We expect robust African growth to continue in 2014, but policy makers
need to be prepared for headwinds from the uncertain global economy, the
risks of a reversal of capital flows, and declining commodity prices.
FILE
By Antoinette Sayeh
In Summary
- We expect robust African growth to continue in 2014, but policy makers need to be prepared for headwinds from the uncertain global economy, the risks of a reversal of capital flows, and declining commodity prices.
Africa is moving forward, and the world is taking note of its dynamism.
Kenya is one of the countries where Africa’s
recent progress is evident and where the opportunities for economic
transformation and growth are manifest.
Of course, much remains to be done and the gains are by no means automatic. The issue therefore is defining and implementing the policies that will enable Kenya to seize these opportunities. On the global front, a recovery is underway. But the recovery remains subdued and the underlying dynamics are changing.
Recent indicators show that advanced economies have begun to gather momentum, particularly the United States, where private demand is relatively robust, and Japan, where the government has taken important steps to stimulate growth.
Europe is emerging from a deep recession, but for the recovery to be sustained, European policymakers will need to continue their reform efforts at the level of the Eurozone and in individual countries.
At the same time, emerging market economies are now slowing after several years in which they led global growth — something that I know has been of crucial importance to Kenya and Africa.
Talk of “tapering” the monetary stimulus of the US
Federal Reserve has heightened volatility in financial markets and
tightened financing conditions for some emerging market economies.
Outstanding domestic reforms have become more pressing as the room for
home-grown stimulus recedes.
So while there is reason to take comfort from the recent developments in advanced economies, we must remain fully aware of the downside risks. The IMF welcomes the St Petersburg Action Plan of the G-20, which stresses the importance of co-operation as countries address the challenges of promoting global growth, jobs, and financial stability.
The action plan recognises the need for fiscal consolidation to reflect economic conditions, the need to push forward on financial oversight and regulation, and the importance of comprehensive structural reforms to support growth — all of which are relevant for sub-Saharan Africa as it becomes increasingly integrated into the global economy.
Strong performance
Economic performance in sub-Saharan Africa has
been strong in recent years, despite the adverse global environment. The
region proved remarkably resilient to the global crisis in 2008-09, and
many countries have experienced sustained increases in per-capita
income, lifting living conditions and reducing poverty.
But let me be clear on this: These gains need to be sustained and extended to many more countries. And within countries, growth needs to be more widely shared to help address the immense social problems and provide employment opportunities for their young and growing populations.
There can be no complacency about Africa’s economic success. Poverty remains unacceptably high and progress toward the Millennium Development Goals remains insufficient. Nevertheless, we can now say that the economic stagnation that characterised the final decades of the 20th century is in the past. Let it stay there.
Africa’s strong economic performance reflects many political, social, and economic changes over the past two decades. This is not just the result of rising prices for commodity exports. In fact, many of the fast-growing economies are not natural resource exporters — Kenya is one example.
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