Good news, bad news

Finweek English Edition - - Economic Trends & Analysis - HOWARD PREECE howardp@fin­week.co.za

THE GOOD NEWS IS that real eco­nomic growth in sub-Sa­ha­ran Africa is cur­rently fore­cast at 3,3% for 2009. That is, at any rate, the cur­rent pre­dic­tion of the In­ter­na­tional Mon­e­tary Fund. That pro­jec­tion is much higher than growth rates now in­di­cate for most of the rest of the world.

The bad news – part of it, any­way – is that in April 2008 the IMF growth fore­cast for the re­gion this year was 6,3%. So the orig­i­nal es­ti­mate has ef­fec­tively halved.

Fur­ther, poverty lev­els over­all are greater in the re­gion than in any other part of the world. The ad­verse im­pact of a sharp de­cline in eco­nomic growth in Africa gen­er­ally is there­fore nec­es­sar­ily greater than the ef­fect in any other con­ti­nent or sub-con­ti­nent.

The sec­ond cru­cial prob­lem is that it’s nec­es­sar­ily im­pos­si­ble to say sub-Sa­ha­ran Africa has yet hit the bot­tom. Things might patently still be­come a lot worse.

An­toinette Mon­sio Sayeh, African depart­ment di­rec­tor at the IMF, says: “The cur­rent global fi­nan­cial cri­sis will have a sig­nif­i­cant im­pact on sub-Sa­ha­ran Africa this year. Al­though the re­gion is po­si­tioned to record pos­i­tive rates of growth this rep­re­sents a sharp slow­down from re­cent years.”

She adds: “As the global cri­sis con­tin­ues to un­fold, the un­cer­tainty sur­round­ing the out­look is un­usu­ally large and risks re­main mainly on the down­side.

Fi­nan­cial flows to Africa could slow fur­ther or even re­verse, putting se­vere pres­sures on the bal­ance of pay­ments in many coun­tries.”

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