Sub-Saharan Africa is poised to record growth of 5,8% in 2006, its best performance in more than 30 years, as higher commodity prices, stronger agricultural output and economic reforms start to pay dividends, the International Monetary Fund (IMF) said on Wednesday.
The IMF, in its twice-yearly World Economic Outlook report, predicted that output in the region would increase by 0,3 percentage points over 2005, with gains expected in both oil and non-oil producing countries.
In 2007 economic activity should remain positive, with growth slipping by just 0,1 points to 5,7%.
The projected spurt this year is driven by oil producers, notably in light of capacity increases in Angola and the Democratic Republic of Congo and with new production coming on stream in Mauritania.
In African countries without oil, momentum will be powered by rising non-oil commodity prices, a recovery in agricultural production and healthy investment levels spurred by macroeconomic reform.
The report said a reduction in trade barriers could also be expected to strengthen economic institutions.
IMF debt relief worth $2,5-billion, accorded to 13 African countries, offer opportunities ”to re-orient spending to priority areas, including health and education, and to raise the level of human capital and long-term growth”.
While the outlook for oil producers is tied to crude prices, a softening in demand for non-oil commodities, higher energy prices and weather-related factors are the principal risks for non-oil producers in Africa.
The report predicted that in South Africa growth will dip to 4,3% in 2006 from 4,9% in 2005 ”as output reaches potential”. A pace of 4,1% is forecast for 2007.
While inflation has been contained, the IMF warned that ”the continued strength of domestic demand, high money and credit growth and developments in international oil and food prices” could accelerate inflationary pressures.
In oil giant Nigeria, where output is seen as falling to 6,2% this year from 6.9% in 2005, managing oil revenues remains the key challenge to policymakers.
The IMF spoke of ”the need for lasting institutional reforms to ensure these revenues are used prudently to pave the way for stable long-term growth.”
Risks to the outlook in Nigeria stem from potential oil-market volatility and disruptions by rebel forces to oil-production facilities. — Sapa-AFP