African Oil Economy Growth
SUB-Saharan Africa’s economy would probably expand 6,3% next year, the fastest pace in more than three decades, boosted by higher output from oil-exporting countries such as Angola, the International Monetary Fund (IMF) says in its World Economic Outlook released yesterday.
Growth in the region was forecast to reach 5,2% this year, the third consecutive year it would exceed 5%, the Washington-based lender said in its semi-annual report released in Singapore. Next year’s growth rate would be the highest since 1971.
Growth in SA would moderate as higher oil prices and rising interest rates curbed spending.
» Source: Business Day
Economic growth would probably slow to 4% from 4,2% this year, the IMF report said. SA’s $239bn economy expanded at a 21-year high of 4,9% last year.
Rising oil prices have boosted investment in countries such as Angola, sub-Saharan Africa’s second-largest oil producer.
Other African states had benefited from higher prices for commodities such as gold and copper and increased aid and capital flows, easing the effect of high oil prices, the IMF said.
“Oil-exporting countries have contributed significantly to this strong performance,” the IMF said. “Growth in oil-importing countries, although lagging that of oil exporters by a substantial margin, has also been surprisingly robust.”
Economic growth in oil- exporting countries would probably accelerate to 9,1% next year from 6,7% this year, the IMF forecast, while growth in oil- importing countries would slow to 4,5% from 4,8%.
Angola’s economy would probably expand 31% in 2007, more than double the growth rate expected this year, and making it the fastest-growing economy on the continent for a third consecutive year.
Angola, China’s biggest supplier of oil, is benefiting from rising investment in its oil industry after the end of a 26-year civil war in 2002.
Some economies might suffer if commodities extended recent declines, the IMF said. Gold has dropped 11% since the beginning of May, while copper has fallen 14% from a record $8800 a ton in London on May 11.
“The resilience of these economies could be tested if non- fuel commodity prices moderate, while oil prices stay high,” the IMF said. “In oil-importing countries, the challenge is to continue to adjust to high oil prices, while pursuing reforms that strengthen medium-term growth prospects.”
Zambia, Africa’s biggest copper producer, would probably expand 6% next year, unchanged from this year, the IMF said. The economy grew 5,1% last year.
Nigeria, Africa’s second-largest economy and its biggest oil producer, would probably expand 6,4% next year, up from 5,2% this year, the IMF forecast. The west African nation needed a “tight fiscal stance” to ensure high oil prices did not push up spending and inflation, the lender said.
Zimbabwe’s economy would probably contract 4,7% next year, after declining 5,1% this year, the ninth straight year of recession.
Zimbabwe’s recession has worsened after a failed land reform programme and drought slashed agricultural output, including production of its biggest export, tobacco. That resulted in shortages of food and foreign currency, pushing the country’s inflation rate to a record 1194% in May.
While growth in Africa was accelerating, it still missed the target of 7% that was needed to meet goals agreed to by the United Nations to halve poverty by 2015, the IMF report said.
“It is important that governments in the region continue to press ahead with reforms to promote private sector investment and employment,” the IMF said. Reforms included “further trade liberalisation, reduced government involvement in the economy and improvements to the business environment”.
