IMF: SA sputters, African growth robust

2012-04-17 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.

  • howzal - 2012-04-18 05:52

    Stop relying too on Europe

  • Nigel - 2012-04-18 07:24

    Lack of port & transport infrastructure & uncompetitive\inflexible\unproductive labour laws are whats holding SA back, just a matter of time before SA is no longer the largest economy in Africa, just as it is going to become a net importer of food in the not too distant future We are no longer the largest gold producer, Russia & Aus have overtaken us, the ANC & Cosatu are pretty much ensuring that our economy follows the declining trend of our soccer team.

      Eduard - 2012-04-18 15:52

      and mirror the Zimbabwe trends. SA is accepting the "I am entailed to everything mentality" and I don't have to do a fair days work. I just wish we can get some smart leaders actually leading this country!!!!!

  • Jacques - 2012-04-18 08:17

    Poor policy. BEEE which encourages middle men to make money instead of creating job and factories. Lack of recources due to corruption eroding spendable cash again falling to BEEE playes. Contanct Mining and Land grab discussions. High Crime Rate. Poor labor law. Unions forming part of poletics. Think about it our Econamy will grow 2.5% what will the unions ask for in pay raises. This means from a production output vs a cost input over a number of years the ANC as screwed us all. Nothing will change as the mind set does not change. Coupled with that in 10 years we are 15 million people more with an economy which has slowed down meaning recources are just being depleted. To me it is a very easy sollution. Get rid of the ANC which is uneducated and has no sense of world trade or economics and things will change. Just before everyone s states look what the did after apartheig with GDP growing it was because sanctions was dropped and the Europeuns coul get the minieral wealth out. Amazing how people state how they beat the old regime when infact it was the big players across the water pulling the strings

  • Ricky - 2012-04-18 09:25

    Add all the taxes on us(e-tolls,fuel levies,nhi etc),increased social spending on non productive and quite frankly parasitic citizens(20 million of them) and we going to end up like Greece,nice and bankrupt.Useless goverment of fools and thieves voted in by parasites.

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