By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The International Monetary Fund (IMF) projected its growth in sub-Saharan Africa to six percent (6%) in 2014 from five percent (5%) in 2013, amidst the Ebola threat and widening insecurity, according to its latest regional economic outlook ‘’Saharan Africa Keeping the Pace’’ October 2014.
The IMF says global headwinds have moderately lowered sub-Saharan Africa’s growth in 2013, but the pace is expected to pick up in 2014 as strong investment demand continues to support growth in most of the region.
‘’Growth is projected to remain robust at about 5 percent in 2013 and 6 percent in 2014, backed by continuing investment in infrastructure and productive capacity,’’ the report said.
According to the IMF, the current outlook is not as strong as portrayed in the May 2013 edition of regional economic outlook publication reflecting, in part, a more adverse external environment—characterised by rising financing costs, less dynamic emerging market economies, and less favourable commodity prices—as well as diverse domestic factors.
The Washington-based Fund affirmed that low-income countries will spur expansion with growth of as much as seven percent (7%) in 2014-2015, according to Antoinette Sayeh, director of the IMF’s Africa Department in a statement.
She said Ebola has killed more than 4,500 people in Guinea, Liberia and Sierra Leone since the outbreak of the virus in December.
“The Ebola outbreak could have much larger regional spillovers, especially if it is more protracted or spreads to other countries, with trade, tourism, and investment confidence severely affected,” according to the IMF.
The Fund added that in Ebola-affected countries, fiscal accounts are likely to deteriorate, and, where public debt is manageable, fiscal deficits should be allowed to widen temporarily.
The report says most of the major risks to the outlook for the region stem from external factors. It said further weakening in emerging market economies—including some of sub-Saharan Africa’s new economic partners—or in advanced economies could affect sub-Saharan Africa’s prospects for growth, including through commodity price declines.
It said the security situation continues to be difficult in Central African Republic and South Sudan, and remains uncertain in northern Mail, northern Nigeria and Kenya.
The IMF further affirmed that the improvement relative to 2013 reflects higher global growth—especially in Europe—and other expected favourable domestic conditions.
The Washington based global lender said in Nigeria oil production is expected to increase in 2014, and electricity reform is advancing.
The global lender said inflation is expected to maintain its downward trend for a third consecutive year, toward less than 6 percent (6%) by end-2014, with benign prospects for food prices throughout the region and the continuation of prudent monetary policies.
‘’Headline inflation in sub-Saharan Africa has been on a declining trend since early 2012, facilitated by a slowdown and occasional reversal in food price inflation and the maintenance of tight monetary policies in some previously high-inflation economies.
‘’Nevertheless, in a few countries inflation remains in double digits, reflecting a diverse set of circumstances, including transportation bottlenecks in neighboring countries (Burundi), sustained money growth (Eritrea), inertia during a gradual slowdown (Guinea), and currency depreciation (Malawi),’’ the report said.
