All data is delayed
See More

IMF: SA sputters, African growth robust

Apr 17 2012 22:00
Washington - High commodity prices will buoy much of sub-Saharan Africa in 2012, but South Africa will continue to stumble due to its deep ties to crisis-ridden Europe, the International Monetary Fund (IMF) said on Tuesday.

Growth in sub-Saharan Africa will pick up to 5.4% this year thanks to new mineral and oil production and the growth of export markets outside Europe, according to the fund's latest world economic outlook.

But South Africa, the region's largest economy, will grow by a modest 2.7% this year as it struggles with weaker terms of trade and a decrease in business confidence.

"Sluggish growth in South Africa may require some policy support," the report said.

South Africa depends on Europe as a market for its high value-added exports and has seen soaring unemployment, stockmarket volatility and currency depreciation due to the eurozone's sovereign debt crisis.

The country's 2012 growth forecast was revised up from 2.5% in January, while a projection for regional growth in 2012 was revised down modestly from 5.5%.

Many other sub-Saharan countries have benefited from limited exposure to Europe as well as rebounding agricultural sectors after last year's droughts, the report said.

Oil exporting sub-Saharan countries are projected to grow by 7.3% in 2012, buoyed by Angolan oil production.

Nigeria, another major oil producer, will grow by 7.1%.

Despite the generally rosy predictions, the IMF warned of knock-on effects to African economies if Europe tumbles further.

Such a shock would likely be transmitted via South Africa and would hit African exports, remittances, aid and private investment.

"Adverse shocks affecting South Africa can quickly spread to neighbouring economies, through their effect on migrant workers' incomes, trade, regional investment, and finance," the report noted.

South Africa should consider further monetary easing if the slowdown continues, the report noted, as long as inflation remains low.
economic growth  |  imf  |  africa  |  south africa


Read Fin24’s Comments Policy publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about:


With infrastructure spending having been identified as one of the key focus areas of the National Development Plan, tradesmen will continue to play a critical role in growing the South African economy through their skills..

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

A 30% a month return on investment is:

Previous results · Suggest a vote