• Friday, May 24, 2024
businessday logo

BusinessDay

IMF projects steady rise in growth for Sub-Saharan Africa on recovery from weather shock

10 African countries with the highest debts to IMF

The International Monetary Fund’s (IMF) has projected positive growth trends for Sub-Saharan Africa, indicating a promising trajectory for the region’s economic recovery.

The Washington based Fund made this known in its World Economic Outlook (WEO) report released on Tuesday, at the ongoing spring meetings of the IMF/World Bank.

According to the IMF, Sub-Saharan Africa is expected to witness a steady increase in growth rates over the next few years. The projected growth is set to rise from an estimated 3.4 percent in 2023 to 3.8 percent in 2024 and further to 4.0 percent in 2025. This optimistic outlook is attributed to the gradual subsiding of negative effects from earlier weather shocks and improvements in supply issues across various sectors.

Read also: IMF projects Nigeria’s debt to GDP ratio to rise to 46.6% in 2024

Despite challenges faced by individual countries, the overall forecast remains unchanged for 2024 compared to the January 2024 WEO update. The report notes a downward revision to Angola’s growth forecast due to a contraction in the oil sector. However, this downward trend is balanced by an upward revision to Nigeria, showcasing resilience and potential for growth in the region’s largest economy.

The IMF’s assessment underscores the importance of addressing sector-specific challenges while leveraging opportunities for sustainable economic growth in Sub-Saharan Africa. With concerted efforts to mitigate the impacts of external shocks and enhance domestic capabilities, the region is poised to capitalize on its vast potential and contribute significantly to global economic dynamics.

According to the report, in emerging market and developing economies, growth is expected to be stable at 4.2 percent in 2024 and 2025, with a moderation in emerging and developing Asia offset mainly by rising growth for economies in the Middle East and Central Asia and for sub-Saharan Africa.

Low-income developing countries are expected to experience gradually increasing growth, from 4.0 percent in 2023 to 4.7 percent in 2024 and 5.2 percent in 2025, as some constraints on near-term growth ease, the report stated.

The report noted that economic activity was surprisingly resilient through the global disinflation of 2022–23. As global inflation descended from its mid-2022 peak, economic activity grew steadily, defying warnings of stagflation and global recession. Growth in employment and incomes held steady, reflecting supportive demand developments–– including greater-than-expected government spending and household consumption—and a supply-side expansion amid, notably, an unanticipated boost to labor force participation. The unexpected economic resilience, despite significant central bank interest rate hikes aimed at restoring price stability, also reflects the ability of households in major advanced economies to draw on substantial savings accumulated during the pandemic.

Read also: IMF: Outlook for world economy is brighter

“Despite gloomy predictions, the global economy remains remarkably resilient, with steady growth and inflation slowing almost as quickly as it rose. The journey has been eventful, starting with supply-chain disruptions in the aftermath of the pandemic, an energy and food crisis triggered by Russia’s war on Ukraine, a considerable surge in inflation, followed by a globally synchronized monetary policy tightening,’’ Pierre-Olivier Gourinchas, economic counsellor and director, research department, IMF, said.