The International Monetary Fund (IMF) has said African economies combined growth rate is held down by the continent’s three largest economies: Nigeria, South Africa and Angola, which IMF said are not performing up to their potentials.
The Fund also said the aggregate – over 3 per cent, close to 4 per cent growth predicted for the region for 2018 and 2019 respectively – “is despite the largest economies in the continent are doing poorly.”
“The aggregate growth rate for the continent is held down by the fact that the three largest economies are not performing up to their potentials. Nigeria’s growth: 1.9 per cent this year; 2.3 next year. South Africa: only 0.8 per cent this year. Angola, contracting by 0.1 per cent this year,” IMF’s Deputy Director, Research Department, Gian Maria Milesi-Ferretti said at a press conference on World Economic Outlook in Bali, Indonesia on Tuesday.
He added that “the continent could do better once these economies are on a more solid footing, particularly, South Africa and Nigeria because they are really large and affect a number of countries in their neighbourhood.”
IMF Econommic Counsellor and Director of the Research Department, Mourice Obstfeld, who acknowledged that a number of African economies are doing quite well, said the negative/epileptic growth in many African countries create a very varied picture. Over all, the IMF is projecting that African growth is rising. IMF said the economy is rising in the nearer term to somewhere around 4 per cent. “And that, unfortunately, is a rate of growth that is really not sufficient to meet Sustainable Development Goals, to employ a rapidly growing workforce,” stated Obstfeld.
Broadly speaking, Mr Obstfeld said while different economies face different challenges, there is need for very thoroughgoing and ambitious structural reforms in Africa that would raise sufficiency; bring people, particularly young people into the labour force; in many countries where debt is high, put it on a more sustainable course; and in many countries, also to improve governance, which is a very big problem in a number of countries.
On a global view, in the World Economic Outlook report released by the IMF at the ongoing Annual Meetings of the IMF/World Bank Growth in Bali, Indonesia, the IMF lowered global growth projections to 3.7 per cent for 2018 and 2019. The estimates falls .2 per cent since the last IMF economic report released in April. The IMF issues the report ahead of the Annual IMF and World Bank meetings where world leaders, finance ministers and nongovernmental organisations gather this week in Bali.
“We are concerned about the downturn in economic growth,” noted Jubilee USA Executive Director Eric LeCompte. As a finance expert, LeCompte has tracked IMF meetings for nearly 10 years and is attending the meetings in Bali. “The report reminds us that inequality remains a serious problem and we still are not safe from financial crisis.”
Since April, the IMF warned that not enough has been done to prevent future financial crisis. LeCompte’s organization, Jubilee USA organized a major event about preventing financial crisis during the Annual Meetings scheduled for October 12th in Bali. An African Finance Minister and senior staff from the IMF, the Vatican and the G-24 will discuss debt relief, disaster aid and crisis prevention.
“We are seeing a growing debt crisis in many developing economies,” stated LeCompte who serves on United Nation expert groups that focus on economic issues. “At the same time, we see risky and speculative behavior on the rise. We know that risky behavior and unsustainable debt is a recipe for financial crisis.”