Measuring Sub-Saharan Africa Economic Resilience to External Shocks: The role of Adaptive Policy Space
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Abstract
This study proposes a framework for assessing and improving the economic resilience of Sub-Saharan African (SSA) countries in the face of common external shocks. The study employed graph methodology, specifically the augmented Min-Max normalization approach to estimate the Economic Resilient Index (ERI). The ERI, an average of five sub-indices representing five major macroeconomic fundamentals that either help to dampen the effect of external shocks or facilitate the recovery from external shock. The study reveals that on an average, SSA economic resilience ranges between 0.48 to 0.54. The index is between 0 to 1 index scale, with the latter representing highest resilience. Furthermore, the study revealed that Southern Africa is the most resilient sub-region, with an average ERI ranging from 0.58 to 0.65, while East Africa emerges as the least resilient, albeit with significant variations among its constituent countries. Botswana consistently maintains its position as the most resilient country throughout the sample period (1998-2021), except in 2016 where it ranks second. Similarly, Southern African countries such as Mauritius, Namibia, and South Africa demonstrate robust resilience performance.
Comparing the computed average ERI with inflation and output growth rates, the study observes a consistent correlation, highlighting the relevance of the ERI in tracking macroeconomic performance. The findings underscore the importance for SSA countries to establish frameworks for monitoring economic resilience, facilitating targeted improvements and ensuring a comprehensive understanding of comparative strengths and areas in need of enhancement.
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