The International Monetary Fund recently unveiled its 2011 economic outlook for the Sub Saharan Africa region where it presents an optimistic picture with a more than 5% economic growth being reported this year and a further 1% increase expected in 2012. The growth has been attributed to a strong demand coupled with high commodity prices in the region. The economic situation has however been affected by a general increase in global fuel and food prices as well as drought in the region which have triggered escalating inflation.
The IMF however cautions that for the region to realize the projected high growth in the coming year, policies need to be put in place to address challenges that beset the steady economic growth and the recent global economic crisis that has impacted the overall global economy. The low income countries have been advised to concentrate on medium term considerations when setting up fiscal policies while also tightening monetary policies in order to contain inflation to single digit levels. Due to the global economic downturn and the subsequent financial constraints, the region has been urged to work on maintaining the equilibrium between spending and revenue, in addition to negotiating favorable terms of trade for oil exports from the region to guard against the continued price volatilities.
Increased trade with emerging markets
Sub Saharan Africa has enjoyed immense trade links with emerging markets including china, Brazil and India-recording more than 50% increase in export mainly in oils, minerals and gas. The region has also recorded an improvement in infrastructure, telecommunications and agriculture. This new partnerships are expected to yield greater international trade as well as long term growth as a result of reduced export and output volatility. This would also mean lower costs in consumption goods and inputs resulting in a much more rapid overall improvement.