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Cape Town - The economies of countries in sub-Saharan Africa have shown surprising resilience in the face of the global economic meltdown, the International Monetary Fund (IMF) said on Monday.
However, there is no guarantee such resilience can be maintained, and the region should "prepare for a rough ride", the 185-member organisation warned in a statement.
The IMF said the risks to growth in sub-Saharan Africa were quite obvious.
"The food and fuel price shock has put pressure on inflation and external balances. And the deepening global financial turmoil has put a brake on global growth, giving rise to the potential for lower commodity prices for Africa's exports and reduced capital flows to Africa; as a result, growth in Africa could slow as well."
If the economic clouds on the continent's horizon developed into a storm, its policymakers had to be prepared to respond.
"One of the challenges Africa faces is increasing inflation. The IMF expects inflation in sub-Saharan Africa - excluding Zimbabwe - to increase to 12% in 2008, before falling back to 10% in 2009.
"The rise in inflation is caused mainly by the food and fuel price shock. In a number of countries demand pressures have also contributed to inflation, sometimes reflecting expansive fiscal policies. As a result of rising prices, particularly of food, poverty may well be on the rise in 2009.
"Higher import prices are also worsening the external balance of most countries in the region, in particular those who are net oil importers.
"Meanwhile, donor support has not covered the larger import bills. And the world financial crisis, which has come on top of the food and fuel price shock, now risks further exacerbating external balances by reducing remittances, capital and even aid inflows."
In the absence of more aid, countries could not afford to import as much as they had before. This meant they needed to pass through the increase in food and fuel prices to the economy over time to encourage adjustment.
"With food accounting for a major part of household expenditure, the resulting loss in the purchasing power of the poor is a serious concern."
A number of countries in the region had fallen behind the curve in fighting inflation.
"In many countries, monetary policies may therefore need to be tightened to preserve price stability," the IMF said.
- Sapa