UNCTAD: A Difficult Year For African Economies
2016 was a difficult year for African economies. This was particularly evident in merchandise exports, which fell by 10.5 percent, according to the analysis in UNCTAD’s annual Handbook of Statistics.
Decreasing volumes of goods loaded in seaports for international shipment (-1.3 percent) and falling foreign direct investment receipts (-3.5 percent) also illustrated the challenges for Africa, although the region’s GDP grew by a 1.7 percent.
Several factors contributed to this picture: Africa’s exports remain characterized by low product diversification (see figure 1) and a high dependency on raw materials compared with other regions of the world.
UNCTAD launched its annual Handbook of Statistics in a new, user-friendly format last week to celebrate its fiftieth year of publication. Based on the wealth of statistics on international trade, investment, development, and population, validated and processed by UNCTAD and made available in UNCTADstat, the Handbook of Statistics provides a coherent overview of trends worldwide and novel summary analyses of countries, regions and sectors.
In recent years, decreasing commodity prices have led to deteriorating terms of trade. This deterioration was reflected in large trade deficits for manufactured goods, which were not outweighed by trade surpluses for primary products. Consequently, Africa ran a merchandise trade deficit, as percentage of exports, much higher than other developing regions (see figure 2). In 2016, Africa’s current account deficit reached six percent of GDP.
The continent’s isolated position in the global liner shipping network (as indicated by the UNCTAD liner shipping connectivity index), low exports of trade-in-services and declining inward foreign direct investment all combined to further challenge economic development in the region.
However, other statistics, available in the Handbook of Statistics, indicate some favorable trends for African economies. Since June 2016, for example, the UNCTAD commodity price index has been increasing year-on-year. The current account deficit of many African economies stabilized in 2016 and stopped rising. Looking at demographic trends, the proportion of people of working age in Africa is expected to grow rapidly, yielding a demographic dividend and a positive effect on labor supply.
The handbook also illustrates the importance of trans-continental and intra-region trade and how they vary across continents. In 2016, the exchange of goods between China, the United States of America and Germany amounted to almost $1 trillion – six percent of world merchandise trade (see figure 3).
In 2016, 69 percent of the European exports remained within Europe and 59 percent of the Asian exports, in Asia. By contrast, for Northern America, Latin America and the Caribbean and for Africa, most exports were delivered to economies in other continents than that of the exporter (see figure 4).
The Shifting US-China Trade Landscape