Economic growth in sub-Saharan Africa is set to maintain pace in 2012, supported by higher commodity prices and rising export demand, the International Monetary Fund’s latest forecast for the region says.
The IMF’s Regional Economic Outlook for sub-Saharan Africa said that in many of Africa’s low-income countries, growth is being boosted by domestic demand and by adding value to exports.
However, the IMF cautioned that consumer price inflation is speeding up across the region, and that tighter monetary policy may be needed in some countries to head off inflation expectations.
Fiscal policy may need to support tighter monetary conditions by focusing more on the medium term, the IMF report said.
“This year looks set to be another encouraging one for most sub-Saharan African economies. Reflecting mainly strong demand but also elevated commodity prices, the region's economy is set to expand by more than 5¼ percent in 2011. For 2012, the IMF staff's baseline projection is for growth to be higher at 5¾ percent, owing to one-off boosts to production in a number of countries. There are, however, specters at the feast: the increase in global food and fuel prices, amplified by drought affecting parts of the region, has hit the budgets of the poor and sparked rising inflation, and hesitations in the global recovery threaten to weaken export and growth prospects. The projection for 2012 for the region is highly contingent on global economic growth being sustained at about four percent,” IMF said.
It added that South Africa was the "engine of trade" on the continent, accounting for four percent of total imports from the sub-Saharan Africa and six percent of total exports.
South Africa was also a major source of trade in intra-regional exports, which have a large share of products with higher local value added. “In 2009, manufactured exports accounted for more than 10 percent of intra-regional exports, with South Africa accounting for 55 percent of total intraregional manufactured exports, followed by Kenya, accounting for 11 percent,” the IMF report said.
“Food and beverages account for about 10 percent of intraregional exports, with Madagascar, South Africa, and Zambia being the main exporters of these products,” it added.
Intraregional trade was growing, accounting for 14 percent of total trade last year, compared with seven percent in 1990, according to the report.
Opportunities for intra-regional trade could grow more considerably if barriers were removed — among them poor transport facilities, said the report. An investment of US$20 billion “for an initial upgrading of sub-Saharan Africa transport infrastructure, followed by one billion dollars in annual spending for maintenance, could expand overland trade among the region’s countries by about US$250 billion dollars,” the IMF said.
The region’s trade is also growing with other emerging markets. By last year, its share of trade with Brazil, India and China reached about three percent, six percent and 17 percent respectively, “rising from negligible shares in the 1990s,” the report said.
But the report noted that with growth in Europe threatening to stall this year, new markets are becoming more important to Africa. Europe has been one of the major destinations for the continent’s exports.
“South Africa and other middle-income countries, because of their closer integration into the global economy, are likely to be affected still more by a global slowdown,” IMF said.

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