Dimmed Africa outlook

Economic growth is expected to rise to 3.4% in sub-Saharan Africa next year from 2.6% in 2017, the IMF said in a report yesterday, but warned that rising debt and political risks in larger economies would weigh down future growth.

Nigeria and South Africa are the biggest economies in Africa south of the Sahara, but both nations have been clouded by political uncertainty linked to the tenure of their leaders.

SA has been clouded by the rule of Jacob Zuma, who has battled scandals.

“Key downside risks to the region’s growth outlook emanate from the larger economies, where elevated political uncertainty could delay needed policy adjustments and dampen investor and consumer confidence,” the IMF said in a report launched in Harare.

“A further pickup in growth to 3.4% is expected in 2018, but momentum is weak, and growth will likely remain well below past trends in 2019.”

To help maintain growth, countries should diversify from dependence on commodities and oil, implement fiscal reforms to stimulate growth and attract private investment.

The IMF said public debt would rise to 53% of GDP this year from 48% in 2016. More worryingly, most countries were now borrowing from local banks, which could distabilise the domestic financial sector and fuel inflation.

Debt-servicing costs were also up, but high debt levels were in particular complicating the economic outlook for six nations, including Zimbabwe, which is gripped by a crunch forex shortage.

While some countries had made progress in reducing their fiscal deficits, others, like SA, would see the deficit widen. –