The International Monetary Fund affirmed its projection for economic growth in Sub-Saharan Africa made in the beginning of October, expecting it to speed up slightly to 5% this year from 4.9% in 2012 and to accelerate further to 6% next year. The affirmation of the forecast is due to unfavourable global conditions and domestic headwinds, such as anaemic private investment and consumption in South Africa, delays in budget execution in Angola, and oil theft in Nigeria.
The Sub-Saharan African countries have achieved success in curbing inflation, which is projected to average 6.9% in 2013. The downward trend is expected to persist, favoured by less dynamic food and energy prices and by the maintenance of prudent macroeconomic policies. IMF said that the main factor behind the continuing underlying growth in most of the region is the strong domestic demand, especially associated with investment in infrastructure.
Despite the positive growth outlook, the region remains vulnerable to lower commodity prices and a slowdown in developed and emerging economies. IMF expects that the strongest growth will be felt in mineral-exporting and low-income countries.
Africa's strongest country South Africa is expected to grow 2% this year and 2.9% in 2014, as it lags the broader region due to the relative maturity of its industrial, extractive and services sectors.
IMF recommended African nations to allow their currencies to fall if they were being pressured by low commodity prices or capital outflows rather than propping them up too much. Some nations, such as Nigeria, intervened to prop up currencies after portfolio outflows surged between May and August.
Fiscal deficits remain elevated and are set to widen in many countries, partly as a result of weakening revenues—most notably among oil exporters—and ambitious public investment programmes, IMF said. The report added that government debt appears sustainable in most countries, following a decade of strong growth and, among many low-income countries, debt relief as well.
The main risks to this outlook originate from external factors. IMF said that a further deceleration in global growth, especially in China and other emerging economies, could weaken demand for sub-Saharan African exports. Slower world growth could also affect commodity prices and might result in lower foreign direct investment if certain export oriented projects were reassessed. Aid flows might also be reduced, although energy importers could benefit from lower oil prices.
The report suggested that the fiscal policy should aim at rebuilding buffers in countries where the debt dynamics raise sustainability concerns or that are vulnerable to adverse developments in commodity prices. This target should be pursued by increasing revenue collections, especially by widening domestic tax bases, particularly in low-income countries.
IMF said that countries in sub-Saharan Africa should also continue to improve their business climates, to attract foreign investment and encourage the domestic private sector. Progress in this area is critical to lay the foundations for economic diversification and for sustainable and inclusive growth.
|Real GDP growth|
|Real GDP growth||2012||2013||2014||2013||2014|
|actual data||current forecast||previous forecast|
|--Republic of Congo||3.8%||5.8%||4.8%||5.8%||4.8%|
|--Democratic Republic of Congo||7.2%||6.2%||10.5%||6.2%||10.5%|
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