African economies are likely to withstand the impact of a looming global recession because they are now able to withstand external shocks better than in the past, an International Monetary Fund survey has found.

The survey confirms sentiments expressed during an Africa investment conference at the London Stock Exchange last week that concluded the continent was set for higher fuelled by rising commodity prices.

The major threat on the horizon is the surging oil prices that may dampen demand for other goods and services. Africa's is projected to grow at 6.5 per cent this year after escaping the turbulence that befell global financial markets in the second half of last year.

Pension fund managers in Nairobi, however, said their offshore returns were lower that in the previous year. Returns on offshore asset class averaged 0.8 per cent. Analysts said some marked slow-down in other emerging markets in Asia and the Pacific, which are strongly linked to the slowing United States market, led to reduced returns for offshore investments.

However, the proportion of investment funds allocated to offshore investments is negligible compared to what is investment in local financial markets.

Besides higher oil prices, conflicts in Kenya, Chad and Darfur are expected to put pressure on the continent's economic growth. In Kenya, for instance, inflation pressures relating to rising oil prices, which has hit a historic Sh100 per litre in Northern Kenya, are starting to be felt.

Recent political violence led to price rise of some consumer products by 50 per cent. The Central Bank of Kenya has also started intervening to help stabilise the local currency against pressure from reduced dollar inflows into the country, raising fears that this may interfere with the country's existing monetary policy. IMF is urging policymakers to sustain stability through checks on inflation, foreign exchange position and fiscal discipline.

Last year, African economies grew by an average 6.5 percent, fuelled by growing oil production and rising domestic investment and productivity, strong global demand for commodities, greater flows of capital to Africa, and debt relief.

IMF attributes this to strengthened macroeconomic policies; years of structural reforms; and less armed conflicts. Global economic growth is expected to slow to 4.1 per cent in 2008, down from 4.9 percent in 2007.

"Despite double-digit food price inflation in several countries in 2007, inflation on average has been held to the six to nine per cent range," says the IMF survey. Sub-Saharan Africa is also witnessing an increase in financial flows from emerging creditors, particularly China, which are stepping up assistance to the region largely in the form of project assistance and export credits.

Positive signs include growth of remittances to Africa to the tune of Sh560 billion a year and the continent has been able to clear over 35.5 trillion-worth of debt to its external creditors.