While strong near-term growth was anticipated for many sub-Saharan African countries, South Africa’s economic expansion continued to be hampered by the financial spillover from Europe, the International Monetary Fund (IMF) said on Tuesday.
In the latest ‘World Economic Outlook’, the IMF kept its 2012 projected real gross domestic product (GDP) growth for South Africa at 2.6%, but lowered its 2013 outlook to 3%, from its July projection of 3.3%.
South Africa’s economic growth would lag many sub-Saharan countries, including the Democratic Republic of Congo (DRC), Nigeria and Ghana.
Tanzania and Kenya would grow real GDP 6.5% and 5.1% respectively in 2012, with each increasing to 6.8% and 5.6% respectively during 2013. The DRC was expected to grow from 7.1% in 2012 to 8.2% in 2013 and Mozambique from 7.5% to 8.4%.
Nigeria had a real GDP growth forecast of 7.1% in 2012, decreasing to 6.7% next year, while Ghana would experience 8.2% growth this year, lowering to 7.8% in 2013.
Combined, sub-Saharan Africa’s real GDP growth, after expanding by more than 5% every year for the past three years, was expected to be 5% this year, with a strong projected growth of 5.7% next year.
However, the IMF warned that sub-Saharan Africa policymakers should use the window provided by strong growth to rebuild budgetary space and normalise monetary conditions to be better prepared for downside risks.
Despite the favourable outlook for the sub-Saharan region, risks remained high, mostly owing to global uncertainties, elevation of global food prices, the possibility of the eurozone crisis escalating and slowing global growth.
“The primary channel for spillovers is trade. South Africa, strongly linked to Europe, would be particularly affected, with possible repercussions for some economies in southern Africa, and softer commodity prices would adversely affect the region’s natural resource exporters,” the report explained.
The IMF slashed its global economic growth outlook to 3.3% for this year, from 3.5% in the July report and also lowered its forecast for 2013 to 3.6%, from 3.9%.