The International Monetary Fund (www.imf.org) is upgrading its African growth prospects for this year, compared to forecasts made in its October 2009 World Economic Outlook. It foresees 4.3% growth for 2010, and 5.3% for 2011 in Africa and adds that the world will bounce back from negative growth in 2009 to 3.9% growth in 2010. The African growth is 0.3% (2010) and 0.1% (2011) better than previously forecast and the world economy is also growing faster than previously forecast, still driven by policy measures.
According to an update to its World Economic Outlook, released on 26 January: “The recovery is proceeding at different speeds around the world, with emerging markets, led by Asia relatively vigorous, but advanced economies remaining sluggish and still dependent on government stimulus measures.”
Economies could even head back into recession, if anti-crisis measures are withdrawn too soon, says IMF Managing Director Dominique Strauss-Kahn. IMF Chief Economist Olivier Blanchard says: “For the moment, the recovery is very much based on policy decisions and policy actions. The question is when does private demand come and take over. Right now it’s ok, but a year down the line, it will be a big question.”
The Fund called for a careful unwinding of positions, differentiated for different economies: “There remains a pressing need to continue repairing the financial sector in advanced and hardest-hit emerging economies. In these cases, policies are still needed to tackle banks’ impaired assets and restructuring.” Unwinding the financial sector support gradually can be facilitated by incentives that make measures less attractive as conditions improve.
“Policymakers will also need to move boldly to reform the financial sector with the objectives of reducing the risks of future instability… At the same time, some emerging market countries will have to design policies to manage a surge of capital inflows.”.
The growth and forecast growth for Africa is far behind that for China (8.7% in 2009, 10.0% in 2010 and 9.7% in 2011) and India (5.6%, 7.7% and 7.8%).
“Stronger economic frameworks and swift policy responses have helped many emerging economies to cushion the impact of the unprecedented external shock and quickly re-attract capital flows. The rebound of commodity prices is helping support growth in commodity producers in all regions. The IMF’s baseline petroleum price projection is unchanged for 2010 and revised up by a small amount in 2011 (to $82 a barrel, from $79 a barrel in the October 2009 WEO). Other non-fuel commodity prices have also been marked up modestly.
Significant risks remain if policymakers get it wrong.
2008 2009 2010 2011
World 3.0 -0.8 3.9 4.3
Africa 5.2 1.9 4.3 5.3
sub-Saharan Africa 5.6 1.6 4.3 5.5