Written by Hanna Barry | From MoneyWeb
The rapid growth rates experienced in sub-Saharan Africa since the 1990s – which defied expectations and proved resilient through the financial crisis – are not sustainable going forward, according to the International Monetary Fund (IMF).
Speaking at the University of Witwatersrand on Tuesday evening, IMF chief economist, Olivier Blanchard said it was not clear where future growth on the continent would come from.
“African countries should use revenues from mining to prepare for the next step and invest in other infrastructure, such as manufacturing or high-productivity agriculture,” Blanchard suggested.
He said that in countries where mining was discontinued, there was often a “return to poverty” and this should be avoided.
Daniel Sloper, Australia’s special representative to the Group of 20 (G20), noted that member countries were looking at structural reforms in their own economies.
Sloper said focuses included removing impediments to infrastructure investment, market flows and trade – which included facilitating access to supply chains.
Earlier this year, the G20 finance ministers agreed on a global growth target of 2 percentage points over the next five years. The G20, of which South Africa is a member, represent 85% of global GDP, 75% of global trade and 60% of the world’s poor.
Blanchard said that low-income countries (LICs) had done well during the crisis and the IMF expects that they will continue to [thrive].
LICs are still driving global growth, while advanced economies (AEs) are dealing with legacies from the global financial crisis. Issues of debt in particular are slowly improving, as fiscal consolidation eases and demand increases.
This is particularly true for countries such as the US, UK and Germany, where fiscal consolidation is minimal and firms and households are “in good shape”, said Blanchard.
The same recovery, however, is not being seen in Japan and the euro periphery, where fiscal stimulus has ended (Japan) and deflationary risks are increasing the real value of debt (euro periphery).
Read more at MoneyWeb
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