- Sub-Saharan Africa's economic growth is projected at 5.3 percent in 2006, the same rate as in 2005, according to the IMF's African Regional Economic Outlook. As last year, Angola is Africa's fastest growing economy, leading the trend of oil exporters growing faster than oil importers. Only in Equatorial Guinea, Seychelles and Zimbabwe, the IMF expects negative growth rates in 2006.
Africa is in a state of record economic growth "thanks in part to prudent policies," according to the latest data released by the International Monetary Found (IMF) in its World Economic Outlook. Last year's strong growth is to be repeated this year, the forecast shows. The very high oil prices however are resulting in higher growth rates for oil producing nations and a somewhat lower growth for oil importing nations.
The IMF report attributes the projected maintenance of relatively strong growth despite higher oil import prices, to "many countries' continued pursuit of prudent macroeconomic policies" and to strong global demand growth. "Higher growth in oil-exporting countries should offset slower growth in oil-importing countries," the Fund noted.
In 2005, economic growth in sub-Saharan African oil exporting countries was measured at 6.8 percent of GDP, while it is expected to be at 8.0 percent this year. Simultaneously, African oil importers saw their economy growing by 4.8 percent last year, going back to a still comfortable 4.5 percent this year. Even when corrected by population growth, per capita growth in oil importing nations stands at 2.9 percent this year in Africa.
As last year, the most impressing growth is to be measured in Angola this year. With a real GDP growth of 15.7 percent in 2005, Angola is set to speed up growth to an impressive 26.0 percent this year, according to the IMF. Also other oil exporters, including Nigeria, Congo Brazzaville, Cameroon, Chad and Gabon, are experiencing considerable growth this year. Equatorial Guinea is the only oil exporting country seeing detraction and can expect a negative growth of 1.1 percent.
Among non-oil exporters, the picture is more differentiated. Strongest growth is expected in Malawi (8.3 percent), mostly connected to the poor country's bumper harvest this year, Mozambique (7.9 percent), Sierra Leone (7.4 percent), Congo Kinshasa and Cape Verde (both 7.0 percent). All these five countries will experience a much higher GDP growth that population growth, producing per capita growth between 3.9 (Congo) and 6.2 percent (Malawi).
While the majority of African countries are performing well, a few are not able to connect to the current positive trend. Negative GDP growth is even foreseen in Zimbabwe (-4.7 percent, improved from -6.5 percent last year) and Seychelles (-1.4 percent, improved from -2.3 percent last year). Zimbabwe continues to struggle with its failed economic and agricultural reforms and an international boycott, while Seychelles struggles with too late reforms and a setback in the tourism sector.
Several other countries however experience a negative trend when population growth is added to the IMF calculations, as there are more people to share economic goods among each year. As such, Guinea-Bissau experiences a positive development in GDP growth (2.6 percent), but per capita, the economy is still shrinking (-0.4 percent). Also the poor countries of Comoros, Lesotho and Niger see almost their entire economic growth eaten up by population growth.
Despite the large overall growth, the IMF was not satisfied with the registered numbers. For poverty in the region to be halved by 2015 - the UN's millennium aim - a real GDP growth rate of 7 percent is required for Africa at large. Only five countries were close to that aim in 2006, the Fund noted.
Especially the slow growth (4.5 percent) in oil importing countries disappointed the Fund. In presenting the report to the press last week, the IMF's Abdoulaye Bio-Tchane, said "it is really not acceptable to see oil revenues increasing while poverty is increasing. That is the equation we have to solve, and I think [African] authorities, ourselves, the World Bank, and other donors ... need to find the right balance."
Inflation in sub-Saharan Africa registered 10.7 percent in 2005, in part because of higher oil prices, and is expected to be largely stable in 2006 at 11 percent. It should decline in many countries but rise in others, including Zimbabwe, the only country with annual inflation in triple digits, according to the IMF. Stabilisation efforts in oil exporters Angola, Chad, and Nigeria should reduce inflation to less than 8 percent" in these countries.
Fiscal deficits, including grants, are projected to worsen in more than half the oil-importing countries, notably Cape Verde, Ethiopia, Guinea-Bissau, and Kenya. According to the report, the reserve cover for oil importers should, on average, remain unchanged, but it is expected to fall in Burkina Faso, Comoros, Ethiopia, Guinea-Bissau, Rwanda, and Tanzania. Continuing high oil prices are expected to raise the fiscal and current account surpluses of oil-exporting countries.
"However, this outlook is subject to risks," the IMF notes. "In oil-importing countries, fiscal and current account balances may come under pressure from higher-than-expected oil prices or lower-than expected prices for Africa's other commodities."
"In several parts of the region, political uncertainties and fragile security threaten growth prospects, as does the possible spread of the avian flu. Moreover, millions of people in eastern and southern Africa are experiencing food shortages and urgently need humanitarian assistance," the Fund adds.
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