IMF sees 4% growth in Africa in 2017

Economic growth in Africa may bounce back to about 4 per cent next year despite a sharp decline to 3 per cent this year.
But to actualise the potential, leaders must embark on substantial policy reset in many cases, the International Monetary Fund (IMF) said in its latest economic bulletin.
IMF sees the economic growth of the region recovering to 4 per cent next year, helped by a slight recovery in commodity prices.
This is despite a 3 per cent growth forecast which the Fund ascribed to the region for this current year, its weakest in nearly two decades.
In its African Economic Outlook, the IMF said the region would likely grow 3 per cent this year – the lowest rate since 1999 – after expanding by 3.4 per cent in 2015.
It blamed the decline on slump in commodity prices, the Ebola virus outbreak, and drought in parts of the continent.
The grave impact of commodities price slump continues to whittle down the economic outlook of a region largely dependent on earnings from global commodities market.
Last week, Moody’s credit ratings of Nigeria and Angola – Africa’s two biggest oil producers – were downgraded by Moody’s Investors Service, citing the negative impact depressed oil prices have had on balance sheets, liquidity, and creditworthiness.
Nigeria and Gabon were cut to B1 from Ba3 as “the prospect of lower-for-longer oil prices” raises liquidity risks and external vulnerability.
Angola was lowered to B1 and the Republic of Congo to B2 from B1 on similar concerns about high dependence on oil constraining financing options.
Moody’s quoted Reuters as reporting that Nigeria was issued a stable outlook on confidence in the country’s credit fundamentals when compared to its peers.
“The stable outlook is driven by Moody’s view that the downside risks posed by the weakening of the country’s fiscal strength, and the external and economic pressures anticipated this year and next, are balanced by Nigeria’s strengths, which exceed those of sovereigns rated below B1.”
But the IMF said it is still optimistic about Africa’s prospects in the longer term.
“However, to realise this potential, a substantial policy reset is critical in many cases,” the Fund insisted.
Affected countries need to contain fiscal deficits as the reduction in revenue from commodities is expected to persist.
Major oil exporters, Angola and Nigeria, are hardest hit by the slump in commodities prices, as are Ghana, South Africa, and Zambia.
Guinea, Liberia, and Sierra Leone are only gradually recovering from the Ebola epidemic, while several southern and eastern African countries – including Ethiopia, Malawi, and Zimbabwe – are suffering from a severe drought.