Washington, United States, 18 Sept – The economy of Africa south of the Sahara is “robust” and will show renewed signs of growth next year, following a downturn in 2006, primarily due to the performance of oil-producing countries such as Angola and Equatorial Guinea, the International Monetary Fund has forecast.
Benefiting from the trend for higher raw material prices in world markets, the economies of oil-producing states will almost double their growth rates to 10.1 percent in the next year, according to the IMF’s latest report on the region published Saturday.
This expansion is made possible “mainly because oil production is increasing in Angola and Equatorial Guinea”, notes the IMF.
Other countries in the region will register growth of 4.6 percent, a stable figure in relation to previous years, the IMF says, and the region as a whole will expand by around 6 percent, with the inflation rate continuing to fall towards 6 percent.
Among this group of countries, Mozambique will record one of the highest growth rates, 7.9 percent, together with the Democratic Republic of Congo and Tanzania.
The IMF lowered its 2006 growth predictions for Angola last week due to “a slightly lower number of oil wells coming into production” than forecast, but next year the African state will have the world’s biggest growth rate of 31 percent.
In its latest regional report, the IMF warns “the general positive scenario in the region will have to be supported by economic policies designed to retain the recent gains of stability”, and “central banks must be vigilant against inflationary pressures caused by higher oil prices.”
“The framing of policies will have to be strengthened to effectively absorb higher levels of resources of petroleum revenues and aid” and “it will be necessary to improve coordination of fiscal and monetary policies, allocate resources to boost productivity and further liberalize commerce to deal with exchange rate pressure and demand-side constraints”, the IMF report adds.
Also in the coming year budget balances and the region’s current account “will improve”, the IMF says, due to “the strength of economic activity in oil-producing states. But the situation will be the opposite in other counties, with the negative examples of Cape Verde and Guinea-Bissau cited by the IMF.
Despite the slight expected fall in regional economic expansion in 2006 of about 0.8 percent to 4.8 percent, sub-Saharan Africa “shows an increasingly robust economic growth”, the IMF notes.
This year’s slowdown is attributed to “the temporary reduction in oil production in exporting states such as Equatorial Guinea, Chad and Nigeria”, as well as “moderation in South Africa’s growth (the region’s largest economy) to more sustainable levels.”
The IMF underscores, however, that there are several risks to this “favorable scenario”, particularly a lower than forecast growth in exports due to the cooling down of the world economy, together with higher interest rates and corrections of imbalances.”
Other hurdles to economic growth and lower inflation are fresh oil price increases or a larger than expected fall in raw material costs, whose increased prices have allowed non-producing countries to sustain higher energy costs in recent years, as in the case of Mozambique.
The IMF also reduced its forecast last week for Cape Verde’s growth in 2007 from 6.5 percent to 6.0 percent and from 7.0 percent to 5.5 percent in 2006.
The other two economies of the five Portuguese-Speaking African Countries, or PALOPs, Sao Tome and Guinea Bissau, will have more moderate growth rates this year of 5.5 and 4.6 percent respectively (1 percent more than the IMF’s spring forecast). (macauhub)