IMF sees ‘subdued’ growth for sub-Saharan Africa

The International Monetary Fund (IMF) has said that Sub-Saharan Africa’s economic growth outlook is “subdued” as the region’s oil producers delay policy adjustments needed to trigger and sustain expansion momentum.
the IMF in an emailed copy of its Regional Economic Outlook on Tuesday said that the area’s gross domestic product will probably expand 2.6 per cent this year from 1.4 per cent in 2016.
The modest recovery from the worst performance in more than two decades last year will be driven by better oil production in Nigeria, higher public spending before elections in Angola and the fading of drought effects in South Africa, it said.
“The underlying regional momentum remains weak and at this rate, sub-Saharan African growth will continue to fall well short of past trends and barely exceed population growth.”
The report point out that investor confidence in South Africa suffered when President Jacob Zuma in March fired his finance minister, Pravin Gordhan, who was pursuing fiscal discipline at the Treasury after lower commodity prices and drought stagnated growth.
According to IMF, in Nigeria, low prices and output of oil, the nation’s biggest export, and resulting foreign-currency shortages caused the GDP to contract 1.5 percent last year. The IMF forecasts both economies will grow at 0.8 percent in 2017.
In non-resource countries such as Ivory Coast, Kenya and Senegal, “public debt is on the rise, borrowing costs have increased, and in some cases, arrears are emerging and non-performing loans in the banking sector are increasing,” the IMF said.
Nigeria, which vies with Angola to be Africa’s biggest oil exporter, and the Central African Economic and Monetary Community states are still struggling to deal with budgetary revenue losses due to low oil prices, it said. Delayed policy adjustments may generate into even-deeper difficulties if unaddressed, the IMF said.
“For the hardest-hit resource-intensive countries, fiscal consolidation remains urgently needed to halt the decline in international reserves and to offset permanent revenue losses,” it said.
Greater exchange-rate flexibility and eliminating exchange restrictions “that are inflicting serious harm on the real economy should be part of a coherent policy package” in Angola and Nigeria, it said.