Prepared for the Committee of Central Bank Governors in SADC
by
Central Bank of Lesotho
August 2014

The Southern African Development Community (SADC) has sequenced a number of activities in order to move toward economic integration in the sub-region. SADC launched a Free Trade Area (FTA) in August 2008. According to the SADC Regional Indicative Strategic Development Plan (RISDP), once the FTA is attained, Customs Union will follow in 2010, thereafter in 2015 a Common Market will be formed. In 2016 a monetary union will be formed and a single currency will be introduced in 2018. In order to prepare for the various degrees of economic integration set out in the RISDP, the SADC has set itself primary and secondary macroeconomic convergence benchmarks/targets. These benchmarks are used to assess macroeconomic convergence at SADC level.

This is the eleventh edition of the Integrated Paper on Recent Economic Developments in the SADC. The paper provides background information on recent economic developments within SADC and globally. Furthermore, it evaluates the region´s performance towards attainment of the macroeconomic convergence targets, as provided for in the RISDP during 2012.

The paper reviews the recent economic developments in the SADC in 2013 and assesses the region’s progress towards the attainment of macroeconomic convergence targets. During the period under review, global economic growth still remains weak, although there are indications of slow recovery. Growth in world output weakened from 3.2 per cent registered in 2012 to 3.0 per cent in 2013, due to among other factors, tightening capacity constraints, falling commodity prices and slowing credit after a period of financial deepening. Inflationary pressures have remained subdued in 2013. Declines in the prices of commodities, especially fuels and food, have been a common force behind decreases in headline inflation across the globe.

In response to subdued global economic developments, economic growth in the SADC region expanded by 4.7 per cent in 2013 compared to 5.0 per cent recorded in 2012. Most of the SADC countries are export-led, implying that reduction in global demand and trade, had adverse impact on economic performance in the region. Most SADC countries registered real economic growth rates of below convergence target of 7 per cent.