世界发展银行-Central-African-Republic-Economic-Update,-July-2021---Investing-in-Human-Capital-to-Protect-the-Future_66页_4mb

Central African Republic Economic Update Summary

Core Content

The Central African Republic Economic Update (Fourth Edition) focuses on the urgent need for investing in human capital to ensure sustainable growth and poverty reduction in a context of state fragility and insecurity. The report highlights the economic impact of the pandemic and renewed political instability, emphasizing the importance of macroeconomic stability, peace, and inclusive policies.

Main Economic Developments and Outlook

1.1 Recent Economic Developments

• Economic Growth Deceleration: CAR's economic growth slowed in 2020 compared to 2019, with real GDP growth stagnating at 0.8%.
• Impact of the Pandemic: Despite relatively contained health impacts, the pandemic disrupted global value chains, reduced external demand, and affected trade, transport, and tourism.
• Fiscal Deterioration: Public expenditure increased due to capital spending, while donor support offset some revenue shortfalls. The overall fiscal balance deteriorated from a surplus of 1.4% in 2019 to a deficit of 3.3% in 2020.
• External Position: The current account deficit worsened from 4.8% to 8.7% of GDP in 2020, driven by weak external demand and increased import deficits. However, the deficit was less severe than that of comparator countries.
• Inflation Control: Inflation remained under control at 2.3% (year-on-year) in 2020, below the CEMAC convergence criteria of 3%, thanks to accommodative monetary policy.

1.2 Economic Outlook and Risks

• Positive Outlook: The economy is expected to recover and grow at an average of 4% in the medium term if security and stability are restored.
• Key Risks: Renewed insecurity from post-election disputes and the fragile security environment pose significant threats to economic growth and stability.
• Long-term Impact: The combined impact of the 2003 and 2013 coups, the pandemic, and election disputes could result in a loss of 22 years in per capita income growth by 2025.

Investing in Human Capital

2.1 Why CAR Needs to Boost Human Capital

• Poverty Reduction and Economic Opportunities: Enhancing human capital is essential to reduce poverty, create economic opportunities, and tackle fragility drivers.
• Avoiding a Demographic Curse: With a high fertility rate and weak demographic policies, CAR risks low economic growth and welfare losses. The country has 35 years to benefit from its demographic dividend.
• Fragility and Employment: High youth unemployment is strongly linked to fragility and conflict, increasing the likelihood of social unrest.

2.2 Low Level of Human Capital

• Human Capital Index (HCI): CAR ranks lowest globally on the HCI, with children born in 2020 expected to realize only 29% of their maximum productivity as adults.
• Health Challenges: The under-five mortality rate is among the highest in Sub-Saharan Africa (SSA), and child survival rates remain low.
• Education Gaps: Primary education enrollment is relatively high, but secondary education completion is critically low, especially for girls. Education completion rates are below comparator countries, and school feeding programs and basic education services are underfunded.
• Public Spending Deficits: Education spending has remained low at less than 1.5% of GDP, while health spending has increased since 2012 but still falls short of comparator levels.

2.3 Options to Build Human Capital

• Early Childhood Development: Invest in nutrition, health, and early learning to improve long-term productivity and resilience.
• Efficient and Inclusive Service Delivery: Improve teacher recruitment and training, expand training institutes, and reduce student-teacher ratios. Also, enhance health infrastructure and service access, especially in remote areas.
• Labor Market Preparation: Align education and training with the future of work, including ICT skills, to support economic diversification and job creation.
• Mitigating Conflicts and Pandemics: Implement measures to protect learning continuity and reduce the impact of conflicts on education and health.
• Governance and Institutions: Strengthen governance in social sectors to improve service delivery and fiscal accountability.
• Domestic Revenue Mobilization: Secure domestic revenue to finance human capital investments, reducing reliance on donor funding.
• Coordination Among Partners: Enhance coordination between technical and financial partners to ensure effective and equitable resource allocation.

Key Messages

• Economic Growth and Stability: The economy decelerated in 2020 due to the pandemic and insecurity, but growth is expected to rebound if stability is restored.
• Human Capital as a Driver: Investing in human capital is crucial for sustainable growth, poverty reduction, and social inclusion.
• Vulnerability to Shocks: CAR's weak economic diversification and fragile security make it highly vulnerable to external and internal shocks.
• Demographic Challenges: The high fertility rate and low investment in human capital could lead to a demographic curse, with long-term negative impacts on growth and welfare.
• Need for Policy Action: Targeted investments, inclusive policies, and improved governance are essential to secure a more prosperous future.

Conclusion

The Central African Republic Economic Update underscores the critical need for human capital investment in the face of economic and social challenges. It calls for policy reforms, improved service delivery, and coordination among stakeholders to enhance economic resilience and achieve long-term development goals.