Africa continues to recover from economic crisis

Report coverThis week the International Monetary Fund (IMF) released its Regional Economic Outlook for sub-Saharan Africa, “Sustaining the Expansion,” which found that Africa continues to recover well from the global economic crisis.

The IMF estimates predict robust growth for sub-Saharan Africa in 2011 and 2012: 5.25% in 2011 and 5.75% in 2012. By comparison, the 2011 World Economic Outlook anticipates the United States and European Union will grow by 1.5% and 1.7% in 2011. On average, global growth is estimated at 4% both years, buoyed by dynamic regions such as sub-Saharan Africa and other emerging economies.

Africa’s growth estimates assume that the global economy will regain some of its momentum and meet the 4% estimated growth in 2011 and 2012. If the global economy does not recover the way the IMF predicts, Africa’s growth would likely falter as well. South Africa is especially vulnerable to global trends, as it is most integrated into the global economy. A graph in the report (below) shows how middle income countries in sub-Saharan Africa, like South Africa, were the hardest hit by the global economic crisis. Growth in these countries is expected to reach only 4 to 4.5% in both 2011 and 2012.

GraphMeanwhile, boosted by strong commodity prices, increased demand for exports and domestic good, and diversification of exports into higher-value added and fast-growing emerging markets, oil and natural resource exporting countries in sub-Saharan Africa are expected to grow faster than sub-Saharan Africa as a whole –- 6% in 2011 and 7% in 2012.

What does this mean for the poorest? In an interview about the report, Antoinette Sayeh, director of the African department at the IMF, cites new evidence that sub-Saharan Africa’s growth has been both inclusive and broad. Even though it is hard to draw overarching conclusions about growth in all of sub-Saharan Africa, Ms. Sayeh notes that this recent growth has been fairly inclusive. In the countries with high per-capita growth, the living standards of the poorest 25% have increased substantially. But, while growth is critical to reducing poverty, it is not always sufficient. Growth must be inclusive, reaching the poorest segments of the population.

In reviewing the research on inclusiveness, Ms. Sayeh notes that education levels and where someone lives effect the amount of money they spend on goods and services. The IMF research indicates that targeted investments in education and health services can help the poorest increase their incomes, overall well-being, and make sure that they benefit from economic growth. For the rural poor, increased investments in agricultural productivity — such as infrastructure investment in energy, irrigation, or transportation — produce more inclusive growth.

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