Monday, January 26, 2009

IMF cautions Africa on their economic future

Economic policymakers in Africa were cautioned by the International Monetary Fund on what lies ahead for the continent due to the world economic slowdown.

Among some of the things the IMF said...

The threat of inflation may be coming due to the food and fuel price spikes that occurred last year. That is especially dangerous for those that are close to the poverty line, the inflation could drop more and more people in the continent into poverty.

Also, the IMF warned that prices of imports will be higher, and aid may not be available to offset the price increases of imports.

From the South African Newspaper the Mail and Guardian, we hear more from the IMF.

While economic growth in the countries of sub-Saharan Africa has been "surprisingly resilient" in the face of the latest shocks hitting the global economy, the IMF cautioned that there is no guarantee that things will not change.

According to Antoinette Monsio Sayeh, director of the IMF's African Department, the risks to growth in sub-Saharan Africa are quite obvious: the food and fuel price shock has put pressure on inflation and external balances.

But she warned that the deepening global financial turmoil had 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," she warned, adding that if the clouds on the horizon develop into a storm, policymakers -– including governments and central banks –- must be prepared to respond.

The IMF said the current severe external challenges come when, for the first time since the 1970s, a large number of countries in sub-Saharan Africa are enjoying persistently high rates of growth in per capita income.

Sustaining and even accelerating the high growth momentum —- and extending it to low-growth countries -— is now critical for the region.

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