Typical street scene in Santa Ana, El Salvador. (Photo: iStock)
IMF Survey : Africa Seeks to Rev Growth Engines amid Downturn
May 26, 2016
- F&D magazine examines Africa’s growth story
- Region faces slowdown but growth varies widely by country
- Commodity prices are just one factor in the region’s recent performance
This is a critical moment for sub-Saharan Africa, which faces slowing growth, but with the right policies many countries in the region are well positioned to ride out the storm, according to the latest issue of the IMF’s quarterly magazine, Finance & Development (F&D).
Participants in the Absa Cape Epic mountain bike race, Cape Town, South Africa; growth in the region is an uphill battle (photo: Ralph Hirschberger/dpa/Corbis)
REGIONAL PROSPECTS
After 10 years of unprecedented growth, which helped fuel a positive Africa Rising narrative, the outlook for sub-Saharan Africa is dimming. The region suffered a sharp slowdown, owing to slumping commodity prices and softer global economic conditions. Natural resource producers such as Nigeria, Angola, South Africa, and Mozambique have been hard hit. Drought has struck in some countries. And China—now a major trade and business partner in a number of African countries—is slowing as it retools its economy, sparking fears of further weakening.
More than commodities
Georgetown University professor Steven Radelet writes in F&D's cover story about the changes that leave Africa better positioned to handle the downturn in the region. Marked improvements in governance, the emergence of more adroit leaders and economic managers, and better economic and social policies are a solid foundation for future growth. Although growth is likely to slow in the next few years, he says, the long-term outlook is solid for countries that diversify their economies, increase competitiveness, and further strengthen their institutions of governance.
Antoinette Sayeh, head of the IMF’s African Department, sounds a similar note in her Straight Talk column, arguing that the underlying drivers of growth over the past decade still persist and that a reset of monetary and fiscal policies can help reignite sustainable growth in the region.
New growth opportunities
Other articles in the Africa cover package look at sources of future growth. Former governor of the Central Bank of Kenya Njuguna Ndung’u, Kenya School of Monetary Studies professor Lydia Ndirangu, and the IMF’s Armando Morales document the positive impact of digital technologies on access to financing in many African countries. The United Nations’ Carlos Lopes shows how regional economic agreements can foster closer business ties.
IMF economists Christine Dieterich, Dalia Hakura, and Monique Newiak explain how gender equality can boost growth in sub-Saharan Africa. The magazine also looks at a sector that exemplifies Africa’s growing influence and economic energy: Nigeria’s film industry, or “Nollywood,” one of the world’s largest film industries in terms of number of films produced.
Muted U.S. growth
The June 2016 issue of F&D includes an article on U.S. growth by Robert J. Gordon, whose recent book, The Rise and Fall of American Growth, has provoked much thought about the prospects for a long period of muted growth in the United States. Gordon suggests that while innovation continues, the median growth rate of real income per person will be less than productivity growth because of aging of the population and rising inequality.
Other features in the latest issue of F&D include an examination of bitcoin’s blockchain technology; a look at the prejudices against capital controls, and a profile of iconoclastic economist Dani Rodrik.