IMF positive on Africa’s growth but warns of downside risks

The International Monetary Fund (IMF) is positive about the growth outlook for sub-Sahara Africa’s economic growth in the coming years, according to its October 2011 Regional Economic Outlook released October 19, 2011.

The IMF says the Regional Economic Outlook projects that growth in sub-Saharan African (SSA) economies will remain on average above 5% in 2011 and the rate is expected to increase in 2012 to nearly 6% because of one-off boosts to production in a number of countries.

“One third of low income countries are expected to grow by more than 6%in 2011. Oil exporters have enjoyed the fruits of elevated oil prices, and the non-oil sectors in their economies are projected to grow by 7½ percent this year,” said the Outlook.

Despite these good projections, the Fund says there are significant downside risks to this outlook to the global economy.

“Global financial volatility and a sharp slowdown in growth in advanced countries would affect SSA by subduing export demand and private financing flows, restricting growth particularly in the region’s more integrated economies,” it said.

IMF adds that volatility in commodity markets could cause further disruptions in macroeconomic balances, with both winners and losers within the region.

Not only risks from the global economy as the IMF noted, but risks from within the region could affect SSA’s growth forecast.

“Inflation rates have begun to rise again, driven in the first instance by rising food and fuel prices…Consumer prices rose on average by 10% in the year to June 2011, up from 7½% a year earlier – and some countries have seen much sharper increases in inflation, extending beyond the immediate impact of higher food and fuel prices,” the IMF said.

Commenting on the report findings, Ms. Antoinette Monsio Sayeh, Director of the IMF’s African Department said “Policies need to tread a fine line between addressing the challenges posed by strong growth and preparing to ward off the potentially adverse effects of another global downturn. At the same time, sub-Sahara Africa needs to continue to invest in growth and employment, which are critical for sustained poverty reduction.”

By Ekow Quandzie

Watch video of Ms. Antoinette Monsio Sayeh, IMF Africa Department Director.