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IMF forecasts Sub-Saharan Africa economy to expand by 5%

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Staff writer ▼ | October 22, 2014
Sub-Saharan Africa
Expectations   The International Monetary Fund

The International Monetary Fund (IMF) has forecast sub-Saharan Africa economy to grow by 5 percent in 2014 and accelerate to around 5.75 percent in 2015.

A report from the IMF received in Nairobi said low-income countries will spur expansion with growth of as much as 7 percent in 2014-2015.

The IMF's latest Regional Economic Outlook for sub-Saharan Africa said the overall positive outlook is, however, overshadowed by pockets of acute difficulty in a few countries.

"This positive picture, however, co-exists with the dire situation in Guinea, Liberia, and Sierra Leone, where, beyond the unbearable number of deaths, suffering, and social dislocation, the Ebola outbreak is exacting a heavy economic toll, with economic spillovers starting to materialize in some neighboring countries," the IMF said.

IMF's Africa Department director Antoinette Sayeh said the strong growth trends of recent years in the sub-Saharan Africa region are expected to continue.

Sayeh said the growth will be underpinned by continued public investment in infrastructure, buoyant services sectors, and strong agricultural production.

"In addition, the baseline scenario of solid growth is predicated on a number of increasingly potent downside risks being lifted. Should the Ebola outbreak be more protracted or spread to more countries, it would have severe consequences for activity in the affected countries and larger spillovers," she warned.

Sayeh said fiscal accounts are coming under considerable pressure in the countries currently affected by the Ebola outbreak.

She advised support should be provided through grants from the donor community, to enable the countries to accommodate higher Ebola-related spending and to help avoid an even more pronounced decline in economic activity.

"However, when grants are not immediately forthcoming, and provided that the public debt levels remain manageable, fiscal deficits should be allowed to widen, subject to the availability of financing," Sayeh said.

In addition, IMF said the security situation continues to be difficult in some countries, including the Central African Republic and South Sudan, while in a few other countries activity is facing headwinds from domestic policies.

"In a few other countries, rapid growth has masked increasing fiscal vulnerabilities, especially where large deficits have been prompted by an acceleration of recurrent spending," the IMF said.

According to Sayeh, for the vast majority of countries in the region, sustaining high growth rates remains the key policy consideration, including fostering job creation and reducing poverty. She said focus should be on boosting fiscal revenue mobilization, channeling spending towards infrastructure investment and other development needs, safeguarding social safety nets to encourage more inclusive growth, and improving the business climate.

"With the external environment turning less supportive, a more pronounced slowdown in emerging markets, particularly China, or a disorderly normalization of monetary policy in the United States could have a protracted impact on the region's economies," said Sayeh.


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