Africa sees slow economic recovery: IMF

The International Monetary Fund (IMF) said on Thursday that Africa's real GDP growth is projected to decline from an average of 6 percent in 2004-08 to 1.7 percent in 2009 and go up to 4 percent in 2010.

The IMF said in its World Economic Outlook that growth in Africa has slowed significantly as a result of the collapse of global trade and disruptions in global financial markets, but growth is expected to regain momentum as the global recovery gets under way.

The effect of the global recession was initially felt most strongly in those economies more highly integrated into global financial markets, including South Africa.

Subsequently, the impact of the fall in financial flows propagated to oil exporters, manufacturing exporters and commodity experts as global trade collapsed.

The report said oil exporters such as Angola, Equatorial Guinea and Nigeria are expected to experience the sharpest growth slowdown in 2009 as oil revenues have fallen hard. GDP growth in oil importers is projected to decelerate as well.

Real GDP in South Africa, the largest economy of the region and an oil importer, is projected to contract by 2.2 percent in 2009.

Two of the economies hardest hit by the global recession are Botswana and Seychelles.

Botswana's economy is being hit by the collapse in the international demand for diamonds; in Seychelles, which is undertaking a comprehensive reform program, the economy is being affected by a sharp contraction in tourism receipts, according to the semi-annual report.

The outlook for the region is subject to significant uncertainty, said the IMF, warning that donor countries may reduce aid flows to the region with serious repercussions for those countries where external aid finances are a large fraction of total revenues.

Poverty could also increase significantly in sub-Saharan region as real GDP per capita contracts, unemployment rises, and the region suffers from a lack of extensive social safety nets.

Looking beyond the short-term challenges, the report said, Africa must move ahead with a series of reforms to strengthen the region's resilience to external shocks and growth prospects.

Monetary policy should continue to be supportive of domestic demand, and exchange rates should act as external shock absorbers, the IMF said in the report.

Source:Xinhua