Ejiofor Alike With Agency Report
24 October 2008
Lagos — International Monetary Fund (IMF) has said that the economic growth of Africa's oil exporting countries was expected to fall by half a point to an average 8 percent in 2008.
This, it said, is due to the "lower-than-expected output in the Niger Delta and Equatorial Guinea plus weaker non-oil growth in Chad due to insecurity " as well as global financial turmoil.
In its latest outlook for Africa launched yesterday in Nairobi, Kenya, IMF also said that economic growth in Sub-Saharan Africa (SSA) will dip to 6 percent in 2008 and 2009 due to tough global conditions, while inflation is seen rising to 12 percent this year.
The report, titled "Sub-Saharan Africa: A test of Policy Frameworks", also predicted that the worsening macroeconomic situation reflected headwinds from strong increases in food and fuel prices, slower world growth and global financial turmoil.
Oil importers growth will also decrease by half a point to an average five percent, the report said. According to it, oil exporters' fiscal surpluses, excluding grants, are projected to rise to seven percent of GDP in 2008, "reflecting a substantial oil revenue windfall."
They will drop to five percent in 2009, "reflecting lower oil prices", the IMF said.
Oil importers' fiscal balances, also excluding grants, will decline to 3.0 percent of GDP in 2008 "because of lower GDP growth and the cost of policy measures to cushion the impact of the food and fuel price shock", the IMF said, stressing that they would stay at 3 percent in 2009.
Launching the report yesterday, IMF's Deputy Director for African Department, Mr Benedicte Christensen, warned, however, that fast-deteriorating global conditions mean IMF's latest forecasts from the start of October may already be out-of-date.
"Since we made these projections, things have turned for the worse, so they are probably on the optimistic side... No country is spared the ramifications of what is happening globally," he said.
"Economic growth in sub-Saharan Africa (SSA) is expected to moderate in the face of the financial turmoil and high energy and food prices, even though many SSA countries are benefiting from terms of trade gains resulting from the surge in other commodity prices. Over all, growth is projected to decline from seven percent in 2007 to just over six percent in 2008-2009. However, there are important cross-country variations," the report said.
The report forecast inflation rising five points to 12 per cent in 2008, then dipping to 10 percent in 2009.
"If there is one thing that hurts the poor most, it is increases in the rate of inflation," Christensen said in Nairobi .
IMF also said African nations' foreign exchange reserves have held up "fairly well so far" but would be unlikely to survive the long-term impact of the food and fuel price "shock".
"While the turbulence has reduced global growth and demand for sub-Saharan Africa's exports somewhat, interest in investing in the continent appears to continue, in part because rates of return there are high relative to those in mature markets and because sub-Saharan Africa offers unique diversification opportunities," IMF said.
The report acknowledged that foreign direct investment was holding up, notably in Congo and Madagascar's mining sectors, Kenya 's telecommunications, and Senegal's tourism and infrastructure sectors.
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