More good news about the prospects of economic growth in Africa. Africa weathered the storm better than in the past and previously thought.
Sub-Saharan Africa is weathering the global financial crisis well and its recovery is expected to be stronger than after previous global downturns, the International Monetary Fund (IMF) said Wednesday.
While some oil-exporting countries and middle-income nations had been hit hard by falling demand for their exports, the continent’s low level of integration into world markets meant that it had been relatively sheltered from the crisis, the IMF said in its semi-annual World Economic Outlook report.
Furthermore, while Africa had feared a sharp fall-off in foreign aid and remittances from expatriate Africans as a result of the crisis, the decline had not been as severe as anticipated, the IMF found.
That aid, twinned with improved government policies in many countries meant the downturn had a limited effect on some of the poorest countries.
‘Growth in a number of the more fragile economies even accelerated last year,’ the IMF noted.
By contrast, middle-income economies that conduct a lot of trade with the rest of the world were among the hardest hit.
South Africa’s Gross Domestic Product contracted by 1.8 per cent in 2009. The IMF has predicted 2 per cent growth for the continental powerhouse in 2010.
Growth also slowed in oil-producing countries on the back of shrunken demand and prices for fuel, coming in at around 4 per cent. But the rebound in oil prices meant countries like Nigeria and Angola, Africa’s biggest producers, were headed for growth of about 6 per cent this year, the IMF said.
One of the biggest threats to Africa was the tightening of foreign purse strings for development projects, the IMF warned.
The IMF also cautioned that stronger oil prices, while benefiting producer countries, could cause inflation to spiral in others, and that donor aid might be further tightened as leading economies come under pressure to cut public spending.
Political uncertainty also posed a threat to growth in some parts of Africa, particularly West Africa.
After growing by 2 per cent in 2009, the continent as a whole will grow by 4 per cent in 2010, the IMF predicted, a forecast unchanged since last October. That compares with average growth rates for the region of about 6 per cent between 2004 and 2008.
In 2011, the IMF expects the region to grow by 6 per cent.