The IMF may upgrade its assessment of Africa’s economic growth prospects because some countries fared better than expected in a global recession that many feared would undo decades of poverty-fighting progress.
In an interview, Antoinette Sayeh, director for the IMF’s Africa Department, told Reuters the more optimistic outlook for the region was due to stronger-than-expected performances by economies such as those of South Africa and Nigeria.
She said the fund could revise up its 2009 growth forecast to close to 2 percent from an earlier projection of 1 percent.
In addition, it could also raise its projection for 2010 to around 4.5 % from a January outlook of 4.3 %.
Despite the stronger outlook, it is still a significant drop from the 6 percent growth rates of the past decade.
“Our latest estimate suggests perhaps a more muted impact on growth than we had thought a few months ago,” Sayeh said ahead of a visit to Africa by IMF Managing Director Dominique Strauss-Kahn this weekend to see how the region has performed during the crisis.
Record IMF lending
As the global recession hit Africa’s exports causing revenues to fall, the IMF pointed up record lending of some $5 billion, including a $1.4 billion loan program to Angola.
That is five times more than in 2008, a time when it looked like most countries were weaning themselves off IMF funding.
Sayeh said IMF lending to Africa would probably be lower this year as global demand for African goods recovers. Still, a “significant number” of smaller countries in Africa have expressed interest in new fund-supported programs, she added.
Strauss-Kahn’s visit, his third to the region since the crisis, will take him to Kenya, South Africa and Zambia — three countries at various stages of development and each affected differently by the crisis.
South African government data shows that the economy grew by a faster-than-expected 3.2 % in the fourth quarter of 2009 after a 0.9 % rise in the previous quarter, which ended the country’s first recession in almost two decades.
During the crisis, South Africa’s economy shed nearly one million jobs in the manufacturing sector, a worrying development given its already high unemployment rate.
Higher growth, greater flexibility in its labour markets and more job opportunities for youths would help reduce the country’s high unemployment rate, Sayeh said.
“South Africa has responded quite well in the course of the crisis in relation to macro policies, implementing fiscal stimulus and easing monetary policy, which has helped the recovery,” she said.
The authorities could start scaling back support as soon as the recovery is under way to avoid overheating in the economy much like other emerging market countries.
“South Africa probably needs to continue those policies perhaps through this year,” Sayeh said. “But it will need to start the process of recalibrating its policy stance in the light of the fact that debt is increasing.”
In contrast, Zambia’s economy has shown strong growth despite the global recession, reflecting an expansion of copper production and growth in its agricultural sector, she said.
“It should be possible for Zambia to sustain that pace of growth over the next year,” she said, noting that increasing domestic revenue for infrastructure development and other pending priorities are among key challenges for Zambia.
Instead of reverting to harmful protectionist measures of the past, Sayeh said African governments maintained the prudent economic policies that helped transform their economies over the past decade.
Those efforts are helping the region recover quicker.
“Even in the face of declining revenues they maintained social sector spending while some countries actually increased targeted social programs to help badly affected groups,” she said.
“As a result it contributed to perhaps a more muted political impact of the crisis than we feared could be the case.”
Still, recent worrying political developments in some African countries have emerged and Sayeh said if they were not contained they could disrupt economic progress in the region.
A coup in Niger, tensions in Ivory Coast and questions over Nigeria’s president have all surfaced of late. Yet the crisis did not lead to the widespread instability many had feared.
Pic: Flag of South Africa