Living on the edge in sub-Saharan Africa — IMF report

Sub-Saharan Africa’s economic activity is expected to slow significantly in 2022 and remain relatively modest in 2023 and looking ahead, the outlook remains highly uncertain, the International Monetary Fund (IMF) said in its latest Regional Economic Outlook for Sub-Saharan Africa.
A downturn in advanced economies and emerging markets, tighter financial conditions, and volatile commodity prices, have undermined last year’s gains. Consequently, countries in the sub-Saharan region are living on the edge. “Late last year, sub-Saharan Africa appeared to be on a strong recovery path out of a long pandemic. Unfortunately, this progress has been abruptly interrupted by turmoil in global markets, placing further pressures on policymakers in the region,” stressed Abebe Aemro Selassie, Director of the IMF’s African Department.The region is expected to grow by 3.6% in 2022, down from 4.7% in last year, due to muted investment and the overall worsening of its balance of trade.
Following worldwide trends, inflation has increased faster and more persistently than previously anticipated, whereby the cost-of-living squeeze has pushed millions of people into acute food insecurity and could weigh on economic growth and undermine social and political stability. The most recent turmoil is just the latest in a series of shocks over the past few years, all of which have taken a toll on the region’s policy space. Against this backdrop, Mr. Selassie pointed to four priorities for policy makers in the region: first, in the context of rising food insecurity, the utmost priority must be to protect the most vulnerable; second, rates should be raised only very cautiously, while keeping a close eye on inflation expectations and foreign exchange reserves; third, public finances should be consolidated to preserve fiscal sustainability; finally, the stage for high-quality growth should be set, amid accelerating climate change.