IMF says sub-Sa­ha­ran Africa faces height­ened risk of cap­i­tal out­flows

Daily Trust - - BUSINESS / NEWS -

In­vest­ment in in­fra­struc­ture and nat­u­ral re­sources will con­tinue to un­der­pin eco­nomic ac­tiv­ity in sub-Sa­ha­ran Africa, al­though cap­i­tal out­flows sparked by tighter global fi­nan­cial con­di­tions pose a risk to growth, the IMF said on Thurs­day.

In­fla­tion looks set to re­main con­tained in most coun­tries, it said.

“The main downside risk to this gen­er­ally pos­i­tive base­line sce­nario is the risk that growth in emerg­ing mar­kets might slow much more abruptly than cur­rently en­vis­aged,” the In­ter­na­tional Mon­e­tary Fund said in its lat­est Re­gional Eco­nomic Out­look.

“As ad­vanced economies tighten their mon­e­tary poli­cies, fron­tier mar­ket economies will also face higher fund­ing costs and a height­ened risk of re­ver­sal of cap­i­tal flows,” it said. The IMF fore­casts eco­nomic growth of 5.5 per­cent for sub-Sa­ha­ran Africa this year, up from 4.9 per­cent last year.

That is slightly more op­ti­mistic than the World Bank, which projects sub-Sa­ha­ran Africa’s out­put will grow 5.2 per­cent this year, partly driven by ris­ing house­hold spend­ing. [ID:nL6N0MZ2WN]

Africa, the world’s poor­est con­ti­nent, needed to en­sure growth was more in­clu­sive, the IMF said, cit­ing Mozam­bique where al­though the econ­omy has ex­panded at the same pace as Viet­nam, poverty has de­clined far more slowly.

The fund said it ex­pected growth in Nigeria - now the re­gion’s big­gest econ­omy af­ter a re­bas­ing - to quicken as oil pro­duc­tion picked up af­ter re­cent sup­ply dis­rup­tions.

It said South Africa, now ranked sec­ond largest and which suf­fered ane­mic pri­vate sec­tor in­vest­ments in 2013 and min­ing strikes which per­sist, will post mod­est growth this year as de­mand picks up in its main ad­vanced econ­omy trad­ing part­ners.

In­fla­tion in the re­gion will ac­cel­er­ate to an es­ti­mated 6.2 per­cent in 2014 from 5.9 per­cent last year, be­fore eas­ing slightly in 2015, though cur­rency de­pre­ci­a­tions may lead to re­newed up­ward price pres­sures, the IMF said. (Reuters)

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