By Antoinette Sayeh
In previous global downturns, sub-Saharan Africa has usually been badly affected—but not this time around.
The world economy has experienced much dislocation since the onset of the global financial crisis in 2008. Output levels in many advanced economies still remain below pre-crisis levels, while unemployment levels have surged; growth in emerging market economies has slowed, but remains quite high.
But in sub-Saharan Africa, growth for the region as a whole has remained reasonably strong (around 5 percent), except for 2009 – where the decline in world output and associated shrinking of world trade pushed Africa's growth down to below 3 percent.
Some better than others
[Related -Bogle Says Indexing Destined To Win The Battle Of The Quants]
Of course, sub-Saharan Africa is a diverse region, and not all economies have fared equally well. The more advanced economies in the region (notably South Africa) have close links to export markets in the advanced economies, and have experienced a sharper slowdown, and weaker recovery, than did the bulk of the region's low-income economies. Countries affected by civil strife (such as Cote d'Ivoire, and now Mali) and by drought have also fared less well than other economies in the region.
So why has most of sub-Saharan Africa continued to record solid growth against the backdrop of such a weak global economy? And can we expect this solid growth performance to continue in the next few years?
[Related -VMAX and VMIN Poised to Be Most Important VIX ETP Launch in Years]
First, the economic situation in sub-Saharan Africa has undergone a fundamental change since the beginning of the millennium. As we show in the latest IMF Regional Economic Outlook for Sub-Saharan Africa—launched today in Lusaka, Zambia—the region has been growing consistently strongly for over a decade.
Critical to the region's recent success has been the steady progress and economic resilience of the region's 26 low-income and fragile economies. Average per capita incomes in these countries is still well under $2 per day, but total output has grown by more than 5 percent in every year since 2004. Furthermore, the share of investment in this output has risen steadily – from 18 percent in 2004 to 23 percent now.
This solid growth record has been supported by several factors, including significantly less civil conflict, the generally favorable commodity price developments benefiting Africa's natural resource exporters; and the extensive debt relief provided to most highly-indebted poor countries.