The International Monetary Fund (IMF) has revised upward its growth forecast for Sub-Saharan Africa to 4.5% this year, crediting reform efforts over recent years, while cautioning that high debt-servicing costs continue to leave the region exposed.
The upgraded projection is contained in the IMF's Update to the African Economic Outlook, released on Thursday (15) on the sidelines of the Annual Meetings in Bangkok. The Fund warned that "steady regional growth masks divergent country experiences, with a slowdown in non-resource-intensive economies and continued resilience in resource-intensive ones."
Reform efforts by African governments aimed at fostering development have "helped cushion the shock of the Middle East conflict", the IMF said, including by containing inflation — which nonetheless is projected to rise from an average of 3.4% in 2025 to 4.3% this year and 5% in 2027.
"Pre-war fiscal adjustment and declining debt ratios are important achievements, but high interest burdens, low reserves in many countries, and reduced aid leave limited room to absorb another adverse shock," the Fund cautioned.
The average debt-to-GDP ratio is expected to fall from 53% last year to 51.7%, but interest payments alone are absorbing, on average, 12% of government revenues.
The principal risks facing the continent include "new energy supply disruptions, sovereign debt repricing, further aid reductions, and severe climate shocks, particularly El Niño", which is expected to weigh especially hard on Southern Africa — a region that includes Mozambique and Angola.
In terms of policy recommendations, the IMF argued that governments "must sustain necessary fiscal adjustment, save temporary windfalls from commodities, target support to vulnerable households, and keep persistent inflation in check."
"Protecting productive investment and enabling private sector growth are essential to making future shocks less costly and improving living standards over the long term," the Fund's economists concluded.
According to the report, only Cabo Verde, at 5%, and Guinea-Bissau, at 4.7%, are growing above the regional average. The broader Sub-Saharan Africa economy is expected to expand 4.5% this year, 0.2 percentage points above the April forecast.
Angola, with growth of 4.4%, Mozambique at 1%, and São Tomé and Príncipe at 0.4% are all below the Sub-Saharan Africa average. Equatorial Guinea is projected to remain in recession, contracting by 1.7% in 2026.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/?p=552751
