- International Monetary Fund. African Dept.
- Published Date:
- May 2012
©2012 International Monetary Fund
Regional economic outlook. Sub-Saharan Africa. — Washington, D.C.: International Monetary Fund, 2003–v. ; cm. — (World economic and financial surveys, 0258-7440)
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1. Economic forecasting — Africa, Sub-Saharan — Periodicals. 2. Africa, Sub-Saharan — Economic conditions — 1960– —Periodicals. 3. Economic development — Africa, Sub-Saharan — Periodicals. I. Title: Sub-Saharan Africa. II. International Monetary Fund. III. Series: World economic and financial surveys.
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The following conventions are used in this publication:
In tables, a blank cell indicates “not applicable,” ellipsis points (…) indicate “not available,” and 0 or 0.0 indicates “zero” or “negligible.” Minor discrepancies between sums of constituent figures and totals are due to rounding.
An en-dash (–) between years or months (for example, 2009—10 or January—June) indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months (for example, 2005/06) indicates a fiscal or financial year, as does the abbreviation FY (for example, FY 2006).
“Billion” means a thousand million; “trillion” means a thousand billion.
“Basis points” refer to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).
This April 2012 issue of the Regional Economic Outlook: Sub-Saharan Africa (REO) was prepared by a team led by Alfredo Cuevas and Montfort Mlachila under the direction of Sean Nolan.
The team included Javier Arze del Granado, Jorge Iván Canales-Kriljenko, Rodrigo Garcia-Verdu, Cleary Haines, Maitland MacFarlan, Mauro Mecagni, Alexis Meyer-Cirkel, Jean-Claude Nachega, Luiz Edgard R. Oliveira, Jon Shields, Darlena Tartari, Alun Thomas, and Juan Treviño. Specific contributions were made by Sandra Donnally, Samuel Fahlberg, Emily Forrest, Hervé Joly, Nir Klein, Brian Moon, Doris Ross, Oral Williams; and with editorial assistance from Jenny Kletzin DiBiase. Natasha Minges was responsible for document production, with assistance from Anne O’Donoghue, and publishing assistance from Charlotte Vazquez. The editing and production was overseen by Joe Procopio of the External Relations Department.
Chapter 1: Sustaining Growth amid Global Uncertainty
Despite difficult external conditions, output in sub-Saharan Africa grew by 5 percent last year. Most countries shared in this solid expansion. Exceptions included South Africa, slowed by weakness in major European trading partners, and countries in western Africa affected by drought in the Sahel and civil conflict in Cote d’Ivoire. Consumer price inflation rose, particularly in eastern Africa, sparked in part by sharply higher global food and energy prices. Macreconomic policies were generally accommodating.
For 2012, the baseline projection is for much of the region’s output momentum to be maintained. Although modest world growth is expected to keep export growth subdued, new resource production in several countries and recovery in western Africa will help nudge output growth up to 5½ percent. Inflation is projected to moderate, notably in countries in eastern Africa have tightened monetary policy.
This outlook is subject to substantial downside risks because of global uncertainties. Renewed financial stresses in the euro area would reduce the pace of growth in sub-Saharan Africa in both 2012 and 2013, with the adverse impact depending on the severity of euro zone shock and, for individual countries, the importance of direct links to Europe. Another surge in oil prices would rekindle inflation, cut growth, and strain fiscal and external balances in oil importing countries.
While macroeconomic policy prescriptions vary substantially between countries, efforts are warranted to rebuild policy buffers in countries where these have been eroded and where growth is strong. At the same time, contingency plans should be prepared in case counter-cyclical measures become necessary. Countries in the process of reducing elevated inflation rates will need to maintain monetary policy on the tight side.
Chapter 2: The Impact of Global Financial Stress on Sub-Saharan African Banking Systems
Most sub-Saharan African banking systems have proved resilient to recent episodes of global financial stress. With limited levels of international financial integration, pressure on their loan quality, profitability, and bank liquidity has come mainly from indirect channels, notably through the impact of international trade developments on domestic economic growth.
The rapid spread of pan-African banking groups in the last few years may in some cases have outpaced supervisory capacity. While their presence has spurred competition and innovation in the sector, these banking groups could become a channel for cross-border contagion unless regional supervisory frameworks are strengthened.
Chapter 3: The Region’s Natural Resource Exporters: Recent Performance and Policy Challenges
Natural resources are an important contributor to merchandise exports in close to half of the 45 countries in sub-Saharan Africa. However, the share of resource exports that accrue to national budgets varies widely across countries, with oil producers being the most successful in terms of revenue extraction.
Countries that obtain considerable fiscal revenue from natural resources have experienced significantly higher volatility in exports, revenue, and nonresource GDP growth than other sub-Saharan African economies. Fiscal policy in many of these economies has become less procyclical over the past decade, but the boom-bust cycle has not been eliminated, and further strengthening of macro-fiscal frameworks would be beneficial.