IMF cuts growth forecast for SA

Oct 09 2012 08:29

The historic South African flag signed by Presidents Nelson Mandela, right, Thabo Mbeki centre, and FW de Klerk which flew from a helicopter at the historic presidential inauguration on May 10, 1994. (Alastair Grant, AP)

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Tokyo - The International Monetary Fund (IMF) on Tuesday cut its 2012 forecast for Africa along with most other countries around the world as the eurozone crisis dampens global demand and higher food prices weigh on food-importing countries in the region.

In its latest World Economic Outlook, the IMF shaved its 2012 projections for Africa to 5% from 5.4%. However, it revised up its 2013 outlook to 5.7% from 5.3%.

The fund said spillovers from the eurozone crisis into Africa have so far been modest except for South Africa, which has close financial and trading ties with Europe.

The IMF cut its 2013 forecast for South African growth to 3% from a July projection of 3.3% mainly due to the impact from the continuing eurozone debt crisis. It maintained its 2012 projection of 2.6%.

"If the euro area crisis escalates further and global growth slows further, Sub-Saharan Africa's prospects will be less favorable," the IMF said.

"South Africa, strongly linked to Europe, would be particularly affected, with possible repercussions for some economies in southern Africa," the Fund said, "Softer commodity prices would adversely affect the region's natural resource exporters," it added.

The IMF cautioned that African countries could also be hit if China's economy slowed sharply. China's economic growth is expected to be the lowest in more than a decade this year.

Increasing Chinese foreign direct investment and government funding to African countries has made it an important player in the region.

"The priority in much of the region is to continue to strengthen policy buffers and prepare contingency plans if downside risks materialise," the IMF added.

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imf  |  africa  |  sa economy  |  global economy  |  europe debt crisis



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