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IMF raises growth forecast for Africa to 4.2%

Babajide Komolafe
The International Monetary Fund (IMF) has reviewed upwards its growth estimate for Africa to 4.2 per cent.
The Fund predicted last October that Africa will grow by 4.0 per cent. It also raised its growth estimate for 2011 to f.3 per cent from 5.2 per cent.

The Fund, in its World Economic Outlook update published yesterday said,  “Stronger economic frameworks and swift policy responses have helped many emerging economies to cushion the impact of the unprecedented external shock and quickly re-attract capital flows.

“The rebound of commodity prices is helping support growth in commodity producers in all regions.”
The IMF projects sub-Saharan Africa’s economy will expand 4.3 per cent this year, 0.2 percentage point more than previously anticipated. The region’s predicted growth rate for 2011 was left unchanged at 5.5 percent.

The global economy, battered by two years of crisis, is recovering faster than previously anticipated, with world growth bouncing back from negative territory in 2009 to a forecast 3.9 per cent this year and 4.3 per cent in 2011, the International Monetary Fund said.

But the recovery is proceeding at different speeds around the world, with emerging markets, led by Asia relatively vigorous, but advanced economies remaining sluggish and still dependent on government stimulus measures, it said.

“For the moment, the recovery is very much based on policy decisions and policy actions. The question is – when does private demand come and take over. Right now, it’s ok, but a year down the line, it will be a big question,” said IMF Chief Economist, Olivier Blanchard, in an IMF video interview.

IMF Managing Director, Dominique Strauss-Kahn, has warned that countries risk a return to recession if anti-crisis measures are withdrawn too soon.

Along with the update to its forecast, the IMF also released a new assessment of global financial conditions in its Global Financial Stability Report (GFSR). It said that financial markets have rebounded since the lows of last March, the result of improving economic conditions and wide-ranging policy actions by governments.

“Notwithstanding the recent sell-off, risk appetite has returned, equity markets have improved, and capital markets have reopened,” Jose Viñals, Director of the IMF’s Monetary and Capital Markets Department, said.

But policymakers still face extraordinary challenges as they seek to unwind the unprecedented fiscal, monetary, and financial support they provided to keep their economies and financial markets from collapsing, the GFSR update pointed


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