IMF: Africa, Isolated From Europe's Woes, Set For Solid Growth
(Dow Jones)- Sub-Saharan Africa is set for robust growth in 2012 thanks to limited exposure to the economic turmoil emanating from Europe, the International Monetary Fund said in its updated barometer on the world economy.
The IMF's World Economic Outlook forecasts that gross domestic product will grow by an average of 5.4% across sub- Saharan Africa in 2012, revised downward from its previous forecast of 5.8% growth this year.
"The diversification of exports toward fast-growing emerging markets has reduced the region's trade exposure to Europe," IMF officials wrote. They added that exports to the euro area have fallen to one-fifth of Africa's total from two-fifths 20 years ago.
The IMF forecasts that South Africa will grow 2.7% this year, up from a forecast of 2.5% growth in January. South Africa--the continent's largest and most developed economy--faces the strongest headwinds from Europe due to its importance as an export market, the IMF said. The revised growth reflects signs of a more stable recovery in the U.S. and Asia, which are also major destinations for the country's goods.
Intense exploration and production of oil and gas resources will drive the continent's fastest growing economies, the IMF said. Oil production in Angola will push GDP growth to 9.7% this year, the highest on the continent, and to 8.8% in Ghana and 7.1% in Nigeria. Oil and gas production will push growth to 6.7% in Mozambique.
In East Africa, monetary tightening to combat inflation is expected to have a negative impact on growth. Uganda is expected to grow 4.2% this year after 6.7% growth in 2011, and Tanzania is expected to grow 6.4% after 6.7% growth in 2011.
With growth prospects for the continent looking solid, the IMF urged African officials to tighten budgets and rebuild central bank reserves to be ready for future global economic shocks.
"Budgetary discipline will also help generate the room needed to refocus spending on priority areas such as infrastructure, health, and education," the IMF said.