1 / 15

Maintaining Growth in an Uncertain World Regional Economic Outlook for Sub-Saharan Africa

This report provides an overview of recent developments and near-term outlook for Sub-Saharan Africa's regional economy. It discusses the risks to the outlook and presents policy choices for maintaining growth in an uncertain global context. The report highlights the solid growth prospects for Sub-Saharan Africa but also emphasizes the elevated risks that need to be addressed.

dwampler
Download Presentation

Maintaining Growth in an Uncertain World Regional Economic Outlook for Sub-Saharan Africa

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Maintaining Growth in anUncertain WorldRegional Economic Outlook for Sub-Saharan Africa African Department International Monetary Fund November 13, 2012

  2. Outline • Recent Developments and Near-term Outlook • Risks to the Outlook • Policy Choices • International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012 2

  3. The Global Context: Slowing growth, most marked in the advanced economies • Selected Regions: Real GDP growth, percent change from a year earlier, 2007-2012Q2 • Selected Regions: Real GDP growth including projections, 2007-2013 • International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012 3

  4. SSA output growth quite strong, but sizeable variation across country groupings Domestic demand, investment, have provided support Recovery from drought and new resource projects too Sub-Saharan Africa: Real GDP Growth, 2007-2013 • International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012 4

  5. Inflation: slowing from 2011 levels, although with food price shocks a risk factor. Sub-Saharan Africa: Food and Nonfood inflation, 2008-2012 May • Sub-Saharan Africa: End-of-period CPI Inflation, 2008-2013 • International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012 5

  6. Fiscal deficits remain elevated; debt ratios manageable but rising in several countries. • Sub-Saharan Africa: Overall Fiscal Balance, 2004-2013 • Sub-Saharan Africa: Government Debt Ratios, 2000-2013 • International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012 6

  7. Sluggish external demand contributes to widening current account deficits • Selected Country Groups: Exports (Three-month moving average, value index), 2008-2012 May • Selected Country Groups: External Current Account Balance, 2004-2012 • International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012 7

  8. ….. but so do rising domestic investment levels in many countries • Sub-Saharan Africa: Changes in Current Account and Investment, 2007-2012 • International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012 8

  9. In sum: the outlook for sub-Saharan Africa remains solid in our baseline projections… • Near-term outlook for growth remains positive • Supply-side factors and stronger policy frameworks are playing significant roles • But risks are elevated • Sub-Saharan Africa: Growth Prospects, 2002-2013 • International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012 9

  10. Risks to the Outlook • The external environment • The euro-zone crisis • The US fiscal cliff • Other risks (e.g. commodity price shocks) • Domestic risks • Policy slippages • Deteriorating security conditions/instability • Climate shocks • International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012 10

  11. Risk scenario: Intensification of euro area stress in the near term Assumptions : • Policies deployed in the euro zone fail to calm markets • Global output lower than the baseline by about 2 percentage points in 2013 • Commodity prices decline by between 8 (non-oil) and 17 (oil) percent. Impact: • SSA’s growth reduced by 1 to 1.2 percentage points • Sub-Saharan Africa: Real GDP growth in downside scenario 1, 2004-2013 • International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012 11

  12. Policy Options in the face of Uncertainty Context: 1. The global outlook is uncertain, with large downside risks 2.Many countries face constraints on “policy space”: • a) limited room to finance any further increase in fiscal deficits AND/OR • b) limited foreign reserves to manage exchange rates and maintain confidence in the domestic currency AND/OR • c) limited room to cut interest rates without stimulating inflation and/or exchange market pressures. • International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012 12

  13. Policy Principles: “the baseline outlook” 1. Countries experiencing strong growth and favorable export prices should move to strengthen fiscal positions. • Accommodative fiscal policy is warranted in middle-income countries where growth is weak – but the margin for maneuver is narrowing as debt levels rise. • Most low-income countries and fragile states need to strengthen domestic revenue bases, given investment needs and risks to aid flows. • Monetary policies appear to be appropriately calibrated in most countries that have monetary autonomy, but there is little room for easing in cases where inflation is still high. • International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012 13

  14. Policy Principles: “A significant, but temporary, global downturn” No one-size-fits-all, but • Avoid pro-cyclical fiscal tightening , where feasible: – countries that can finance larger deficits should let automatic stabilizers work. – resource exporters with ample foreign reserves can deploy this buffer to offset oil revenue losses, up to a point. – countries with limited borrowing space and foreign reserves will likely need to seek official external financing. • Countries with flexible exchange rates should let the rate adjust as a shock absorber. 3. Central banks with monetary autonomy and anti-inflation credibility can shift emphasis to supporting activity. • International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012 14

  15. Thank You • International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012 15

More Related