Sub-Saharan Africa to grow 6% next year – IMF

Sub-Saharan Africa’s economic growth is expected to increase to six per cent in 2014, from five per cent this year. The growth is to be supported by investment in infrastructure and production capacity, the International Monetary Fund (IMF) said on Thursday. The IMF had predicted in May that the region would grow 5.7 per cent this year and 6.1 per cent in 2014.
It said the slight downward revisions were due mainly to weaker global economic conditions, while budget delays in oil producer Angola and oil theft in Nigeria also hurt growth. Inflation on the continent is expected to be less than six per cent next year, its third year of decline due to benign prospects for food prices and the continuation of prudent monetary policies. It expects growth to pick up next year.
“The improvement relative to 2013 reflects higher global growth, especially in Europe, and other expected favourable domestic conditions. The IMF in its regional report cited Nigeria’s electricity reforms and hopes of improved oil output as an example. The main factor behind the continuing underlying growth in most of the region is … strong domestic demand, especially associated with investment in infrastructure and export capacity in many countries.
“In spite of the strong growth outlook, the region remains vulnerable to lower commodity prices and a slowdown in developed and emerging economies, the report said. The strongest growth will be felt in mineral exporting and low-income countries, the IMF said, highlighting examples like Cote d’ Ivoire, the Democratic Republic of Congo, Mozambique and Sierra Leone. Africa’s top economy South Africa is expected to grow by two per cent this year and 2.9 per cent in the next. It lags the broader region due to the relative maturity of its industrial, extractive and services sectors.
South Africa has suffered this year from industrial strikes, slowing private investment and disposable income growth and weakening consumer confidence, the IMF said. The World Bank sees growth of 5.3 per cent for sub-Saharan Africa in 2014, underpinned by strong private and public investment.
The IMF gave similar policy prescriptions to previous reports. It recommended that African nations allow their currencies to fall if they are being pressured by low commodity prices, or capital outflows rather than propping them up, except to prevent “disorderly market conditions”. It also suggested they work to improve the ease of doing business and the collection of economic statistics for monitoring.