IMF cuts growth forecasts

The International Monetary Fund (IMF) has cut its economic growth forecast for sub-Saharan Africa (SSA) this year by 1,25 percentage points as plunging oil prices force exporters to curb spending plans. Fin24 reports that gross domestic product (GDP) is estimated to expand 4,5 percent, down from 5 percent in 2014, the Washington-based lender said in its World Economic Outlook.

Further weakening of growth in China or Europe could reduce demand for African exports and curtail foreign investment in infrastructure and mining, it said.

Nigeria and Angola, Africa’s biggest oil producers, are among the hardest hit by an almost halving in crude prices since June. Angola’s government lowered budgeted spending by almost a quarter, while Nigeria has proposed cutting the oil price benchmark in its fiscal plan by 20 percent.

‘Oil-exporting countries should enact prompt fiscal adjustments, while oil importers’ policy stances should strike the right balance between promoting growth and preserving stability,’ the IMF said. Nigeria’s economy is set to expand 4,8 percent this year, down from 6,3 percent in 2014, while Angola’s will probably grow 4,5 percent, compared with 4,2 percent last year, according to the IMF. The IMF’s forecasts for sub-Saharan Africa are more optimistic than those of the World Bank, which said last week that economic growth will slow to 4 percent in 2015 from 4,5 percent last year.

Infrastructure and electricity shortages are ‘key concerns’ facing sub-Saharan Africa’s push for strong economic growth. Business Day reports that this is according to Euromonitor International’s head of strategic, economic and consumer insight research, Sarah Boumphrey.

The market research firm said it expected five of the 10 fastest-growing economies in the world this year to be in sub-Saharan Africa, which should attract more investors. But energy shortages presented a challenge.

The firm estimated that, in per capita terms, the 10 lowest energy-generating countries globally were all located in sub-Saharan Africa. ‘Overcoming a reliance on (electricity) imports and improving generating capacity is crucial for economic growth,’ Boumphrey said.

The region’s young and growing population would continue to support economic growth and investments from global consumer companies, Euromonitor International said. – Fin24