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IMF projects 5% economic growth for sub-Saharan Africa

THE sub-Saharan African regional economic output is projected to expand by over 5% in 2012 and 2013 despite the negative factors pulling down growth in advanced countries, the International Monetary Fund (IMF) has said.

Report by Our Staff

The fund’s latest Regional Economic Outlook report noted that sub-Saharan African countries with closer trade links to Europe were experiencing some softening in exports.

“We expect growth in sub-Saharan Africa to remain quite robust,” said IMF African department director, Antoinette Sayeh.

The IMF noted that, depending on the characteristics of the slowdown, some individual countries might experience more severe disruptions, primarily due to specific exposures to certain export markets, vacillating commodity prices, or sources of remittances and foreign investment.

Aggregate output growth in sub-Saharan Africa is projected to remain above 5% in 2012 and 2013, provided that the global economy develops broadly along the lines envisaged in the October 2012 World Economic Outlook.

Significantly, the IMF said the pace of output growth was expected to vary significantly across countries, with more sluggish growth in established middle-income countries, including South Africa and its immediate neighbours.

Risks to the growth outlook have increased over the past six months with nearby risks ranging from the scope for intensification of stresses in the Eurozone and the risk of a sharp fiscal tightening in the United States.

These risks are anticipated to spill over into sub-Saharan Africa, including reduced exports and investments.

The study identified some important trade, investment, and financial linkages between South Africa and other countries in the region, especially those which are members of the Southern African Development Community (Sadc) and the South African Customs’ Union (Sacu).

The lethargic external demand for exports was also cited as contributing to some widening of current account deficits across much of the region.

The strength of projected growth in sub-Saharan Africa, relative to other developing regions, is helped in part by expanding natural resource sectors and some presumed improvement in climatic conditions.

Simulations also indicated that in the Democratic Republic of the Congo, Lesotho, and Zimbabwe, which are regular wheat or maize importers, an additional 10% rise in food prices could reduce their trade balances by up to one percentage point of GDP.

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