Despite current global economic shocks, the majority of Africa’s economies have maintained a healthy outlook and are expected to realize further positive transformations as the global economy stabilizes, according to International Monetary Fund (IMF).
The IMF estimates that the continent’s medium-term projections are likely to remain positive but warns that most African countries need to urgently reorganize their policies to revive economic growth.
“The region’s medium-term prospects remain favorable but many countries urgently need to reset their policies to reinvigorate growth and realize this potential,” the IMF reports.
The organization further advises African countries, especially those in the sub-Saharan region, to adjust their financial policies and employ flexibility in their exchange rate as their first line of defense, particularly those countries that are outside monetary unions.
According to the IMF, factors, such as drops in commodity prices, volatility in currency, Chinese economic growth, European downturn, and national disasters, are the main cause of the current global economic slowdown.
While it anticipates an economic growth of 3 percent in the sub-Saharan region, the IMF attributes sub-Saharan Africa’s susceptibility to the current commodity price slump to its overdependence on natural resource exports.
African countries that export oil are expected to bear the brunt of the ongoing decline in commodity prices and should brace themselves for a further drop in GDP growth.
Expected Economic Growth
Despite the existing economic shocks, the majority of African economies are projected to realize faster growth across the globe, owing to the fact that a significant number of investors are still willing to invest in Africa — albeit at a measured pace.
While the IMF estimates a 3 percent growth in sub-Saharan Africa, other African countries look more promising, with one of them being Rwanda.
In April, the IMF released a statement placing Rwanda’s GDP growth at 6.9 percent for the year 2014/2015.
The IMF attributed Rwanda’s growth to a strong construction and service industry as well as the country’s vigorous agriculture and manufacturing sectors.
While these projections point to a brighter future for African economies, there is still a need for Africa, as a whole, to identify unexploited or underutilized sources of financial growth and reduce its volatility.