Sub-Saharan African growth to reach 6,3%: IMF says

Growth in the region is forecast to reach 5,2 percent this year, the third consecutive year it will exceed 5 percent, the Washington-based lender said in its semi-annual World Economic Outlook released on Thursday in Singapore. Next year’s growth rate will be the highest since 1971.

Rising oil prices have boosted investment in countries such, as Angola, Sub-Saharan Africa’s second-largest oil producer. Other African nations have benefited from higher prices for commodities, such as gold and copper and increased aid and capital flows, easing the effect of high oil prices, the IMF said.

“`Oil-exporting countries have contributed significantly to this strong performance,” the IMF said. “Growth in oil-importing countries, although lagging that in oil exporters by a substantial margin, has also been surprisingly robust.”

Economic growth in oil-exporting countries will probably accelerate to 9,1 percent next year from 6,7 percent this year, the IMF forecast, while growth in oil-importing countries will slow to 4,5 percent from 4,8 percent.

Angola’s economy will probably expand 31 percent in 2007, more than double the growth rate expected this year, and making the southern African nation the fastest growing economy on the continent for a third consecutive year. Angola, China’s biggest supplier of oil, is benefiting from rising investment in its oil industry after the end of a 26-year civil war in 2002.

Some economies may suffer if commodities extend recent declines, the IMF said. Gold has dropped 11 percent since the beginning of May, while copper has fallen 14 percent since reaching a record $8 800 a ton in London on May 11.

“The resilience of these economies could be tested if non-fuel commodity prices moderate, while oil prices stay high,” the IMF added. “In oil-importing countries, the challenge is to continue to adjust to high oil prices, while pursuing reforms that strengthen medium-term growth prospects.”

Zambia, Africa’s biggest copper producer, will probably expand 6 percent next year, unchanged from this year, the IMF said. The economy grew 5,1 percent last year.

Growth in South Africa, the biggest economy on the continent and the world’s largest gold and platinum producer, will moderate as higher oil prices and rising interest rates curbs spending. Economic growth will likely slow to 4 percent from 4,2 percent this year, the IMF said. South Africa’s $239-billion economy expanded at a 21-year high of 4,9 percent last year.

Nigeria, Africa’s second-largest economy and its biggest oil producer, will probably expand 6.4 percent next year, up from 5,2 percent this year, the IMF forecast. ‘ IMF

The west African nation needs a “tight fiscal stance” to ensure high oil prices don’t push up spending and inflation, the lender said.

A recession in Zimbabwe will continue into next year, the IMF forecast. Zimbabwe’s economy will probably contract 4,7 percent next year, after declining 5,1 percent this year, the ninth straight year of recession, according to the IMF.

While growth in Africa is accelerating, it still misses the target of 7 percent that is needed to meet goals agreed to by the United Nations to halve poverty by 2015, the IMF said.

“It is important that governments in the region continue to press ahead with reforms to promote private sector investment and employment,” the IMF added. Reforms include “further trade liberalisation, reduced government involvement in the economy and improvements to the business environment”.


October 2006
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