afrol News, 28 October - African economies have reached the threshold where the growth in their own domestic demand is strong enough to fuel national economic growth. A new analysis sees domestic demand as key to the current strong growth.
Sub-Saharan Africa's accelerating economic growth is "expected to be broad based in 2010 and 2011," the International Monetary Fund (IMF) holds in its latest regional forecast.
"Strong domestic demand and resurgent exports are projected to boost average growth rates in the region to 5–5 ½ percent, near to the high levels recorded before the global economic slowdown," the IMF analysts conclude.
The key explanation for the resilience of sub-Saharan Africa had been the "generally strong economic position of countries going into the global financial crisis," the added. This allowed counter-cyclical fiscal and monetary policies to be put in place to soften the impact of the global downturn.
In most African countries, economic growth rates had returned close to potential and domestic demand was expected to "remain strong on the basis of rising real incomes and sustained private and public investment," the IMF analysis says.
The IMF Regional Economic Outlook also draws attention to the downside risks that remain for the global economy, with only a shaky recovery so far evident in rich countries and continued fragility in financial markets.
"If a significant further global slowdown does occur, it could dampen growth quite markedly in sub-Saharan Africa," the analysts warn. "This would delay efforts to rebuild the sound policy buffers that helped to shield the region from the worst effects of the global crisis." In addition, a heavy political calendar of elections in as many as 17 African countries during 2011 "could delay some reforms."
Also, the IMF's Regional Economic Outlook for sub-Saharan Africa noted that the global crisis had left a legacy of elevated unemployment levels in countries with more developed manufacturing sectors and, more generally, of weakened fiscal balances.
During the last few years, sub-Saharan Africa's trading patterns had also shown some dramatic shifts toward China and other parts of developing Asia, the report said. These shifts were so marked that, by 2009, China's share in the sub-Saharan Africa's total exports and imports exceeded that between China and most other regions in the world.
Overall, trade with Asia was "likely to be an increasingly important factor in maintaining growth for the region on its current trajectory." But the key drivers of African growth were still likely to remain: political stability; the business climate, including the prudent exploitation of natural resources; and the quality of economic management.
With the expansion in global output set to continue, IMF analysts were projecting that, barring shocks, "most countries will maintain strong growth into 2011."
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