Ebola, strife pose risk to Africa – IMF

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JOHANNESBURG – Sub-Saharan Africa’s economic growth remains strong and should accelerate to 5.8 percent in 2015 but if the Ebola outbreak in its western corner is protracted or spreads it will have “dramatic consequences” for that zone, the IMF said on Tuesday.

In its latest World Economic Outlook, the Fund said Africa should repeat 2013’s growth rate of 5.1 percent this year and then accelerate in 2015 as infrastructure investments boost efficiency and the service sectors and agriculture flourish.

The 2015 forecast was an improvement on the 5.5 percent growth for the overall region projected by the IMF in April.

“This overall positive outlook is, however, overshadowed by the dire situation in Guinea, Liberia, and Sierra Leone, where the current Ebola outbreak is exacting a heavy human and economic toll,” the report’s Sub-Saharan Africa section said.

Since it was detected in Guinea in March, spreading to neighbouring Sierra Leone and Liberia, the Ebola epidemic has killed more than 3,400 people and is the world’s worst recorded outbreak of the deadly hemorrhagic fever.

The epidemic has overwhelmed the health systems and battered the economies of these three small West African states, which were showing signs of recovering from a decade of interlocking civil wars in the 1990s.

Isolated travellers have also carried the disease to Nigeria, Senegal and the United States, and a Spanish nurse has become the first person to contract Ebola outside of Africa in this outbreak.

“Should the Ebola outbreak become more protracted or spread to more countries, it would have dramatic consequences for economic activity in the west African region,” the IMF said.

In a separate report, the World Bank said that without a scaled-up response, transportation, cross-border trade, supply chains and tourism in West Africa could be “severely disrupted”, costing the region as a whole tens of billions of dollars.

The security situation in several parts of Sub-Saharan Africa remained fragile, the IMF said, noting rumbling internal conflicts in South Sudan and Central African Republic.

Growth in South Africa, the continent’s most advanced economy, had been lacklustre, hit by protracted strikes, low business confidence and tight electricity supply, the IMF said.

But it saw “muted recovery” taking hold in 2015 through improving labour relations and gradually stronger exports that would push South African growth to 2.3 percent from a forecast 1.4 percent this year.

By contrast, Nigeria – the continent’s top oil producer which overtook South Africa as its biggest economy this year after a dramatic GDP rebasing – is forecast to expand 7 percent this year and 7.3 percent in 2015, the Fund said.

Some African economies had been able to increasingly tap capital markets, with recent sovereign bond issuances in the Eurodollar market largely oversubscribed, the report said, citing maiden issues by Kenya and Ivory Coast.

African currencies had also generally stabilized after weakening in 2013, with some exceptions.

The IMF report singled out Ghana’s cedi, whose continued downward pressure reflected “domestic policy slippages”, and Zambia’s kwacha, which fell heavily in the first half of the year before recovering some lost ground. – Reuters.

 

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