The International Monetary Fund (IMF) says sub-Saharan Africa growth will be moderately lower in 2013, owing to global headwinds. But it still expects growth in the region to come in at around 5% this year, before rising to 6% in 2014, notwithstanding some external uncertainties and the fact that the region’s largest economy, South Africa, is poised to expand by only 2% this year.

Excluding South Africa, the region was forecast to grow by 6% this year and by 6.5% in 2014.

In its October Regional Economic Outlook, the IMF also suggested that the downside risks would mainly arise from external factors, such as any further weakening in emerging markets or advanced economies that could result in commodity price declines.

However, temporary declines in international commodity prices were not expected to derail growth at the regional level. However, they could undermine current-account balances and the economic expansion of some resource-intensive countries.

Weather and political events were highlighted as the key domestic threats.

The report also highlighted the fact that current-account deficits in the region hade increased markedly since the onset of the global financial crisis, but said these deficits did not pose immediate concerns, especially where these deficits were being financed through foreign direct investment and had not resulted in higher external indebtedness.

“Dependence on portfolio flows carries additional risks; this type of financing is especially important for South Africa, which has been subject to volatile financing for its current account deficit, especially since June of this year,” the report stated.

In addition, South Africa’s fiscal deficit had not fallen as expected after the stimulus provided during the global financial crisis.

“Although real spending growth has been consistent with that country’s potential growth, revenue has repeatedly fallen short because of sluggish economic activity.”

South Africa’s Medium-Term Budget Policy Statement reaffirmed that government would meet its fiscal-deficit target for the year, which was revised lower to 4.2% of gross domestic product (GDP), from 4.6% in February - a revision aided by a technical adjustment to the reporting format, which boosted receipts and payments.

Under the revised format, the deficit is projected to decline to 4.1% of GDP in 2014/15, with expenditure of R1.14-trillion anticipated during the period, before falling to 3.8% in 2015/16 and 3% in 2016/17.

Attention was also turning increasingly to debt levels, with interest payments representing the fastest-growing expenditure item on the back of a substantial increase in government’s debt stock. By 2016/17, more than R140-billion would be required to service public liabilities, an amount that exceeds current spending on healthcare.

IMF African Department director Antoinette Sayeh said it was heartening that sub-Saharan Africa’s economies had generally “maintained a strong pace despite some tensions observed in the external environment, including somewhat slower growth in emerging market economies”.

“This is a reflection of continued sound macroeconomic policies as well as robust domestic demand, in particular investment in infrastructure and productive capacity,” she added.