The International Monetary Fund raised its forecast for economic growth in Sub-Saharan Africa next year as the world’s poorest region benefits from rising commodity prices.
Gross domestic product will expand 5.7 percent in 2013, the fastest pace after developing nations in Asia, up from 5 percent this year, the Washington-based lender said in its World Economic Outlook report. In July, the IMF predicted 5.3 percent growth for next year.
“Export diversification has reduced exposure to weak demand from advanced economies,” the IMF said. “High commodity prices have supported the region’s commodity exporters and boosted investment in resource extraction.”
The Standard & Poor’s GSCI gauge of 24 commodities has increased 11 percent in the past four months as central banks from the U.S. Federal Reserve to the European Central Bank pledged to keep borrowing costs low and bolster their economies to prevent another global recession.
While sub-Saharan Africa has become less dependent on Europe and the U.S. to sell its goods, the debt crisis in the euro-area and slower economic growth still pose a risk to trade, the IMF said.
“Risks to the outlook remain high, primarily because of global uncertainties,” it said. “If the euro-area crisis escalates further and global growth slows further, sub-Saharan Africa’s prospects will be less favorable.”
The IMF’s growth estimate is higher than the World Bank’s prediction of 5.2 percent expansion in the region in 2013, up from 4.8 percent this year. Investment in Africa, including capital flows and foreign direct investment, will probably drop to $36.6 billion this year from $42.4 billion in 2011, the Washington-based lender said in its Africa’s Pulse report on Oct. 4.
Inflation in the region will slow next year to an average of 7.1 percent from 9.1 percent this year, according to the report.
South Africa, the continent’s biggest economy, will probably expand 3 percent next year from 2.6 percent in 2012, the IMF said. Fiscal and monetary authorities have limited room to spur economic growth, it said.
Finance Minister Pravin Gordhan has pledged to rein in the budget deficit to 3 percent of gross domestic product by 2015 from 4.5 percent this year. The Reserve Bank’s benchmark interest rate is at 5 percent, the lowest level in more than 30 years.
“This constraint is particularly acute on the fiscal side, where fiscal space will shrink further in a global slowdown,” the IMF said. “Under such a scenario, the authorities may need to rely more heavily on countercyclical monetary policy to cushion the economy against adverse spillovers.”
Nigeria, the continent’s largest oil producer, will probably expand 7.5 percent next year, the fastest pace among the region’s petroleum producers, according to the IMF. Kenya, the biggest economy in east Africa, is forecast to grow 5.6 percent in 2013, more than the 5.1 percent estimate for this year, the lender said.