[ad#amazon_120x240]Growth in sub-Saharan Africa may exceed growth in all other regions except developing Asia, the International Monetary Fund said.
“growth in sub-Saharan Africa — projected at 5.5 percent in 2011 and 5.75 percent in 2012 — is expected to exceed growth in all other regions except developing Asia,” according to a world economic outlook update released by the IMF.
“This reflects sustained strength in domestic demand in many of the region’s economies, as well as rising global demand for commodities.”
The release of the report took place in Johannesburg because South Africa is seen as a key emerging market economy, and is a member of the IMF and G20, said Caroline Atkinson, director of external relations at the IMF.
The fund was also taking “updates outside Washington to represent the global nature of our work”, she added.
The pace of recovery varied across the sub-Saharan region.
Growth was now close to the pre-financial crisis high in the low-income countries of sub-Saharan Africa. These countries had grown by over six percent prior to the financial crisis and were expected to grow by 6.5 percent in 2011.
“The recovery in South Africa and its neighbours, however, has been more subdued, reflecting the more severe impact of the collapse in world trade and elevated unemployment levels that are proving difficult to reduce.”
The IMF predicted growth of 3.5 percent for South Africa in 2011. This was almost in line with the SA Reserve Bank’s forecast of 3.4 percent growth in gross domestic product for 2011.
South Africa’s forecast growth is below the average of other emerging and developing economies, which were expected to grow by 6.5 percent in 2011, according to the IMF.
“… during the recent crisis South Africa’s financial system fared relatively well,” said José Viñals, financial counsellor and director of the IMF’s monetary and capital markets department.
Risks to the economy remained, because of the influence of the country’s major trading partner, Europe.
“The pace of recovery in Europe, the dominant trade partner for most non-oil-exporting countries in sub-Saharan Africa, is modest and uncertain.”
The IMF warned the “sharp pickup” in fuel and food prices could have a significant impact on non-oil-exporting countries in the region.
“Rising food prices are likely to affect the urban poor in particular, given the high share of food in their consumption baskets.”
Countries would have to counter this with social grants or “social safety nets” which they would have to find funds for.
Global financial conditions broadly improved in the latter half of 2010, although there were still “lingering vulnerabilities”.
Countries should also remain alert about inflation as there was pressure from rising commodity prices.
Olivier Blanchard, economic counsellor and director of the IMF’s research department, told the briefing that global economic recovery continued at two speeds — a slower rate for advanced economies and a much faster growth rate for emerging economies.
This could lead to “tensions and risks” which need strong policy responses, he said.
“With emerging markets now accounting for almost 40 percent of global consumption and more than two-thirds of global growth, a slowdown in these economies would deal a serious blow to the global recovery — and to the rebalancing that needs to take place,” the IMF warned.
