African growth steaming ahead, says IMF

STRONG domestic demand and resurgent exports will drive economic growth in Sub-Saharan Africa near to the high levels recorded before the global financial meltdown, the International Monetary Fund (IMF) said yesterday, pegging growth rates for the region at between five and 5,5 per cent for 2011.

Next year, growth could shoot up to 5,8 per cent, the IMF said in its latest Regional Economic Outlook, released yesterday.The latest forecast for Namibia, released last October, predicts economic growth of 4,8 per cent for 2011. Economic outlooks released locally so far this year expect growth in 2011 to vary between 3,5 per cent and five per cent.’The key explanation for the resilience of Sub-Saharan Africa has been the generally strong economic position of countries going into the global financial crisis. This allowed counter-cyclical fiscal and monetary policies to be put in place to soften the impact of the global downturn,’ the IMF said.It won’t all be plain sailing though, the Washington-based institution warned.’The global crisis has left a legacy of elevated unemployment levels in countries with more developed manufacturing sectors and, more generally, of weakened fiscal balances,’ the IMF said. Namibia’s official unemployment stands at 51,2 per cent.According to the IMF, growth rates in most countries have returned close to potential and domestic demand is expected to remain strong on the basis of rising real incomes and sustained private and public investment. ‘However, the trajectory of fiscal balances in some countries is not consistent with medium-term financial and debt sustainability. The Regional Economic Outlook suggests therefore that now is an opportune time in some cases to adjust medium-term spending and revenue plans and to start withdrawing any recent fiscal stimulus measures,’ the IMF said.Sub-Saharan Africa’s trading patterns have shown some dramatic shifts during the last few years toward China and other parts of developing Asia, the report said. These shifts were so marked that, by 2009, China’s share in the Sub-Saharan Africa’s total exports and imports exceeded that between China and most other regions in the world.Exports of goods and services make relatively small contributions to aggregate demand in most sub-Saharan African countries. Europe and other advanced countries remain the region’s dominant trading partners, the IMF said. ‘However, in a minority of countries- including the major natural resource exporters- the impact of developing Asia on global export demand and commodity prices is expected to be significant in both the short and long term.’Overall, trade with Asia is therefore likely to be an increasingly important factor in maintaining growth for the region on its current trajectory,’ the IMF said. ‘But the key drivers of African growth are likely to remain: political stability; the business climate, including the prudent exploitation of natural resources; and the quality of economic management,’ it added.The IMF said Sub-Saharan Africa’s growth performance will hinge in part on official and private financing flows staying at their recent elevated levels. ‘If extended risk aversion or fiscal retrenchment in Europe was to lead to a sharp drop-off in donor support, this would almost certainly hamper the envisaged acceleration in GDP growth.’