IMF scales down Sub-Saharan Africa’s growth rate in 2015 as global oil prices drop
The International Monetary Fund announced lower growth rates for Sub-Saharan African economies in 2015 following the slump in global crude prices, incidence of terrorism and the outbreak of the Ebola virus.(Image:spyghana.com)
Sub-Saharan Africa enjoyed robust economic growth of 5% in 2014 driven by strong investment in mining and infrastructure and by strong private consumption, however the trend shall not be as pronounced this year as activity is expected to decelerate further in 2015, according to the latest forecasts released by the International Monetary Fund (IMF).
Too much of Africa’s growth figures are induced by raw commodities exports, leaving the economies fragile to exogenous factors with the current drop in global oil prices.
“The economic expansion will be at the lower end of the range experienced in recent years, mainly reflecting the impact of the sharp decline of oil and commodity prices over the last six months. But the impact of this shock will be highly differentiated across the region,”says a senior IMF official.
However,Sub-Saharan Africa would continue to be the fastest growing region globally as this slowdown mainly reflects difficulties in the oil exporting regions and those impacted by the Ebola outbreak—thus, excluding these countries and South Africa, growth is projected to be healthy.
The IMF report accordinglyreassures that“Sub-Saharan Africa’s economy is set to register another year of solid economic performance, expanding at 4.5% in 2015.”
Beyond the current shock, sustaining strong, diversified, and durable growth remains the key policy priority, as in the short term oil exporters will have no choice but to undertake fiscal adjustment wherein feasible exchange rate flexibility will be important to help preserve scarce external reserves.
The outlook regarding real GDP growth in 2015-16 is that it is expected to be at an average of 5% —nearly 2.5% points below October 2014 forecasts — as Nigeria, Sub-Saharan Africa’s largest economy and oil exporter, has been hit hard by the shock. With limited buffers, the authorities are cutting capital spending, and have adjusted monetary and exchange rate policies to relieve pressures on the public finances and the currency.