Sub-Saharan Africa is poised for a sharp rebound in growth but recovery could be derailed if the global economy falters again, the International Monetary Fund (IMF) said Wednesday 6 October in its World Economic Outlook.
The IMF warned in particular that budget-cutting measures in developed nations could reduce aid and private financial flows. Output in Sub-Saharan Africa is nonetheless expected to expand 5 percent in 2010 and 5.5 percent next year after 2.6 percent in 2009, the IMF said.
The growth rate is forecast to almost double this year as demand from China and India drive up prices of commodities such as copper and platinum, and exports rebound from last year’s global recession.
That is being tempered by fiscal spending cuts in the UK, Germany and other European nations, which buy about a third of exports from middle- and low-income African countries, according to the IMF.
Low-income countries, such as Ethiopia, Tanzania and Uganda, will drive growth in the Sub-Saharan Africa next year, the IMF said.
South Africa needs to continue to attract capital inflows, while shifting ‘their composition towards foreign direct investment, World Bank Chief Economist for Africa Shanta Devarajan said.
A ‘currency war’ as a result of countries intervening to curb gains in their currencies may hurt growth in Africa if it results in another global recession, Devarajan noted.
