Political upheaval causes near stagnation in North Africa

In 2010 the economic expansion was above average in resource-rich countries that benefit from the revival in commodity demand, oil and non-oil commodity prices, and trade. In 2011 growth is expected to accelerate in most African countries, with some important exceptions. Several African countries have to cope not only with higher food and oil bills, but also with political instability and social unrest. The political upheavals and related uncertainty in northern Africa in the first half of 2011 disrupted economic activity. In Tunisia and Egypt, large-scale strikes and demonstrations led to production losses in the first months of the year, and the security situation discouraged tourism, which is a major earner of export revenues in both Tunisia and Egypt. In Libya the recent political upheaval is causing a double-digit fall in oil production and aggregate output. Due to these events, growth in North Africa is expected to slow to below 1% in 2011, down from 4.7% in 2010. Under the assumption of a return to normal economic life, growth of the region is expected to accelerate to around 5% in 2012. These projections are subject to a large margin of error. Given north Africa´s weight of around a third of the continent´s GDP, the events in this region are depressing Africa´s growth in 2011 by more than one percentage point.

East Africa is expected to continue on its growth path of above 6% during the projection period, while growth in West Africa is expected to decelerate to below 6% due tot he events in Côte d´Ivoire. Southern Africa, the only African region with negative growth in 2009, recovered in 2010 and is expected to further strengthen, with growth reaching 4.5% in 2011 and 5.5% in 2012. In Central Africa, growth is projected to accelerate to 5.3% in 2011 and to 5.7% in 2012 (Table 1.1 and Figure 1.7). 

The high oil price and increasing oil production continue to boost growth of African oil-exporting countries. But the events in Libya affect average GDP growth of this group of countries, which is expected to decelerate to below 3 % in 2011 before accelerating again to around 6% in 2012 (under the assumption that normal economic activity in Libya resumes). In oil-importing countries, average growth accelerated in 2010 to 4.2 % (up from less than 2% in 2009) and is expected to further strengthen to 4.9% in 2011 and to 5.4 % in 2012 (see Annex Table 1.A).

Among individual countries, Ghana and Ethiopia are projected to lead the African growth league in 2011. In contrast, political conflicts are causing output to fall in Libya and Côte d´Ivoire. The events in Egypt and Tunisia and the political uncertainty in Madagascar are also weighing on these countries´ growth (see Figures 1.8 and 1.9).