The International Monetary Fund has given a rather bleak forecast for Sub Saharan Africa’s economy.
It has warned that the economies of sub-Saharan Africa are facing contraction this year.
In its latest African Economic Outlook, the fund forecasts growth in the region of 3.75% this year, the slowest growth in six years.
Next year, the report forecasts growth of 4.25%.
Low oil and commodity prices, together with a slowdown in the Chinese economy, are the main reasons for the overall downturn, the IMF says.
China is the region’s largest trading partner and many African countries have benefited hugely from exporting raw materials to the country.
“The strong momentum evident in the region in recent years has dissipated,” says the report, titled Dealing with the Gathering Clouds.
“With the possibility that the external environment might turn even less favourable, risks to this outlook remain on the downside.”
The IMF calls on African governments to adopt policies to lessen the impact of this economic slowdown, such as allowing currency depreciation to help boost exports.
It also urges governments to address income inequalities that are particularly high in the region, as well as gender inequality.
The IMF slashed growth rates to 3.75% for 2015 and 4.25% in 2016. It’s quite an about turn for a region that had become the “go to” spot for investment in the last 5 years.
Sumitra Nydoo with the story.