5 Statistics Department First Quarter Volume 13 - April 26, 2013 Africa in the World Economy Economic Growth AFRICA: Economic growth Strong growth overall, despite mixed country performances Economic growth in Africa remained robust at 4.6% in 2012, despite the slowdown in the global recovery. Africa s resilience is linked to continued momentum in emerging economies, the continent s attractiveness as an FDI destination, robust domestic demand, ongoing investment in infrastructure, and activation of new capacity in the extractive sectors. This overall positive performance is though far from uniform across the continent, as domestic factors including monetary policy tightening (Kenya and Uganda), protracted labor disputes (South Africa), and political unrest (Egypt, Tunisia, Mali, and Guinea Bissau) have impeded growth in a number of African countries. Graph 7. GDP growth for selected countries (quarterly data, % annual change ) The continent s strong performance during 2012 was largely due to high commodity prices and an increase in private capital flows, particularly to the natural resources sector, in the form of FDI. Exports grew strongly in the first half of the year; however a sharp deceleration of industrial commodities and oil exports occurred in the second half of Tourism, an important driver of growth for many countries, remained robust with a high level of arrivals in many of the traditional destinations, including South Africa, Kenya, and Madagascar. However, the North African countries of Tunisia and Egypt, whose economies also rely heavily on the sector, are struggling to win back holidaymakers particularly tourists from the austerity-hit eurozone some two years after the sociopolitical unrest of the Arab Spring erupted. South Africa's GDP growing at a lackluster pace In South Africa, negative domestic factors reined in economic growth at a lackluster 2.5% in 2012, down from 3.5% in Despite forecasts of a contraction in the fourth quarter of 2012, real economic growth seasonally adjusted picked up by 0.5%, after a revision of the third quarter figures to roughly 0.3%, after industrial action in the mining sector had taken its toll. Mining sector real value added contracted further in the fourth quarter of 2012 as a number of gold and platinum mines lost output due to strike activity. By contrast, agricultural output rose as livestock production held up fairly well over the period. The manufacturing sector in South Africa saw real output increase in the final quarter of 2012, supported by continued demand from emerging economies and improved competitiveness due to depreciation of the rand. However, indicators are more muted for the first quarter of 2013 with a dip in consumer confidence and manufacturing output slowing. South Africa s economy is forecast to grow at a muted 2.75% in 2013, owing to the slowdown in mining production and the weakness of demand in the eurozone, which is its main export market. Pressures on fiscal and external stability in Tunisia and Egypt Tunisia shares many of the same problems as Egypt: a high level of unemployment particularly among the youth; food and oil subsidies that represent a drain on government finances; and sociopolitical fragility in the aftermath of the Arab Spring. Major international ratings agencies have downgraded Tunisia and Egypt s sovereign credit ratings with a negative outlook, citing acute political, economic, and security strains. Tunisia s trade is particularly vulnerable to the eurozone crisis, as recession-hit France and Italy represent its largest export markets. Egypt s negotiations to secure an IMF loan of US$ 4.8 billion have stalled. However, the IMF has reached a framework agreement with Tunisia on a two-year, US$1.75 billion standby loan deal, which is awaiting final approval from the IMF board of directors. The aim of the loan is to support the implementation of the government s reform program to promote private investment, foster sustainable job-creation, reduce economic and social regional disparities, and strengthen social policies to protect the most vulnerable. 15,00 6,25-2,50-11,25-20, Graph 8. Manufacturing production (monthly data, % annual change) Graph 9. North Africa - GDP growth (quarterly data, % annual change )

6 6 Statistics Department First Quarter Volume 13 - April 26, 2013 Africa in the World Economy Economic Growth AFRICA: Economic growth Severe political and social unrest, such as that experienced by Arab Spring countries, is generally accompanied by a sharp deterioration in macroeconomic outcomes. The recovery is often sluggish leading to increased unemployment, lower domestic and foreign investment, and fiscal deficits. With declining reserves, high external vulnerabilities can lead to large currency depreciation, which may give rise to higher inflation. Many of these economic characteristics are evident in Egypt and Tunisia and require the implementation of fiscal adjustment measures. Steady growth in oil exporters countries Graph 10. Crude oil production for Opec members (1000 barrel / day) 2 500, , ,50 630,25 In Namibia, GDP growth in the fourth quarter of 2012 accelerated by 4.3% compared to 0.7% in the previous quarter. This rebound was brought about by Agriculture, Mining and electricity, and water sectors real value added, which increased by 21.1%, 47.7%, and 17.2% respectively. Despite moderating industrial output, Senegal s GDP growth also showed a bullish trend, reaching 5.2% in the fourth quarter, up from 3.7% in the previous quarter. 7,00 Nigeria, Africa s main oil producer, saw its GDP growth increase to 7.0% in the fourth quarter of 2012, up half a percent from 6.5% in the third quarter. Severe floods in the country in mid-2012 led to the deaths of 363 people and displaced 2.1 million, with major impacts not only to affected populations, but also to infrastructure and the economy as a whole. However, the implementation of power sector reform and rebound after the floods are expected to boost growth in Ghana is now the second biggest oil-producer in the continent after Nigeria, supplanting Angola in the rankings. The dramatic rise of Ghana s economy during is discussed in the Focus section below. Africa s oil-exporting countries should continue to perform well, although expectations need to be tempered on account of weakening global economic growth, which is depressing oil prices. Oil output estimates for the first quarter 2013 indicate that total crude oil production in the four OPEC members (Algeria, Angola, Libya, and Nigeria) is roughly stabilizing. Recent falls in the price of oil have seen Brent crude dropping below US$ 100 per barrel for the first time since July 2012 and West Texas Intermediate down to US$88.3 per barrel. This represents a fall of 9% in the first half of April 2013 alone. Some forecasters believe that OPEC may cut production to shore up oil prices, although growth in oil demand is likely to continue from China. Graph 11. West Africa : industrial production (quarterly data, % annual change ) 30,00 18,75 7,50-3,75-15, Table 4 : Real GDP growth (%) Country Q Q Q Q Q Q.4 i % change on previous year i % change on same quarter of previous year Botswana Egypt Ghana Kenya Mauritius Morocco Namibia Nigeria Rwanda Senegal South Africa Tanzania Tunisia Uganda

7 Statistics Department First Quarter Volume 13 - April 26, Africa in the World Economy Focus (1/3)... Ghanaian economy After a temporary slowdown in 2009, Ghana s economy has witnessed a resurgence since 2010, expanding by 15% in December 2010 marked the start of its oil production, which has delivered a massive boost to the economy. In recent years, exports have also been buoyed by high cocoa and gold prices. Construction and service activities, which now account for 50% of GDP, have also performed well. Supported by fiscal tightening measures and currency adjustments introduced in 2009, the country s macroeconomic fundamentals have further strengthened. In 2012, the economy expanded at a steady rate of 7.9%, amid rising fiscal and external imbalances. Momentum has continued into 2013, despite fading base effects from oil extraction. Fiscal and monetary policies have succeeded in reining in inflation to single digits. Meanwhile, much remains to be done to achieve solid macroeconomic stability and sustainable economic development for the long term. The discovery of oil is at the same time an opportunity and source of risk for Ghana. Economic growth boosted by oil sector The discovery of oil reserves, which positioned Ghana in second place after Nigeria in terms of oil production in Sub-Saharan Africa, has given a major boost to the nation s growth prospects. The global economic crisis of saw GDP growth decelerate from 8.4% in 2008 to 4% in Indeed, the economy registered an average annual growth of 4.5% between 2001 and However, the country s GDP growth of 8.0% in 2010 and 15% in 2011 was not solely due to its traditional major exports of gold and cocoa. It was the discovery and the start of oil extraction at the Jubilee field that fueled the strong economic performance of In 2012, economic output is estimated to have expanded at a slower but steady rate of 7.9%. As the contribution of industrial sector faded across 2012, due to the vanishing of base drift effects from the oil sector, growth moderated from 9% in the first quarter to just 6% in the last quarter of The growth pattern is also illustrated by the composite index of real economic activity, computed by Bank of Ghana. This corroborates the deceleration across 2012, but with a moderate upturn at the end of the year. Both business and consumer confidence indexes in January 2013 rebounded strongly, pointing to positive expectations and strengthening activity for the year ahead. From the demand side, public and private consumption was stimulated by oil incomes, the rise of the wages of public sector workers, and subsidies on fuel prices. On the supply side, national income was boosted by high prices of raw materials especially oil, gold and cocoa, which increased export revenues. With the emergence of the oil industry, the value added of the industrial sector accounts for onefourth of total GDP. Ghana s exports of crude oil for the year 2012 surpassed cocoa in terms of value. The percentage share of total exports was: cocoa at 20.7%, oil at 23%; with gold still in first position at 54.2%. The contribution of the services sector to GDP growth remains decisive. According to Ghana Statistical Service, the services sector accounted for about 45.5% of GDP in 2012, thanks to the dynamism of the telecommunications and trade sectors Ghana : GDP growth and sectoral contributions (quarterly data, %) 400, , , , , ,2726-1, Ghana: Economic activity (monthly composite index)

8 8 Statistics Department First Quarter Volume 13 - April 26, 2013 Africa in the World Economy Focus (2/3)... Ghanaian economy (continued) Current account balance remains healthy Despite the rise in oil exports, Ghana s current account continues to post a high deficit, mainly due to the deterioration in the trade balance. The current account component of the balance of payments amounted to % of GDP in 2012, according to the IMF. Total merchandise imports amounted to US$17.7 billion in 2012, an increase of 12.1% over Non-oil imports grew by 13.9% to US$14.4 billion, while oil imports grew moderately by 5%. These developments resulted in a trade deficit of US$4.2 billion in 2012, compared with US$3.1 billion in Imports will continue to grow at a rapid pace in line with the dynamism of domestic demand and the oil sector requirements in capital goods. Servicing the current account deficit will hinge on strong capital inflows, including foreign direct investments in the oil sector and bond purchases by nonresident investors. The overall balance of payments therefore recorded a deficit of US$1.2 billion in 2012, reversing the surplus of US$546.5 million achieved in The balance of services and incomes will also continue to weigh on the current account deficit, mainly through the repatriation of dividends by nonresident investors, in spite of a positive but modest contribution from current transfers. Raising public deficit Provisional data on Ghana s public finances and the execution of the budget during 2012 showed that total revenue and grants increased by around 30%, compared to the previous year, on account of higher revenue from petroleum taxes and an increase of 20.6% on a year-on-year basis in value added tax collection. The improved performance of import duty was attributed to a number of factors including increased imports, improvements in import valuations, and the cedi depreciation during the year. Government spending in 2012 was equivalent to 35.2% of GDP and recorded 56% growth. On a year-on-year basis, recurrent expenditure grew by 64.6%. Ghana : Main exports (quarterly data, current US$) ,0 6187,5 3375,0 562,5-2250, Ghana : Public finance (millions of GH çedi) Ghana : Monetary survey (monthly data, year on year change in %) Furthermore, non-interest payments accounted for 76.3% of the recurrent expenditure. These high non-interest payments were driven mainly by personnel emoluments and transfers, which together accounted for 82.3% and 71.9% of non-interest expenditure and domestic revenues respectively. These developments resulted in a budget deficit equivalent to 12.0% of GDP against a target of 6.7% of GDP and compared to a deficit equivalent to 4.0 % of GDP in The deficit was financed largely from domestic sources. Ghana s total public debt rose to 46.0% of GDP in December 2012 from 34.4% of GDP in December

9 Statistics Department First Quarter Volume 13 - April 26, Africa in the World Economy Focus (3/3)... Ghanaian economy (continued) Inflationary pressures emerge in the first quarter 2013 In mid-2009, Ghana faced high inflationary pressures and a fall in the value of the cedi against major currencies. This threatened public and external balances and required adjustment policies under the Extended Credit Facility granted by the IMF. Since then, the situation has improved. However, after posting single-digit inflation in 2011 and 2012, the inflation rate rose to 10.4% in March Inflationary pressures include the pass-through effect of a previous surge in producer prices, combined with public sector wage increases, and a sharp increase in government domestic borrowing. At the start of 2013, the Monetary Policy Committee of the Bank of Ghana maintained its policy rate at 15%, after successive rises introduced during The central bank s Governor sees a broadly positive growth outlook for 2013, underpinned by private sector credit expansion, improved business and consumer sentiments and increased oil production in the last quarter of The BoG may need to tighten its monetary policy to keep inflation below its target rate of 8.5%. Pressures on exchange rate easing In 2012, the cumulative depreciation of the cedi for the year stood at 17.5%, compared to 5% depreciation in The Ghanaian cedi has been put under pressure from both domestic and external factors. Domestic factors include the surge in imports and loose fiscal and monetary policies, while external factors include global risk aversion which favors safe haven currencies like the dollar. The Bank of Ghana has mounted a defense of the cedi, consisting of aggressive interest rate hikes, as well as micro and macro prudential measures. Exchange rate tensions are likely to persist in 2013 due to the balance of payments deficit and uncertainties about the level of capital outflows of equities and debt. Ghana : Inflation and interest rate (monthly data, %) ,00 1,75 1,50 1,25 1,00 0,75 0,50 Ghana : Exchange rate of GH çedi (local currency per US$, monthly average)

10 10 Statistics Department First Quarter Volume 13 - April 26, 2013 v Africa in the World Economy Foreign Trade AFRICA: Merchandise trade World trade volume forecast to grow by 3.3% in 2013 In 2012, world trade volume growth slumped to 2.0%, from 5.2% in According to the WTO, world merchandise trade is expected to remain sluggish in 2013 at around 3.3%, as the economic slowdown in the eurozone and high unemployment dampen import demand. The abrupt deceleration of trade during 2011 and 2012 is bound up with the uneven global recovery, and the slowdown in advanced economies. In 2012, exports of developing economies grew by 3.3%, while imports of these countries grew by 4.6%. This is a much stronger performance than that of the advanced economies, which saw their imports decline by 0.1%. Trade among developing countries has seen a significant rise over the past decade and now represents more than 50% of all developing country trade. Even excluding exports to China, trade among developing countries has been very robust. East Asia, South Asia, and Sub-Saharan Africa are the regions where this South South trade grew fastest, though at a lower rate in countries that have preferential trade agreements with high-income economies. Merchandise imports of African countries decelerated over the course of 2012 After seeing its exports shrink by 8.5% in 2011, Africa rebounded in 2012 to record the fastest export growth of any region, at 6.1%. Africa s imports grew by 11.3%, making it the only region to record double-digit growth. South Africa s results for 2012 were less impressive, recording a significant fall of 11% in merchandise exports over the year. Notable decreases in inventories were registered in the mining and manufacturing sectors, with production setbacks partly met by running down stock levels. This contributed to a broadly unchanged volume of exports in the final quarter of the year, with a recovery in mining exports especially iron ore and coal countered by a decline in exports of manufactured goods. The volume of imports receded moderately in the final quarter of 2012, weighed down largely by lower imports of vehicles and transport equipment , , ,656 80,985 61,313 41,641 21,969 2,297-17, Graph 12. World merchandise imports (Volume 2005Q1=100) Graph 13. Africa - Merchandise exports (Values in current US $, year to year % change) Graph 14. Africa - Merchandise imports (Values in current US $, year to year % change) However, the value of merchandise imports in South Africa increased over the period, largely due to a significant depreciation of the rand. This also underpinned an increase in the rand value of exports. Despite a moderate deterioration in the terms of trade, there was a slight narrowing of the trade deficit from the third to the fourth quarter. Simultaneously, the deficit on the services, income and current transfer account contracted marginally, causing the current account deficit to decrease to 6.5% of GDP and this approximate level is expected to be maintained in

11 Statistics Department First Quarter Volume 13 - April 26, Africa in the World Economy Foreign Trade AFRICA: Summary of trade statistics Table 5 : Merchandise trade for selected African countries (%) Country 2011 Q Q Q Q Q Q Q Q.4 i % change on same quarter of previous year Exports Algeria Mauritius Morocco Nigeria Tanzania Tunisia Imports Algeria Mauritius Morocco Nigeria Tanzania Tunisia Table 6 : Exports for selected African countries (current millions of US$, s.a) Country 2011 Q Q Q Q Q Q Q Q.4 Algeria Angola Benin Burkina Faso Cameroon Congo, Dem. Rep Congo, Rep Cote d'ivoire Djibouti Egypt Equatorial Guinea Ethiopia Gabon Ghana Guinea Guinea-Bissau Libya Madagascar Mauritania Mauritius Morocco Mozambique Niger Nigeria Seychelles South Africa Tunisia Uganda Zambia Zimbabwe

12 12 Statistics Department First Quarter Volume 13 - April 26, 2013 Africa in the World Economy Commodity Prices AFRICA: Commodity trends Commodity prices showing signs of a slowdown During March 2013, prices for most commodities fell close to their December 2012 levels. Concerns over the slowdown in China s economy, intensified by the announcement of new measures to curb the country s real estate sector, hit base metal prices particularly hard. Raw material prices have also been hurt by the US dollar s surge since the start of The IMF commodity price index was down in March 2013 by 3.7% on a monthly basis, following an increase of 1.6% recorded in February. Crude oil futures fell on reduced refinery demand The energy index dropped by 4.1% in March, following an increase of 2.3% in the previous month. At the time of writing (mid-april 2013), prices have seen a marked decrease, with Brent crude below US$100 per barrel for the first time since July 2012 and West Texas intermediate down to US$88.3 per barrel. Both have fallen 9% in the first half of April. Graph 15. Commodity prices (indexes, 100=2005) Fundamental factors are primarily responsible for the price retreat. Austerity measures in the eurozone have seen consumers cutting back on personal expenditure, including gasoline. Demand remains very low and the International Energy Agency has downgraded the global demand forecast for Also, the surge in U.S. production is putting the brakes on prices. Precious and industrial metals prices down in March and April Downside pressures on industrial metal prices are largely associated with slower global economic growth, rising domestic production, and relatively high inventories. Combined with growing concerns over the Chinese economy, these developments had a dampening effect on industrial metal prices Gold prices decreased significantly during the first quarter of April 15 saw its biggest tumble in two years (to US$1,321 per ounce), compared to its high of US$ 1,921 in September Silver has also seen a drop of 11%. Various factors are at play here: the sell-off of gold reserves by Cyprus sending worrying signals, weaker economic data coming out of China, plus the US dollar s surge. The drop in prices, despite the highly accommodative policies taken by many central banks, especially the Federal Reserve, raises some doubt about gold s potential to maintain its upward trajectory of recent years Graph 16. Crude oil (US$ per barrel) Cereal prices have been moving in the opposite direction since the start of 2013, with wheat retreating more than 10%. Global wheat production is expected to recover in 2013 though, after the major drought that hit eastern Europe in After moderating at the end of 2012, corn prices have risen by more than 5% since the start of Weak economic growth in several major economies is curbing demand for commodities. This, together with a supply that exceeds demand, should keep the lid on commodity prices in the months to come. However, if global growth accelerates as expected at mid-year, prices could start to trend upward again Graph 17. Cocoa beans (US$ / metric tonne)

13 Statistics Department First Quarter Volume 13 - April 26, Africa in the World Economy Commodity Prices AFRICA: Summary of commodity prices Table 7 : Commodity Prices Commodity /2011 Energy Mar 2013 / Feb 2013 Q / Q4Q / Q Jan Feb Mar % % % Coal, Australia, $/mt Crude oil, Brent, $/b Crude oil, WTI, $/b Natural gas, Europe, $/mmbtu Agriculture Source : World Bank Beverages & oils Cocoa, c/kg Coffee, Arabica, c/kg Coffee, Robusta, c/kg Tea, Kokata auctions, c/kg Tea, Mombasa auctions, c/kg Palm oil ($/mt) Soybean oil ($/mt) Grains Maize, $/mt Rice, Thailand, 5%, $/mt Sorghum, $/mt Wheat, US, SRW, $/mt Other Food Bananas, EU, $/mt Beef, c/kg Oranges, $/mt Sugar, EU, c/kg Sugar, world, c/kg Raw Materials Timber Logs, Cameroon, $/cum Plywood, c/sheets Sawnwood, Cameroon, $/cum Other Raw Materials Cotton, A Index, c/kg Rubber, Singapore, c/kg DAP, $/mt Phosphate rock, $/mt Metals and Minerals Aluminum, $/ton Copper, $/mt Gold, $/toz Iron ore, c/dmtu Lead, c/kg Nickel, $/mt Silver, c/toz Tin, c/kg Zinc, c/kg Platinum ($/troy oz) / slight (-/+) change / moderate (-/+) change / large (-/+) change

14 14 Statistics Department First Quarter Volume 13 - April 26, 2013 Africa in the World Economy Inflation / Money Supply AFRICA: Inflation & money supply Inflation easing, with notable exceptions After a continuous upward trend from the end of 2010 to mid-2012, inflation in Africa edged down in the latter part of 2012 and this has continued into Although inflation seems to have largely been contained in most African countries, there are a few notable exceptions such as Ghana, South Africa, and Tunisia, as detailed below. Many central banks in the continent reacted to weakening inflation pressures and moderate growth by easing monetary policy. In addition, the weak global environment encouraged many central banks to cut their policy rates, in an effort to inject liquidity into real economy. Kenya and Uganda were among the most aggressive in cutting policy rates in High inflation rates experienced during 2011 in these countries, and also in Tanzania, have eased since the end of 2011, partly as a result of favorable rains and as a result of more stringent monetary policies. In Kenya, where monetary tightening had been deployed to rein in inflation, the headline inflation rate increased slightly in February (4.5%) and March (4.1%), from a low of 3.3% in November In Tanzania, the annual inflation rate for March 2013 declined to 9.8% from 10.4% the previous month, with food inflation rate decreasing by one percentage point to 10.7% in March from 11.7% in February. In Uganda, the annual headline Inflation rate for March 2013 rose to 4.0% from 3.5% recorded in the previous month. In Namibia, inflation edged down to 6.2% in February and March, from 6.6% recorded in January, as a result of slight drops in the price of food and non-alcoholic beverages. Rising inflationary pressures in some countries Graph 18. Africa - Inflation (monthly data, median values) 15,00 11,25 7,50 3,75 0 Graph 19. Inflation in the Horn of Africa (monthly data, % change m/m-12) Although a disinflationary trend generally prevailed across the continent, domestic factors are fueling inflation in some countries (Ghana, South Africa, and Tunisia). Political unrest is causing supply shortages in some North African countries (Tunisia, Egypt), and this is driving up domestic food prices and inching up inflation rates. In Egypt, the urban inflation rate has accelerated steeply over the past 4 months, from 4.7% in December 2012 to 7.6% in March In Tunisia, in response to political turmoil and social protest, as well as declining world commodity prices in general, transition governments during 2011 and 2012 increased food and fuel subsidies. They also increased public sector wages in response to rising unemployment (officially at 17%) and poverty. However, maintaining the subsidies has proved challenging for the government, which fears a budget deficit of around 6% in In response, the authorities raised the price of statecontrolled milk in early 2012 and then the price of gasoline at the pumps by around 6.8%. In March 2013 the government imposed a levy of 1% on salaries above 1,700 dinars ($1,075) per month to help fund remaining subsidies on fuel and food. The withdrawal of some subsidies has driven up inflation to 6.5% in March 2013, with food inflation hitting two digits and fuel prices rising by nearly 7% Graph 20. Inflation : consumer prices (monthly data, % change m/m-12) AfDB Design, ERCU/YAL

15 Statistics Department First Quarter Volume 13 - April 26, Africa in the World Economy Inflation / Money Supply AFRICA: Inflation & money supply Similarly, core inflation measured by the CPI (excluding food and energy), exhibited a steady upward trend during 2012 and persisted into 2013, triggered mainly by the surge in commodity prices. This suggests that the pass-through effects of the public sector wages increase and rise in imported prices have yet to surface. However, Tunisian producer prices remained stable during the year. This reflects profit margin cutting by domestic producers to preserve their competitiveness. In order to address the country's fiscal and balance of payments deficits and create conditions for a sustained recovery of the economy, the central bank of Tunisia is maintaining a tight monetary policy stance. Graph 21. Inflation : producer prices (manufacturing, monthly data, % change m/m-12) 28,227 23,338 18,448 13,558 8,669 3,779-1,110 After registering single-digit inflation rates for both 2011 and 2012, Ghana is seeing a recent rise caused by a delayed pass-through of increased producer prices combined with public sector wage increases granted and a sharp increase in government domestic borrowing (see Focus). -6,000 Stagflation risk in South Africa! The SARB (South Africa Reserve Bank) has warned of the risk of stagflation, characterized by low growth and rising inflation. Inflation in March 2013 rose to 6% the top end of the Reserve Bank s target after increasing by 5.9% in February. Sluggish global demand combined with domestic structural constraints to growth, a depreciating rand, and above-inflation wage hikes have been contributory factors. In regard to the monetary sector, credit growth trends have reflected monetary policy and rising inflation. Private sector credit growth slowed to 7.9% in February 2012 from almost 10% in late 2012, while aggregate money supply accelerated to 7.7% in February from 5.2% growth in December 2012 and 6.7% in January Graph 22. South Africa : money and credits (monthly data, % change on previous year)

16 16 Statistics Department First Quarter Volume 13 - April 26, 2013 Africa in the World Economy Inflation AFRICA: Inflation summary Table 9 : Inflation on consumer prices (in %) % change on same quarter of previous year Country Q.2 Q.3 Q.4 Q.1 Q.2 Q.3 Q.4 Q.1 Algeria Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Republic Chad Comoros Congo, Rep Côte d'ivoire Djibouti Egypt Equatorial Guinea Ethiopia Gabon Gambia, The Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Libya Madagascar Malawi Mali Mauritania Mauritius Morocco Mozambique Namibia Niger Nigeria Rwanda Sao Tome and Principe Senegal Seychelles Sierra Leone South Africa Sudan Swaziland Tanzania, United Rep Togo Tunisia Uganda Zambia