Nairobi: The International Monetary Fund (IMF) has projected that growth in Sub-Saharan Africa will rise to up to 6 percent in 2011 compared with a projected 5 percent this year.
IMF Kenya Representative, Ragnar Gudmundsson said that over the past 7 years, the region has done so well with the next best growth performance after Asia.
Gudmundsson attributed the achievement to fewer wars within the region saying, “Fiscal deficits were smaller leading into the 2008-2009 crisis as there is still a hug demand for natural resources.”
He also added that there will be a much stronger recovery in developing countries than in advanced countries.
The projections were released in the Regional Economic Outlook for Sub-Saharan Africa in October this year.
“Domestic demand in the region in 2010 and 2011 still remains strong on the basis of rising real incomes and sustained private and public investment,” said Gudmundsson.
However, the report indicates that the prospects for the world Gross Domestic Product (GDP) growth are expected to be lower in 2011 than this year from 4.5 percent to 4.2 percent in 2011.
Gudmundsson also stated that the region will experience a quick recovery than the West, adding that Asia took the lead this year but next year it will be Africa.
The report indicates that Shift to private demand in advanced economies needs to be accompanied by labour market reforms to spur job creation.
“Loose monetary policy in advanced countries led to large capital flows to emerging Markets and indeed to Low Industrial Countries,” the report stated.
The report goes on to state that nevertheless we celebrate the region’s resilience, we should not forget that the crisis has been costly, South Africa alone lost 1 million jobs.
In April 2009, however, the IMF had reported that following the global financial crisis, demand for African exports and commodity export prices have fallen, and remittance flows may weaken.