The International Monetary Fund’s (IMF) October 2015 regional economic outlook for Sub-Saharan Africa is titled “Dealing with the Gathering Clouds.” Not exactly optimistic, is it?
The IMF is expecting the region to grow at 3.75% this year and 4.25% in 2016, down from 5% in 2014.
They claim that the three factors responsible from the past impressive growth of the region have been “a much improved business and macroeconomic environment, high commodity prices, and highly accommodative global financial conditions.” Clearly the last two factors are gone. China’s slump and US oversupply of oil have pushed down commodity prices and the end of the US recession and coming normalisation of their monetary policy is making the yield on debt issued by emerging economies to sky-rocket. So all the region has now is the first factor.
To make matters worse, the IMF does not see commodity prices recovering anytime soon.
It’s recommendations are for fiscal adjustments i.e. managing the deficit through less spending and better domestic revenue mobilization, and allowing currencies to depreciate instead of shoring them up with reserves.