## Confessions of a Dismal Scientist—Africa's Resilience

_IMF Blog, May 3, 2011_

## Source details

**Canonical URL:** [Confessions of a Dismal Scientist—Africa's Resilience](https://www.imf.org/en/blogs/articles/2011/05/03/confessions-of-a-dismal-scientist-africas-resilience)

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## Bibliographic details
- Authors: Abebe Aemro Selassie
- Published: May 3, 2011

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### Economic performance and outlook
- Sub-Saharan Africa experienced its best period of economic growth since at least the 1970s in the two decades prior to the global financial crisis.
- Recovery from the global financial crisis in the region has been more V-shaped than the U- or L-shaped recoveries seen in earlier slowdowns.
- Good macroeconomic policies implemented in many countries before the crisis enabled strong counter-cyclical monetary and fiscal responses.
- Projection: "output in sub-Saharan Africa looks set to expand by around 5½ this year and 6 percent in 2012."
- The crisis nevertheless caused significant dislocation, including "the 1 million or so jobs lost in South Africa" and delays in progress toward the poverty reduction Millennium Development Goal.

### Recent risks: food and fuel price shocks
- A recent sharp increase in food and fuel prices on world markets is the author's primary current concern.
- 2008 food price spike led to prompt and pronounced increases in local prices in most African countries; the current episode shows a more diverse picture.
  - In some countries, strong harvests have limited local food price increases.
  - In many other countries, local food prices have started to increase sharply, harming "the urban poor and landless rural households."
- The surge in fuel prices poses tests to regional resilience:
  - For the region's "37 oil importing countries," higher world fuel prices mean higher oil import costs.
  - Delayed pass-through of international to domestic fuel prices can lead to higher fiscal deficits.
  - Across the region, higher fuel prices will imply higher inflation.

### Policy recommendations
- For pronounced food price increases:
  - Consider targeted interventions that provide the poorest families with transfers from the budget.
  - Alternatively or additionally, consider subsidizing the specific food items consumed by the poorest households.
- For fuel price increases:
  - Recommend allowing local fuel prices to adjust in line with international prices.
  - Rationale: fuel price subsidies are "highly regressive—the bulk of the benefits go to the richest households—and very costly."

### Author's assessment and outlook
- The author, while predisposed to worry, notes that the region's recent handling of the global financial crisis gives cause for optimism.
- Confidence rests on the hope that appropriate policies will be adopted in response to current food and fuel shocks, as they were during the global financial crisis.

*Abebe Aemro Selassie — May 3, 2011*

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## References

- [region’s economic performance and outlook](http://www.imf.org/external/pubs/ft/reo/2011/afr/eng/sreo0411.htm)
- [https://www.imf.org/wp-content/uploads/2011/04/afr-reo-may2011-ssa-growth.jpg](https://www.imf.org/wp-content/uploads/2011/04/afr-reo-may2011-ssa-growth.jpg)
- [jobs lost in South Africa](http://blogs.imf.org/2011/04/04/south-african-unemployment/)
- [Millennium Development Goal](http://blogs.imf.org/2010/09/20/making-up-for-lost-time-getting-back-on-track-to-the-millennium-development-goals/)

_Source: https://www.imf.org/en/blogs/articles/2011/05/03/confessions-of-a-dismal-scientist-africas-resilience_