Regional Economic Outlook: Capital Flows and The Future of Work
Sub-Saharan Africa, October 11, 2018
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- Published: October 11, 2018
- Series: Sub-Saharan Africa
Macroeconomic outlook for sub-Saharan Africa
- Growth is expected to increase from 2.7 percent in 2017 to 3.1 percent in 2018, reflecting domestic policy adjustments and a supportive external environment, including continued steady growth in the global economy, higher commodity prices, and accommodative external financing conditions.
- Inflation is abating.
- Fiscal imbalances are being contained in many countries, but the adjustment has typically occurred through a combination of higher commodity revenues and sharp cuts in capital spending, with little progress on domestic revenue mobilization.
- Over the medium term, and on current policies, growth is expected to accelerate to about 4 percent, which is characterized as too low to absorb the likely flow of new entrants into labor markets.
- The outlook is surrounded by significant downside risks, particularly considering the elevated policy uncertainty in the global economy.
- Shielding the recovery and raising medium-term growth would require reducing debt vulnerabilities and creating fiscal space through more progress on domestic revenue mobilization, and policies to achieve strong sustainable and inclusive growth.
Capital flows to sub-Saharan Africa: causes and consequences
- In the aftermath of the global financial crisis, there has been a spectacular increase in nonofficial cross-border capital flows to sub-Saharan Africa.
- Official development assistance to the region is on a declining trend.
- Potential benefits of large inflows: provide much-needed financing for development initiatives and boost economic growth and welfare.
- Potential macroeconomic and financial stability challenges from large inflows:
- Economic overheating.
- Currency overvaluation.
- Unsustainable domestic credit and asset price booms.
- In the absence of adequate fiscal and macroprudential frameworks, inflows may encourage:
- Excessive borrowing by the public and private sectors.
- Exacerbation of currency, maturity, and capital structure mismatches on balance sheets—leaving countries vulnerable to a sudden reversal of capital flows that may be triggered by factors extraneous to the recipient economy.
The future of work in sub-Saharan Africa
- The current wave of technological advances is set to shake up the landscape for jobs within countries and across the world.
- Historical pattern: previous periods of technological change led to higher living standards, but transition periods were marked by fears as existing jobs were made obsolete and it took time for new and different jobs to arise.
- Contemporary concern: the Fourth Industrial Revolution may be disruptive, as technology replaces workers, possibly leading to lower income shares and rising inequality.
- Distinct regional challenge: while most countries face technological change at a time of declining working populations and may use technology to sustain or increase output with fewer workers, sub-Saharan Africa faces a different challenge because working populations continue to grow rapidly.
Regional Economic Outlook: Capital Flows and The Future of Work — October 2018 (IMF).
Content in this bundle
- Chapter 3, Washington, DC, April.
- sreo1018p
- Sub-Saharan Africa Regional Economic Outlook; Capital Flows and The Future of Work, October 2018
- 2. Capital Flows to Sub-Saharan Africa: Causes and Consequences (Annex 2.1)
- Sub-Saharan Africa Regional Economic Outlook; Capital Flows and The Future of Work, October 2018
- Chapter One; Sub-Saharan Africa REO, October 11, 2018
- Chapter Two; Sub-Saharan Africa REO, October 11, 2018
- Chapter Three; Sub-Saharan Africa REO, October 11, 2018
- Table of Contents; Sub-Saharan Africa REO, October 11, 2018