PARIS (Reuters) - The slowdown in economic growth in Africa this year may be much sharper than the International Monetary Fund is currently forecasting, a senior IMF official said on Wednesday.
The IMF updated its forecasts last week and is now expecting growth of 3.3 percent in 2009 in Africa, down three percentage points from its April 2008 outlook but the risks to the forecast are to the downside.
“The slowdown in growth could be much larger than we estimate currently,” the IMF’s Africa Department Director Antoinette Sayeh said at a seminar.
The slowing economy has sent demand for African exports tumbling and prices of commodities such as cotton, copper and oil have fallen.
“Remittances, tourism revenue and even aid, we feel could fall further,” she said.
Investment flows have also dropped as investors prefer to put their money into safer havens. This has created pressure on reserves and foreign exchange rates.
“Reserves seem to be adequate at this stage but the risks are significant down the road,” she said.
Some countries should take fiscal stimulus measures to support slumping demand while falling inflation may also leave for central banks to ease monetary policy.
“Inflation was a huge problem for the continent last year and it is just starting to come down, mainly due to oil prices,” she said.
“Falling inflation across the board allows for some monetary easing in some countries.” she said.
Countries with flexible exchange rates must allow those to adjust to the slower economy while those with fixed exchange rates may need to secure official financing to bolster reserves.
She said the IMF stood ready to provide assistance.
“We certainly expect to be able to respond to countries who need additional financing because of the crisis,” she said.