IMF expects a 3.6% growth of Sub-Saharan Africa in 2020
Abidjan, Côte d'Ivoire (PANA) - Economic growth in sub-Saharan Africa is projected to halt at 3.2 percent in 2019 and rise to 3.6 percent in 2020, the International Monetary Fund (IMF) said in its Regional Economi Outlook released on Monday.
"The expected recovery, however, is at a slower pace than previously envisaged for about two-thirds of the countries in the region, partly due to a challenging external environment," said the report.
The IMF projects sub-Sahara Africa's growth to remain strong in non-resource-intensive countries, averaging about 6 percent.
As a result, the report said that 24 countries, home to about 500 million people, will see their per capita income rise faster than the rest of the world. In contrast, growth is expected to move in slow gear in resource-intensive countries (2½ percent).
"Hence, 21 countries are projected to have per capita growth lower than the world average. Reducing risks and promoting sustained and inclusive growth across all countries in the region requires carefully calibrating the near-term policy mix, building resilience, and raising medium-term growth," the report suggested.
According to the IMF, empirical analysis suggests that increased competition can boost real per capita GDP growth rate by about 1 percentage point through improved export competitiveness, productivity growth, and investment in the region.
Based on a database of domestic arrears in sub-Saharan African countries, the IMF study found that domestic arrears have been pervasive in many countries, reflecting weak public financial management.
Furthermore, it said that arrears have increased in recent years (to about 3.3 percent of GDP in 2018), following the 2014 commodity price shock. However, despite the prevalence of arrears, their causes, effects, and consequences are not well understood.
It further pointed out that that domestic arrears negatively impact private sector activity and the delivery of social services while increasing banking sector vulnerabilities and undermining citizens’ trust in the government.
Domestic arrears also weaken the ability of fiscal policy to support growth, casting doubt on the merit of relying on arrears financing to avoid spending cuts.
-0- PANA JU/TBM/KND/AR 29Oct2019
