Survey of economic conditions in Africa, 1975(Part I)

Abstract

In the previous issue of the survey the ECA secretariat outlined the problems confronting African and other developing countries arising from persistent world inflation over the past few years, increases in the prices of petroleum and petroleum products in the last quarter of 1973, a slowdown in economic activity in GECD countries at the beginning of 1974, and the deterioration in the terms of trade of developing countries following the collapse of the commodity boom in the second part of 1974. The difficulties arising from these multiple economic problems, namely balance of payments deterioration, disruption of development programs and reduced economic activity· generally, have not abated in 1975. In general, prospects for 1976 are not good. Previous forecasts have been over-optimistic. The combined real GNP of the seven major GNP countries was expected to increase marginally in the second half of 1974 and continue stagnating in the first half of 1975; in fact, output is now estimated to have fallen by over 1 per cent (at annual rates) in the second half of 1974 and by about 5 per cent in the first half of 1975. The GNP economy entered 1975 with activity on a more steeply declining trend than expected. The extent and geographical spread of the decline are unlike anything recorded in the post-war period. The margin of unutilized resources including industrial capacity and manpower is not expected to decline until mid-1976. All this augurs ill for African and other developing countries.