IMF forecasts 2015 Sub-Saharan African economy to grow at 4.5 pct

The International Monetary Fund (IMF) on Tuesday forecast Sub-Saharan Africa's economy to grow at 4.5 percent in 2015, becoming the fastest growing economy globally.

The IMF said in its latest Regional Economic Outlook for Sub- Saharan Africa reaching Xinhua in Nairobi that expansion will be marginally due to sharply fall in global oil and commodity prices.

Antoinette Sayeh, Director of the IMF's African Department, said the region will continue being one of the fastest growing in the world -- second only to emerging and developing Asia.

"The economic expansion will be at the lower end of the range experienced in recent years, mainly reflecting the impact of the sharp decline of oil and commodity prices over the last six months. But the impact of this shock will be highly differentiated across the region," Sayeh said.

She said Sub-Saharan Africa's eight oil exporters have been hard hit by the price decline, and their average growth in 2015 is expected to be about 1.4 percentage points, lower than in 2014 in response to this shock.

"However, for most of the rest of the region, growth prospects remain favorable. These countries are enjoying the benefits of lower oil import bills, although some are also feeling the impact of lower prices for their non-oil commodity exports," she said.

The Fund said the growth is projected to be particularly strong in most low-income and more fragile countries, and this will help to reduce poverty levels.

According to the IMF, the current circumstances also highlight the urgent need for policies that favor structural transformation to diversify Sub-Saharan Africa's production base and promote greater integration into global trading networks.

"This will help the region create jobs for the rapidly growing young population as the region is set to experience a significant demographic transition in the next decades," said Sayeh.

By 2030, the IMF said the number of people reaching working age in the region will exceed that in the rest of the world combined.

"This offers a tremendous opportunity for Sub-Saharan Africa, which, if properly tapped, could create a powerful engine for long- term growth," said the Fund.

While the baseline scenario is for solid growth, the IMF said policy makers need to remain mindful of risks that could still cloud the outlook.

In particular, global financial conditions are tightening just as the region's frontier markets are increasingly relying on Eurobonds to finance their large investment needs.

"The deteriorating security situation in some areas could also strain budgets and have an adverse impact on the near-term growth outlook, especially in the agricultural sector, while weakening prospects for foreign direct investment," Sayeh said.