The International Monetary Fund (IMF) is projecting that Sub-Saharan Africa’s growth for 2023 will be better than advanced countries for end year 2023, despite a slow global economy growth.
“The slowdown is more pronounced in advanced economies than in emerging market and developing ones,” Mr Pierre-Olivier Gourinchas, Economic Counselor, IMF Research Department, said.
He was speaking at the release of the World Economic Outlook on Tuesday, October 10, 2023, in Marrakech.
In the report, the Fund is projecting that Sub-Saharan Africa will record a Gross Domestic Product (GDP) growth of 3.3 per cent by end of year.
The growth projection is a 1.8 percentage higher than the 1.5 projected growth of 1.5 per cent for advanced economies, including the United States, United Kingdom, and the Euro Area.
The revised Sub-Saharan Africa projected GPD growth for 2023 is also a 0.3 percentage higher than the world output of 3.0 per cent.
“According to our latest projections, global growth will slow from 3.5 percent in 2022 to 3 percent this year and 2.9 percent next year, a 0.1 percentage point downgrade for 2024 from our July projections. This remains well below the historical average,” he said.
The Fund observed that inflation continued to decelerate from 9.2 per cent in 2022, on a year-over-year basis, to 5.9 per cent this year and 4.8 percent in 2024.
“Core inflation, excluding food and energy prices, is also projected to decline, albeit more gradually than headline inflation, to 4.5 percent in 2024,” Mr Gourinchas noted.
He explained that the projection in slowdown was coming on the back of three global forces – the almost complete recovery in services, tighter monetary policy necessary to bring inflation down, and inflation shaped by the incidence of last year’s commodity price shock.
On policy solutions, the Economic Counselor said: “With many countries near the peak of their tightening cycles, little additional tightening is warranted.”
“However, easing prematurely would squander the gains achieved in the past 18 months,” he added.
He advised that fiscal policies needed to support the monetary strategy and help the disinflation process, a focus on returning to the medium-term growth projections, and structural reforms.
Mr Gourinchas also called for multilateral cooperation that would ensure that all countries achieved better growth outcomes.
To do so, he urged countries to avoid implementing policies that contravened World Trade Organization rules and distort international trade, and safeguard the flow of critical minerals needed for the climate transition, as well as agricultural commodities.
The global economy suffered its largest shock of the past 75 years with the outbreak of the COVID-19 pandemic in 2020, with its wounds still healing, amid widening growth divergences across regions, the World Economic Outlook noted.
The report indicated that after a strong initial rebound from the depths of the COVID-19 pandemic, the pace of recovery had moderated.
It was, however, noted that several forces were holding back the recovery, some of which reflected the long-term consequences of the COVID-19 pandemic, Russia-Ukraine, and increasing geo-economic fragmentation.
Others were more cyclical, including the effects of monetary policy tightening necessary to reduce inflation, withdrawal of fiscal support amid high debt, and extreme weather events, the IMF report stated.