ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA Economic and Social conditions in North Africa in 2006 Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA Elements of the presentation • The context • Performance: strong growth and an increase in foreign trade and investments. Inflation and balances were under control • Employment and human development: more to be done. The report on the MDGs completes the analysis undertaken by this report which deals with more general aspects of human development (HDI, unemployment) • Conclusions and recommendations Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA Components of the environment • Strong world growth: 5, 4% • Accelerated growth of world trade: 7, 1% to 9, 2% • Increase of oil prices: 64 $ compared to 54 $ in 2005 and 31$ in 2004 • Accelerated growth in Africa, but differences between subregions in evolution and heights • Increased rainfall (Morocco and Algeria) • Starting oil production and exportation in Mauritania • Continuation of increased oil production in Sudan but the impact of the Darfour crisis on development • Interesting initiatives to follow up in the field of cooperation and integration in Maghreb Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA Growth rate in 2005 and 2006 • • Average economic growth rate (weighted) increased from 4, 8% to 6, 4% By country: – Decrease in oil production in Algeria, but stimulating effets of oil prices on non-oil sectors – Negative impact of high oil prices on growth in oilimporting countries – Positive impact of increased rainfall in Morocco and Algeria – Implementation of reforms to stimulate domestic demand in Egypt Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA Inflation in 2005 2006 generally controlled • Hike in the prices of food products, especially agricultural, in Egypt during the last quarter of 2006 • Difficulties of trade goods movement in Sudan resulting in an increase of consumer prices • High public expenditures related to the legislative elections and the increase of civil servants salaries in Mauritania stimulated consumption and increased consequently the cost of living Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA Relations between exchange rates in 2006 and 2005 in dollar et euro Relative stability of the exchange rates Appreciation of the Sudanese pound Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA INVESTMENTS Increased by 11% from 66, 6 billion $US to 76, 6 billion $US • After a strong acceleration in 2005 of 40%, GCF in Algeria increased by 14% only in 2006 • In Egypt, GCF growth reached around 20% during the last 3 years. The private sector contributed 60% with a 40% growth rate • Recovery in Tunisia and acceleration in Morocco and Mauritania • Slowdown in Sudan after a pic on 2005 Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA Foreign trade Trade in goods and services : rapid growth • - Increase by 40, 5% from 229 billion dollars to 310 billion dollars - Increased exports by 40% from 125 B$US to 175 B$US - Increased import by 42% from 9, 54 B$US to 134, 5 B$US - Increased balance of goods and services by 40% Low share of the intra regional trade, about 3% of the total volume of trade, but interesting initiatives like the Maghreb Union of Emloyers • Surplus of current account in Algeria (25% of GDP) and in Libya (30%) • Decline in current account deficit (3, 1% compared to 21%) in Mauritania • Stagnation of current account deficit compared to GDP in Sudan at 10% • Modest balances for the other countries Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA Fiscal balance As in 2005, oil-exporting countries registered budgetary surpluses except Sudan. Other countries registered budgetary deficits Fiscal balance as a percentage of GDP in 2006 Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA Money and capital markets same trend as in 2005 • More monterization of economies • A favourable trend of foreign assets • Diversity of the performance of issuing institutions regarding money creation • Difference in the structures and the levels of interest rates • Increased rate in Libya and decrease in Egypt after the decrease in 2005 • Available stock market indices are still on the rise as in 2005 Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA Economic Policy Measures : towards increasing competitiveness The same priorities : liberalisation and improvement of external and fiscal balances Increasing competitiveness in general including attracting investments and consolidating growth by improving the business environnement Salaries increase in Mauritania is an exception to the general trend; it aims at achieving growth recovery through boosting domestic consumption Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA SOCIAL CONDITIONS • In this context characterized by strong growth, control of fiscal balances and inflation, increased investments and foreign trade, only modest progress was made in the area of social conditions • The rate of unemployment dropped slightly • Only slight improvement was registered by HDI • The gap between average income and the social conditions widened Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA Unemployment rate estimates for 2004 -2005 -2006 (as % of the active population) • A declining trend in general, but weak compared to growth • Notable decline in Algeria • High concentration of unemployment among the youth • Continuation of the application of measures launched by the countries: – New Labour laws to strike a balance between offer and demand – Qualitative adaptation to the labour market requirements – Implementation of training programmes to facilitate mobility and adaptation Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA Evolution of ranking according to the human development index Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA Main social development and employment measures • Algeria: measures taken to address the unemployment challenge, particularly for youth and women • Egypt: adoption of strategic plans and establishment of new institutions • Morocco: continuation of human development centred policy (basically in the framework of INDH) • Mauritania : continuation and consolidation of poverty eradication policy • Tunisia: measures taken in the area of employment and social development Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA Conclusions A current trend of strong growth in North Africa characherized by : – Control of inflation and external and fiscal balances – Sound monetary policies though administered by very different instruments and approaches – Increased foreign assets generated and reinforced by hike in oil prices Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA WEAKNESSES TO BE CONSIDERED – Weak participation of private sector in investment – Lack of endeavours to seek complementarities between national economies in the area of trade and limited intra-regional trade – Different banking system structures and interest rates as well as different interventions by the monetary autorities – Growth that can hardly create jobs – Development strategies that do not support adequately human development Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA Recommendations • Deepen the analysis of public investments by introducing the measure of short, medium and long term impact so as to select investments that can boost economic activities • Focus studies and researches on the causes of the weakness of employment/GDP elasticity in the region by identifying countries and sectors of activities • Introduce job creation and social development (MDG) in projection and development models • Take concerted measures for the coordination between monetary and banking systems in the region • Take precautions against the expected dollar depreciation through sound management of foreign exchange reserves combined with debt management Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA SPECIFIC ACTIVITIES • Increased technical assistance regarding the specifications and performance of models for mainstreaming social development, in particular by learning from importing the most successful experiences • To consider the coordination aspects in the study on capital mobility in North Africa. This study would help bring about proposals regarding coordination to develop this mobility and consequently boost FDI and off-shoring among the countries of the region Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007

ECONOMIC COMMISSION FOR AFRICA OFFICE FOR NORTH AFRICA Thank you Abdelilah Ouaqouaq aouaqoua@uneca. org Twenty-second Meeting of the Intergovernmental Committee of Experts (ICE), Rabat, Morocco 26 -29 June 2007