African Economic Outlook 2019: Africa growth prospects remain steady, industry should lead growth (AfDB)

Africa’s general economic performance continues to recover and GDP growth is projected to accelerate to 4.0 percent in 2019 and 4.1 percent in 2020. But improved macroeconomic and employment outcomes require industry to lead growth, according to the 2019 African Economic Outlook report, launched today by the African Development Bank.

The focus of the 2019 report on regional integration for Africa’s economic prosperity, highlights integration for trade and economic cooperation and the delivery of regional public goods. Five trade policy actions could raise Africa’s total gains to 4.5 percent or GDP, or $134 billion a year, the report finds.

The Trump Administration’s paper now circulating within the WTO: An undifferentiated WTO – self-declared development status risks institutional irrelevance

Section 5: conclusion. Defenders of the status quo approach by some WTO Members for determining development status - self-declaration - may argue that Members effectively agreed to it by consensus in 1995. They may even claim their authorities would never have sought WTO membership if they could not self-declare as developing. Unfortunately, clinging to this approach leads to a system that prevents true liberalization while anchoring all Members to a world that no longer exists. This contradicts the goals stated by Members in the preamble to the Marrakesh Agreement Establishing the WTO. Self-declaration and its first-order consequence - an inability to differentiate among Members - puts the WTO on a path to failed negotiations. It is also a path to institutional irrelevance, whereby the WTO remains anchored to the past and unable to negotiate disciplines to address the challenges of today or tomorrow, while other international institutions move forward.

Creative Economy Outlook: trends in international trade in creative industries (UNCTAD)

With export growth rates of over 7% over 13 years, global trade in creative goods is an expanding and resilient sector buoyed by China, according to a new UNCTAD report. The second edition of the periodic pdf Creative Economy Outlook: Trends in International Trade in Creative Industries (6.15 MB)  examines the global picture and also features 130 country profiles with reported creative goods and services trade data. The data, which covers the period 2002 to 2015, shows the creative economy’s contribution to world trade. Over this period, the value of the global market for creative goods doubled from $208bn in 2002 to $509bn in 2015. The report also charts the remarkable rise of China, whose exports of creative goods grew at double the global average between 2002 and 2015. Design and visual arts are among the highest performing sectors with fashion, interior design and jewelry accounting for 54% of creative goods exports in developed economies and 70% (including toys) in developing economies.

pdf South Africa country analysis (6.15 MB) : South Africa creative goods exports increased from $270m in 2005 to $599m in 2014. Design goods (interior design and jewelry and fashion) was the strongest export category generating $315 million, followed by: publishing (books and journals) which tallied $118m; visual arts (painting, antiques and sculpture) $55m; art crafts at $39m and audiovisuals (CDs, DVs and tapes) at $32m. However, South Africa was a net importer of creative goods. Imports stood at $1.8bn, three times higher than the value of exports. Despite having a growing creative economy, in 2014, the creative goods trade deficit was $1.2bn. The role of trade with other African countries has expanded significantly for South African creative goods, 67% of which went to the African market in 2014, compared with just 31% in 2005. By 2014, trade with Europe and the Americas had shrunk, and the top five export partners for creative goods were Namibia, the United States, Botswana, Lesotho, and Zambia. Creative services exports stood at $128.7m in 2014. Audiovisual and related services accounted for the largest share of creative services exports, driven by a strong local film and television industry. This industry had developed a strong reputation in establishing South Africa as a service-industry oriented country.

Towards a borderless Africa? Regional organisations and free movement of persons in West and North-East Africa (DIE)

The present analysis of ECOWAS (West Africa) and IGAD (North-East Africa) shows that both regional organisations face difficulties with their free movement policies, though the respective challenges emerge in different phases of the political process. In the IGAD region, member states have so far been unable to agree on any free movement treaty, while the ECOWAS region is experiencing delays in the national and sub-national implementation of established legislation. These differences can primarily be explained by historic path dependencies, divergent degrees of legalisation, and differing interests on the part of sub-regional powers. Finally, regional free movement is being hampered in both regions by internal capacity issues and growing external influences on intra-African migration management and border control. From the perspective of development policy, it is expedient to support free movement at sub-regional level in Africa. The following recommendations arose from the analysis: [The authors: Eva Dick, Benjamin Schraven]

Credit reporting without borders: UEMOA case study (World Bank). 

The Regional Credit Reporting System in the West African Monetary and Economic Union (UEMOA), encouraged and facilitated by IFC, is a unique example of realigning strategies to leverage international best practices and set up a unique credit reporting model that serves the specific needs of the UEMOA countries. The journey started in 2010 and resulted in the successful establishment of a regional credit information system that is the first of its kind in the world. This Regional Credit Reporting system in UEMOA (covering eight countries – Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo) established a Regional Credit Bureau servicing all eight-member countries. The booklet aims to illustrate how the UEMOA region moved from an environment largely devoid of credit information sharing to one where it embraced a regional credit reporting solution based on best practice with the guidance provided by the IFC and become the only existing example of a free cross-sharing mechanism of credit information.

IMF reviews of Central African Economic and Monetary Community policy issues:

1. pdf Common policies of member countries (1.03 MB) . The regional strategy has helped to avert an immediate crisis but continues to face headwinds: two countries have yet to enter financing arrangements with the Fund: regional reserves have underperformed despite higher-than-projected oil prices; the projected recovery of non-oil growth has still to materialize; and the security, social, and political context remains challenging.

2. pdf Selected issues report (913 KB) : A regional approach to enhancing governance and reducing the potential for corruption. This note assesses the link between governance and economic performance in the CEMAC. It highlights areas where the CEMAC’s governance is weak, based on available indicators over-time, and highlights areas for improvement. The focus of this note is on the regional dimensions of reform that can support better governance. It is recognized that the thrust of actions in this area are largely in the remit of national authorities. However, the very design of an economic and monetary union results in a set of policy and reform dimensions that have a distinct regional feature. For these, improvements require a coordinating or even steering role by regional institutions, to set a coherent framework for and maximize synergies of reforms at the country level. The note focuses on three key areas where governance has a specific regional dimension. First, it examines gaps in the implementation of regional standards for public financial management. Second, it looks at standards to strengthen the framework underpinning efforts in the area of any-money laundering and combating the financing of terrorism. Finally, it assesses the framework for management and accountably of oil resources.

A governance dividend for Sub-Saharan Africa? (IMF)

This paper investigates the correlation between overall governance and one crucial dimension thereof, namely corruption, and economic performance in SSA. Our main goal is to test whether weak governance and corruption have any impact on SSA growth. At the same time, it is important to acknowledge that low corruption and good governance are not the sole drivers of growth. Indeed, there are various examples of countries perceived as being poorly governed that have had episodes of strong growth driven by other factors, for example natural resource wealth. In other cases, countries with good governance have not necessarily benefited from strong growth. While the estimated correlations between governance/corruption and growth do not prove causation, they do suggest [inter alia] the following: The impact of weak governance on GDP per capita growth is stronger in SSA relative to the rest of the world and bringing governance to the world average could increase GDP per capita by an estimated 1 to 2 percentage points. Corruption also has a deleterious impact on SSA countries relative to the rest of the world and bringing corruption to the world average could increase GDP per capita by 1 percentage point.

A new world: the geopolitics of the energy transformation (IRENA)

To assess the impact of the energy transition on different regions, Figure 5 shows each region’s net fossil fuel exports and imports as a share of GDP. While the graph above masks differences within regional groupings, it has the advantage of uncovering major differences between regions and country groupings. The majority of countries in Sub-Saharan Africa (pdf) will benefit from reducing fossil fuel imports and generating renewable energy domestically, because this will boost job creation and economic growth. The exceptions to this are the two biggest oil producers in the region, Nigeria and Angola, which are at risk because they depend heavily on fossil fuel rents. Because of their size and large fossil fuel exports, they skew the data for SSA as a region. In the long-term, however, African countries have a unique opportunity to leapfrog the fossil fuel-centred development model despite recent discoveries of oil and gas.

The rail freight challenge for emerging economies: how to regain modal share (World Bank)

Successful railways now focus on understanding the logistics of targeted freight and positioning rail transport services as part of an overall logistics system aimed at meeting customers’ needs. By responding to new trends in logistics and partnering with road haulers, port operators, forwarders, intermodal terminal operators, and third-party logistics companies to provide the seamless service delivery required by changing supply chains, rail freight organizations in Europe and North America have regained modal share or reversed a trend of falling shares. Emerging economies can learn from their experience. The analysis presents examples and lessons of good (and not-so-good) practice. It summarizes what successful rail freight organizations have done to increase market share and provides options for policy makers. [The author: Bernard Aritua] 

Effective trade costs and the current account: an empirical analysis (IMF)

A view receiving increased support is that the height of trade costs in prime export sectors has a strong effect on current account balances: countries specializing in sectors that face relatively high trade costs, such as services, tend to run current account deficits, and similarly, countries specializing in low trade cost sectors, such as manufacturing, tend to run current account surpluses. To test this view, we first infer comparative advantages and trade costs, by sector, within a large sample of countries for the period 1970–2014. Then we construct effective trade costs—trade costs weighted by sectoral comparative advantage—to gauge the height of a country’s overall trade costs. Results reveal that, although higher effective exporting costs are associated with lower current account balances, their impact is quantitatively limited; furthermore, the effective costs of importing often have no statistically significant effect. [Companion IMF analysis: Macroeconomic consequences of tariffs]

A quartet of recent OECD trade reports:

1. Measuring distortions in international markets: the aluminium value chain (pdf). The aluminium sector has seen major changes over the last 15 years, notably the rise of the People’s Republic of China as the leading producer by a wide margin in most segments of the value chain. This unprecedented increase in output has fuelled concerns about excess capacity in the sector that is depressing global aluminium prices and threatening the viability of producers worldwide. To understand whether this increase in capacity has been driven by non-market forces, this report examines 17 of the largest firms operating along the aluminium value chain, which together make up more than half of global smelting capacity. Profiled key finding: Total government support for the 17 firms reached up to $70bn over the 2013-17 period, depending on how financial support (i.e. concessional loans) is estimated. Although all 17 firms received some form of support, it is highly concentrated: the top 5 recipients receive 85% of all support, most of it at the smelting stage of the value chain.

2. Barriers to trade in digitally enabled services in the G20 (pdf), Trade and cross-border data flows (pdf), Principles for market openness in the digital age (pdf)