Africa’s economic prospects according to the IMF
According to the 8 April 2014 IMF World Economic Outlook (WEO) Press Briefing in Washington DC, Africa’s growth trend will continue strongly, but, warns Olivier Blanchard, IMF Economic Counselor and Director of Research Department, the continent’s economic and business environment will be “more bumpy looking forward”.
Blanchard, speaking during the briefing about the world’s emerging and developing economies, said the IMF predicts their growth at 4.9 percent this year, up from 4.7 percent last year. Breaking this down, he said that the growth forecast for Sub-Saharan Africa should be an impressive 5.4 percent, making it second only to China (7.5 percent) and setting it alongside India (also 5.4 percent).
Stronger advanced economies will impact growth in Africa
Later in the briefing, during the Q&A portion, a questioner raised concerns over Blanchard’s “more bumpy” prediction. Thomas Helbling, Chief of the World Economic Studies Division, Research Department, IMF, fielded the question, explaining the prognosis by saying, “For a long time emerging markets were the stars of the global economy, experiencing robust growth, offering better return prospects. What has changed recently is that we are seeing better return prospects in advanced economies, better growth but also prospects of monetary policy normalization. This is a more difficult environment, in the sense that investors have become less tolerant to emerging market risk.”
Helbling did, however, add that “many emerging markets are in a stronger position to withstand capital flow reversals. They have more flexible exchange rates. They have greater buffers in terms of foreign exchange reserves. Their policy frameworks have changed. And as you can see over the past few months, countries that were relatively more under pressure, if they responded, they were able to control the situation and return to stability. So overall we think under our baseline forecast where we would expect some bumps, that emerging markets can manage the situation and the risks.”