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Press Release: IMF Outlook for Sub-Saharan Africa Perceives Good Recent Progress on Growth and Inclusiveness, but Cautions on Downside Risks to Global Economy
October 19, 2011
The International Monetary Fund (IMF) today released the October 2011 Regional Economic Outlook: Sub-Saharan Africa. Ms. Antoinette Monsio Sayeh, Director of the IMF's African Department commented on the report's main findings:
Recent Developments
“Growth has remained strong in the region in recent years, and most low-income countries in Africa weathered the global economic slowdown well. The Regional Economic Outlook projects that growth in sub-Saharan African (SSA) economies will remain on average above 5 percent in 2011. The growth rate is expected to increase in 2012 to nearly 6 percent, because of one-off boosts to production in a number of countries. Beneath these good overall trends for SSA, however, there is considerable diversity.
“But there are significant downside risks to this outlook.
“There are also risks from within the region.
Ms. Sayeh concluded: “Policies need to tread a fine line between addressing the challenges posed by strong growth and preparing to ward off the potentially adverse effects of another global downturn. At the same time, Sub-Saharan Africa needs to continue to invest in growth and employment, which are critical for sustained poverty reduction.”
Inclusive Growth
Introducing the Regional Economic Outlook chapter ‘How Inclusive has Africa’s Recent High Growth Episode Been?’ Ms. Sayeh said: “New evidence from household surveys shows that the average living standards of relatively poor households in some fast-growing economies rose strongly in the early 2000s. Comparing across countries, the poorest 25 percent of households fared best in countries where economic growth was higher.
“This evidence sheds some light on an apparent enigma in aggregate data showing—at best—a very weak relationship between poverty and growth. It suggests that one important link in the chain between economic growth and poverty reduction is growth in agricultural employment. Cross-country differences in agricultural employment growth explain a large part of observed differences in the relative consumption growth of the poorest households among the countries sampled. The chapter also shows that real income growth may have been significantly underestimated in some countries, mainly because of biases in the way that consumer price inflation has been measured,” Ms. Sayeh noted.
Re-orientation of Trade
Commenting on Regional Economic Outlook chapter ‘Sub-Saharan Africa’s engagement with emerging partners’ Ms. Sayeh observed: “A fast-paced reorientation in SSA toward new markets is under way, with nontraditional partners now accounting for about 50 percent of the region’s exports and almost 60 percent of its imports. While the region’s exports are still heavily concentrated in oil, gas, and minerals, particularly in the case of its largest emerging partners—China, India, and Brazil—many emerging markets purchase a wider range of products. FDI into the region is also diversified, including infrastructure, agriculture, and telecommunications.
“This reorientation brings the usual benefits of greater international trade, but should also boost long-term growth by reducing volatility in exports and output. The emergence of new partners provides the region with both significant opportunities - lower cost of inputs and consumption goods, transfer of technology, and economies of scale - and challenges - managing high concentration of exports on commodities and rapid sectoral changes,” Ms. Sayeh said.
The full text of the October 2011 Regional Economic Outlook: Sub-Saharan Africa can be found on the IMF's website, www.imf.org.
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