IMF: Steady growth in sub-Saharan African; drought spikes inflation

Sep 20, 2011, 13:01 GMT

Washington - The global economic slowdown has not significantly impacted sub-Saharan Africa, but the severe drought in the Horn of Africa region caused a sharp rise in inflation, the International Monetary Fund (IMF) said Tuesday.

Economic growth in sub-Saharan Africa was forecast to expand, provided the current financial instability in major advanced economies was contained, the IMF said in its semi-annual report on the global economy.

The report was released ahead of the IMF's annual meeting with the World Bank on Friday and Saturday.

Growth in gross domestic product (GDP) was projected to average 5.25 to 5.75 per cent during 2011-12 in the region that was shielded from the worldwide downturn because of its limited integration with global manufacturing and financial networks.

However, the worst drought in the Horn of Africa region in six decades - where more than 12 million people are facing starvation, with Somalia the hardest-hit and Djibouti, Ethiopia and Kenya severely impacted - has led to a spike in inflation.

The report projected growth of 6.5 per cent in 2012, on the back of strong investments in Kenya, economic stabilization in Ivory Coast following months of political violence in 2010, and large oil and mining projects in Niger and Sierra Leone.

Growth in South Africa is expected to reach 3.5 per cent over the next 12 months, spurred on by renewed investments, increased private consumption and generally low interest rates. The largest economy in the region has so far been bogged down by rising unemployment, high household debt and the slowdown in developed economies.

Inflation was projected to stay high for the oil exporters, the report said, led by rapid monetary expansion in Nigeria before the onset of the financial crisis and an increase in domestic fuel prices in Angola.

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