Macroeconomic Environment for Development: SADC Region Dr. A. Mondlane SADC SECRETARIAT 22 March 2010

The SADC Region was mainly affected by the secondary effects of the Global Economic Crisis

Cont’d The region’s real GDP increased marginally by an estimated 0.1 per cent in 2009 down from an increase of 5.9 per cent recorded in 2008 As a result of the depressed economic growth, the positive trend in per capita income recorded since 2006 was reversed in 2009. Growth in per capita income was estimated to have declined by 1.2 per cent in 2009. The rising food and fuel prices of late 2007 and 2008 resulted in high inflation for the region, i.e. above the targeted single digit. Inflation has since slowed down but still in double digit by close of 2009.

Cont’d Declining demand on the international market affected exports of the region. The current account deteriorated due to unfavourable terms of trade. Foreign reserves declined due to low exports and as countries drew down their reserves to complement falling government revenues. With falling economic growth and exports, government revenues were affected resulting in widening fiscal balances which were partly offset by borrowing as indicated by increases in external borrowing.

Cont’d Prospects for 2010 look assuring with most of the indicators expected to improve. The challenge for the region remains the need for: Diversified economies Additional sectors that are flexible to complement the traditional sectors. Improvements in productivity in the existing sectors (agriculture). Skilled labour force that can add to improvements in productivity and generate new sectors even in the event of a crisis.