The International Monetary Fund (IMF) in a report released on Monday stated that the growth forecast for this year, represents the lowest for the region in the past 15 years.
It attributed the development to severe shocks, including weak commodity prices, tight external financing and drought, stressing that there is urgent need to reset policies to secure growth.
“ After a prolonged period of strong economic growth, sub-Saharan Africa is set to experience a second difficult year, as the region is hit by multiple shocks,” the IMF said in its latest Regional Economic Outlook for Sub-Saharan Africa,” pointing out that the steep decline in commodity prices and tighter financing conditions have put many large economies under severe strain. The report called for a stronger policy response to counter the effect of these shocks and secure the region’s growth potential.
The report said growth fell to 3½ per cent in 2015, stating that in the current year, growth is expected to slow further to three per cent, well below the six percent average over the last decade, and barely above population growth.
Hit by several shocks, the commodity price slump has hit many of the largest sub-Saharan African economies hard, the report said, adding that while oil prices have recovered somewhat compared to the beginning of the year, they are still more than 60 per cent below 2013 peak levels. As a result, oil exporters such as Nigeria, Angola, and five of the six countries within the Central African Economic and Monetary Community continue to face particularly difficult economic conditions, stating that the decline in commodity prices has also hurt non-energy commodity exporters, as well. The report however indicated that the impact of these shocks varies significantly across the region as many countries continue to register robust growth, including in per capita terms
While the immediate outlook for many sub-Saharan African countries remains difficult, the region’s medium-term growth prospects are still favorable. The underlying domestic drivers of growth at play over the last decade generally continue to be in place. In particular, the region’s much improved business environment and favorable demographics should help bolster growth in the medium term, said the report.
