Africa's Low-income Countries Lead Growth Forecast

Another year of strong growth is in prospect for most of the 29 low-income countries in sub-Saharan Africa.

The IMF’s latest Regional Economic Outlook projects that these countries’ output will expand on average by 6 percent in 2011, compared with last year’s 5½ percent pace.

This performance would be on a par with the region’s high-growth surge in the mid-2000s. The main engines of the LICs’ expansion are expected to be exports and private consumption, with the public sector taking more of a back seat.

The omens are good also for oil-exporting countries. Booming oil revenues are already filtering through to many non-oil sectors and easing government financing constraints. A big question is whether governments will be able to exercise sufficient control over government spending to prevent boom-bust cycles.

As always, however, there are risks to growth. What is good for oil exporters may depress real incomes and subdue activity in oil importers. Furthermore, lingering uncertainties in the global outlook and a heavy election calendar in Africa could impinge on growth prospects.

Some countries lag

In contrast to the buoyant low-income countries, most medium-income countries are still struggling to overcome dislocations caused by the global financial crisis (see chart). Within the Southern African Customs Union, recovery from the downturn has generally been at a slower pace than elsewhere in sub-Saharan Africa.