The International Monetary Fund (IMF) today released the October 2010 Regional Economic Outlook: Sub-Saharan Africa. Ms. Antoinette Monsio Sayeh, Director of the IMF’s African Department commented on the report’s main findings:“The latest Regional Economic Outlook highlights the broad-based economic recovery that is now under way in sub-Saharan Africa. Growth of 5 percent is projected in 2010 and 5½ percent in 2011. Should this prevail, economic growth in most countries in the region would have effectively bounced back to close to the high levels registered in the mid-2000s.
“The region’s resilience owes much to sound economic policy implementation before and during the 2007–09 global financial crisis. This allowed country authorities to use fiscal and monetary policies nimbly to dampen the adverse effects of the sudden shifts in world trade, prices, and financial flows. “Domestic demand in the region in 2010 and 2011 is expected to remain strong on the basis of rising real incomes and sustained private and public investment. In addition, exports are expected to benefit from the increased orientation of trade toward fast-growing markets in Asia.
“Nevertheless, the global financial crisis has left a legacy of elevated unemployment in some sub-Saharan African countries. Fiscal balances have deteriorated, particularly in the region’s middle-income and oil exporting countries. And because of the fragile nature of the global recovery, risks remain weighted on the downside. “Looking ahead, the focus of policy needs to shift toward rebuilding the policy buffers that served so well during the crisis. In particular, expansionary fiscal policies will need to be tempered to make sure that public finances return to a sustainable path and public debt levels remain manageable” Ms. Sayeh said.
Ms Sayeh also drew attention to the main messages of the two analytical chapters in the Regional Economic Outlook: (i) recent evidence suggests that monetary policy in sub-Saharan Africa may have more power to influence monetary conditions than previously assumed and (ii) relatively low growth rates recorded in West African Economic and Monetary Union (WAEMU) could be enhanced by stronger policy environments and political stability; and by robust fiscal frameworks for directing resources towards priority spending needs.