JOHANNESBURG -(Dow Jones)- Sub-Saharan Africa will grow by 5% on average this year and 5.75% in 2012, though fallout from global financial volatility poses serious risks for the region's most developed economies, the International Monetary Fund said Wednesday.
"The main threat to economic activity in the region is the strong possibility that global growth will decelerate further," the IMF wrote in its regional economic outlook for sub-Saharan Africa.
As the economy most integrated into the global marketplace, South Africa would feel the impact of such a slowdown most acutely, and the IMF forecast that Africa's largest economy will now grow about 3.5% this year. Many economists are predicting growth of around 3% this year for South Africa.
And large emerging trading partners like India and China won't be able to offset a downturn in the developed world, the IMF found, because their own growth rates are decelerating as government officials work against potential overheating.
Smaller and poorer countries less tied to the global economy also face challenges. Inflation is one concern, the IMF said, with consumer prices rising an average of 10% in June over the previous year. And few countries have reacted to the risk by raising interest rates, often because they also want to preserve uncertain growth rates.
East Africa faces the most immediate challenge to its economic wellbeing due to the current drought and famine, the IMF said. Kenya and Ethiopia's GDP growth will be 0.5 percentage point lower this year because of drought, and Tanzania is also contending with much lower power production from its hydroelectric plants.
Africa's exports are still concentrated on oil, gas and minerals, the IMF said, a long-time trend that has only increased as emerging powers such as China, India and Brazil have developed an appetite for African resources. This means that many African economies could see serious economic disruptions if commodity prices swing wildly, the IMF said.
But many investors are also moving into infrastructure, agriculture and telecommunications markets, helping to rebalance African growth more broadly.
"A fast-paced reorientation in (sub-Saharan Africa) toward new markets is under way," said Antoinette Monsio Sayeh, the IMF's director for Africa, in a release accompanying the report. She added that focus on new products and markets "should also boost long-term growth by reducing volatility in exports and output."
Source: www.nasdaq.com
"The main threat to economic activity in the region is the strong possibility that global growth will decelerate further," the IMF wrote in its regional economic outlook for sub-Saharan Africa.
As the economy most integrated into the global marketplace, South Africa would feel the impact of such a slowdown most acutely, and the IMF forecast that Africa's largest economy will now grow about 3.5% this year. Many economists are predicting growth of around 3% this year for South Africa.
And large emerging trading partners like India and China won't be able to offset a downturn in the developed world, the IMF found, because their own growth rates are decelerating as government officials work against potential overheating.
Smaller and poorer countries less tied to the global economy also face challenges. Inflation is one concern, the IMF said, with consumer prices rising an average of 10% in June over the previous year. And few countries have reacted to the risk by raising interest rates, often because they also want to preserve uncertain growth rates.
East Africa faces the most immediate challenge to its economic wellbeing due to the current drought and famine, the IMF said. Kenya and Ethiopia's GDP growth will be 0.5 percentage point lower this year because of drought, and Tanzania is also contending with much lower power production from its hydroelectric plants.
Africa's exports are still concentrated on oil, gas and minerals, the IMF said, a long-time trend that has only increased as emerging powers such as China, India and Brazil have developed an appetite for African resources. This means that many African economies could see serious economic disruptions if commodity prices swing wildly, the IMF said.
But many investors are also moving into infrastructure, agriculture and telecommunications markets, helping to rebalance African growth more broadly.
"A fast-paced reorientation in (sub-Saharan Africa) toward new markets is under way," said Antoinette Monsio Sayeh, the IMF's director for Africa, in a release accompanying the report. She added that focus on new products and markets "should also boost long-term growth by reducing volatility in exports and output."
Source: www.nasdaq.com
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