March 01, 2021
News /
Posted by NCID

The Navarra Center for International Development produces a series of figures each week focusing on a topic per month. On February, this has been Macroeconomics. Here is an analysis by regions.

Sub-Saharan Africa

Kenya overtook Angola as the third largest economy in sub-Saharan Africa in June 2020. The country's agriculture-based economy has allowed it to continue to grow compared to the oil-dependent economies of Nigeria and Angola. As a result, Kenya has no negative effects from oil-related shocks. If growth rates are compared, while Angola and Nigeria responded negatively to the Great Oil Shock of 2014, Kenya grew faster since that year.

Agriculture remains the largest sector in Kenya and the largest employer. It accounts for over 70% of the rural population, with the rural population constituting 72.97% of the total population. However, although agriculture's share of employment has declined and its growth is slowing, it remains a major force in the economy. Although there are fewer farmers, they are becoming more productive: value added per worker in agriculture rose from $993.03 in 2012 to $1,114.22 in 2018.

South Africa's economy is the second largest in Africa after Nigeria, but its growth rate has stagnated over the last decade, with an average GDP growth rate of 1.3%. The reasons for this are diverse: the aftermath of apartheid in the country, the political, structural and economic transition, and finally the 2008 crisis and government mismanagement. In addition, the pandemic led to the country's worst recession in democracy, with an 8% decline.  

The lack of human capital is the biggest constraint on South Africa's economy, along with a low investment-to-GDP ratio of 18 per cent, which is at odds with the National Development Plan's target and its intention to reach 30 per cent of GDP.

Central America

To this day, it is estimated that approximately one million Guatemalans live abroad, most of them in the United States. Economically, their departure translates into one of the country's main pillars: remittances. From 2013 to 2019, remittances have doubled from 5.1 to 10.5 billion dollars.

In 2020, despite the pandemic, Guatemala received remittances equivalent to 14.6% of GDP. This trend is not unique to Guatemala, but to the Northern Triangle, which closed 2020 with an increase in remittance income. The reason is that one in four Central American households depend exclusively on remittances. This money not only helps their families to breathe economically, but also reactivates domestic trade in Central American countries, where states and economies are weak.

Southeast Asia

The Philippines is the world's fourth largest recipient of remittances. Officially, an estimated 2.3 million of them work abroad. From 2010 to 2019, the amount of remittance money in the Philippines has increased from USD 18.8 billion to USD 30.1 billion. The United States is by far the country from which the most money arrives, with a total of USD 11.3 billion in 2019, followed by Saudi Arabia (2.1) and Singapore (1.9).

As it is, the country grants special status to the so-called Overseas Filipino Workers (OFWs): they have a single entry at the Ninoy Aquino International Airport in Manila, they are exempt from flight tax and airport taxes when travelling out of the country from the Philippines, they can walk-in to renew their passports and the Department of Labour and Employment has a special office for them called the Overseas Workers Welfare Administration.