URBANIZATION AND INDUSTRIALIZATION

AFRICA’S CURRENT ACCOUNT
DEFICIT REMAINED STABLE
The continent wide current account deficit
stayed at 7.0 per cent of GDP in 2016 (figure 1.9),
reflecting no or little change in North, Southern and
West Africa. The current account deficit widened
among oil-exporting countries from 7.7 per cent of
GDP in 2015 to 8.2 per cent in 2016, offset by a
narrowing from 6.3 per cent to 6.1 per cent among
oil importers, and from 8.8 per cent to 8.3 per cent
in 2016 among mineral-rich countries.
The decline in oil and commodity prices cut into
export earnings, especially in emerging economies,
as Africa experienced a sharp decline in trade
(see section 1.2). The current account deficits to
some extent have depleted international reserves
and increased dependence on external debt and
investment.
The decline in oil and commodity
prices cut into export earnings,
as Africa experienced a
sharp decline in trade.
MOST COUNTRIES EXERCISED
TIGHT MONETARY POLICY
Most countries, including some larger economies,
followed a tight monetary stance to limit the impact
of inflation from a weakening currency and/or
increases in regulated electricity prices, as central
banks raised policy rates in, for example, Angola,
Nigeria and Egypt.
However, Algeria, Côte d’Ivoire, Cameroon, Kenya
and Morocco among others pursued a loose stance.
Kenya and Morocco cut their policy interest rates to
2.25 per cent and 10 per cent, taking advantage of
subdued inflationary pressures, and Algeria reduced
its discount rate for the first time in almost a decade
from 4 per cent to 3.5 per cent, largely because
of declining liquidity due to low oil prices. Most
countries in Central and West Africa also adopted
loose policies, as their common currency (the CFA
franc) is pegged to the euro, forcing them to stay
in line with the ultra-loose monetary policy of the
European Central Bank.
Figure 1.9 Current account deficit, (% of GDP), 2013–2016
CURRENT ACCOUNT BALANCE
(% OF GDP)
2
0
-2
-4
-6
-8
-10
Source: Based on EIU (2016).
Note: e=estimates.
0.5
-3.4 -5.5 -7.0 -7.0
-5.9
-6.6
-4.1
-6.6 -6.3
-6.6
-7.7
-8.8
-6.1
-8.2
-8.3
2013 2014 2015 2016e
Africa Oil-exporters Oil-importers Mineral-rich
RECENT ECONOMIC DEVELOPMENTS IN AFRICA
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