Understanding Trade Dynamics in Sub-Saharan Africa
IMF Working Papers, February 21, 2025
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Bibliographic details
- Authors: Hany Abdel-Latif, Khushboo Khandelwal, Longmei Zhang
- Published: February 21, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229001915.001
Overview
- Authors: Hany Abdel-Latif, Khushboo Khandelwal, Longmei Zhang
- Date: February 21, 2025
- Series: Working Paper No. 2025/045
- Pages: 29
- Volume: 2025
- Issue: 045
- DOI: https://doi.org/10.5089/9798229001915.001
- Stock No: WPIEA2025045
- ISBN: 9798229001915
- ISSN: 1018-5941
- Subject: Exports, Foreign exchange, Imports, International trade, Oil exports, Real effective exchange rates, Trade balance
- Keywords: AfCFTA, export determinant, Export determinants, Exports, Global, import change, Import demand, Imports, Oil exports, Real effective exchange rates, Sub-Saharan Africa, Trade balance, trade dynamics, understanding trade dynamics
Major findings on imports
- Domestic demand and exports are significantly associated with import changes, though the magnitude of these associations varies across countries.
- Variations in consumption and investment are highly correlated with changes in imports across the region and in nearly all country groups.
- Changes in exports are associated with increased import growth, with this link being most notable in resource-intensive countries.
- An appreciation of the real effective exchange rate is correlated with reduced import growth in East African countries; resource-intensive countries experience a less pronounced correlation.
Major findings on exports
- Exports show a strong sensitivity to global economic cycles, reflecting the region's reliance on commodities.
- The correlation between exchange rates and exports exhibits considerable heterogeneity across countries.
Analytical emphasis and heterogeneity
- The paper evaluates dynamics both regionally and across various country groups, highlighting cross-country heterogeneity in:
- The strength of the association between domestic demand and imports.
- The sensitivity of imports to export changes, especially in resource-intensive countries.
- The relationship between real effective exchange rate movements and import or export growth across subregions (e.g., East Africa versus resource-intensive countries).
Implications (from findings)
- Import dynamics in SSA are closely linked to domestic demand components (consumption and investment) and to export performance, suggesting that shifts in domestic macroeconomic conditions and external demand can materially affect import growth.
- The pronounced sensitivity of exports to global cycles underscores the exposure of SSA economies to commodity price and global demand shocks.
- Heterogeneity in exchange rate–trade relationships across country groups implies that country- and region-specific analyses are important for policy design.
Source: Understanding Trade Dynamics in Sub-Saharan Africa, IMF Working Papers 2025, 045 (2025), Hany Abdel-Latif, Khushboo Khandelwal, Longmei Zhang.
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