October 1, 2009 -- Business Report
Africa is riding out the crisis that sapped demand for its exports this year, the IMF said on Thursday but warned that poverty risked worsening there if recovery is slower than expected.
"Growth in Africa ... is expected to regain momentum as the global recovery gets under way," the International Monetary Fund, a multilateral body that lends to countries in trouble, said in its twice World Economic Outlook.
But it warned that "the outlook for the region is subject to significant uncertainty" and said governments should focus on protecting people from the risk of deepening poverty and unemployment.
"A weaker-than-expected recovery of the global economy would slow the recovery in commodity markets and worsen the prospects for inflows," including foreign aid, said the report, released here ahead of the IMF's yearly meeting.
"Policies should be geared toward mitigating the impact of the global recession on economic activity and poverty, while continuing to strengthen the foundations for sustained growth."
The crisis hit hardest in South Africa, the African country most closely tied to global financial markets, but then filtered through to its northerly neighbours, notably major oil exporters such as Nigeria, the IMF said.
Manufacturing nations such as Morocco and commodity exporters such as Botswana were then affected in turn as global trade collapsed.
The report forecast that Africa's economy as a whole would grow by four percent in 2010 after a weakened growth rate of 1.7 percent this year --stronger than the big world economies hit recently by recession.
South Africa, the continent's biggest economy, would see 1.7 percent growth in 2010 after a contraction of 2.2 percent this year, the IMF said.
It has recently seen capital flows pick up and "growth is expected to resume during the second half of 2009, supported by expansive fiscal and monetary policies and the projected recovery in global trade."
Botswana is among the African countries worst affected by the global crisis, with demand for its diamonds plunging, while the Seychelles has suffered from a drop in tourism, the IMF said.
"On the other hand, many low-income countries in the region that have more diversified commodity exports seem to be weathering the global recession fairly well" and are likely to recover quickly.