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Vol 50 No 22

Published 6th November 2009

Experts argue about Africa's prospects

The IMF and the AfDB differ sharply on the severity of the global recession's effects on Africa and the measures needed to ameliorate them

The world's financial experts and institutions disagree on how seriously the global financial crash has affected developing economies or how quickly they may recover. In Africa, the International Monetary Fund, World Bank and African Development Bank (AfDB) differ in aspects of their diagnoses and their cure. In October last year, the IMF predicted that 2008 growth in Sub-Saharan African economies would slow to 6%. It now estimates that Africa's overall output growth will be 1% in 2009, after earlier forecasts of about 3%. That is equivalent to a 1% per capita decline. Prices of key commodities have fallen along with external demand for exports; portfolio investment, remittances and capital flows have declined; borrowing costs have risen and access to finance is tighter. Most severely affected in the short term are the oil exporters (under 2% growth in 2009, the IMF estimates) and the middle-income countries (about 2.5% contraction in 2009) that are more highly integrated into global financial markets and more dependent on international trade, including South Africa.

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