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IMF cuts Africa’s growth forecast

By on October 22, 2014

The International Monetary Fund (IMF) has reduced its growth forecast in sub-Saharan Africa because of the outbreak of Ebola virus disease in West Africa and violence in at least five other countries.

Africa’s economy will expand five per cent this year, about the same as in 2013, driven by infrastructure investment, a buoyant services sector and strong agriculture production; Bloomberg quoted the IMF to have said.

In April, the Washington-based Fund forecast a 5.5 percent growth rate this year.

While low-income countries will spur expansion with growth of as much as seven per cent in 2014-2015, Director of the IMF’s Africa Department, Antoinette Sayeh said in a statement.

Ebola has killed more than 4,500 people in Guinea, Liberia and Sierra Leone since the outbreak of the virus in December.

“The Ebola outbreak could have much larger regional spillovers, especially if it is more protracted or spreads to other countries, with trade, tourism, and investment confidence severely affected,” according to the IMF.

“In Ebola-affected countries, fiscal accounts are likely to deteriorate, and, where public debt is manageable, fiscal deficits should be allowed to widen temporarily.”

Worsening insecurity stemming from civil wars and Islamist militant attacks could also curb Africa’s economic growth, according to the IMF.

“The security situation continues to be difficult in Central African Republic and South Sudan, and remains precarious in northern Mali, northern Nigeria, and the coast of Kenya,” it said.

Domestic economic challenges may also curb growth in countries such as South Africa that are facing electricity shortages and labour disputes, according to the IMF.

 

[This Day]