* Guarded optimism that Africa can maintain growth trend
* Spillover risks seen, but impacts will vary widely
* South Africa most exposed to negative winds from West
By Pascal Fletcher
WASHINGTON, Sept 23 A global downturn may tone
down the roar of Africa's bounding "lion" economies, but they
can keep a spring in their step if governments deepen reforms
and maintain prudent policies, the World Bank and IMF say.
Even as World Bank President Robert Zoellick warned of a
"darkening outlook" for developing nations projected by
European and U.S. debt woes, top bank and fund officials sought
to preserve a guarded positive outlook for Sub-Saharan Africa.
While still the planet's poorest region, Africa has boasted
more of the world's fastest-growing economies than any other
zone in the last decade, and emerging market investors and
analysts have been enthusing about its "lion" economies leaping
forward, largely on the back of minerals and oil exports.
After suffering a temporary growth rate collapse inflicted
by the 2008-2009 financial crisis, Africa rebounded strongly
within a year. IMF and World Bank economists are still sticking
to an average regional growth forecast of around five percent,
although they are ratcheting back a few notches to take into
account the storm clouds looming over global growth prospects.
"Providing the world economy continues to grow at four
percent, Sub-Saharan Africa, the low-income countries should do
reasonably well," Abebe Selassie, assistant director of the
IMF's Africa Department, told Reuters.
But there is clear recognition that Africa, despite being
far less integrated than other regions into global trade and
finance flows, will not escape impact if growth and demand fall
in the advanced economies of Europe and the United States.
"At a time when Africa is doing its best ever, it is now
certainly at risk of seeing growth diminish, and that of course
we're very concerned about," the IMF's Director of the African
Department, Antoinette Sayeh, told Reuters this week.
STAYING THE REFORM PATH
One of the biggest worries of IMF and World Bank officials
is that another external shock, and the internal economic'
political and social pressures it might generate in African
states, could divert African governments from the positive path
of policy reforms and improved budget management that had
underpinned the region's buoyant growth in the last decade.
"Now, the political climate for continuing those reforms
would be even more tense at a time of fiscal pressures," the
Bank's Vice President for Africa Obiageli Ezekwesili said.
"If they take their hands off from the reins of reform ...
it would be devastating, because it would reverse all the gains
that have been made in a decade," she told Reuters.
At the IMF/World Bank meetings this week, Zoellick made a
point of warning about the negative headwinds for developing
countries that could swirl out from a global downturn.
He said falling demand and investor confidence in advanced
economies, combined with volatile and high world food prices --
which have triggered riots in Africa in the past -- could lead
to rising protectionism and of a "retreat to populism."
"This is not the time to take the wrong policy measures,
this is the time to sustain the right policy measures because
it matters for recovery," Ezekwesili said.
She cited the imposition of price controls as an example of
what would be a policy mis-step, recommending instead targeted
"safety net" measures for the most poor and vulnerable that
would still allow the market to regulate supply and demand.
International charity group and development advocate Oxfam
said many African states had had to cut education, health,
agriculture and social spending in the last two years.
"We're expecting donor aid budgets to be slashed, and the
longer this crisis continues, the deeper the impact for Africa
and particularly for the poorest people," Oxfam spokesperson
Caroline Pearce told Reuters. She urged the G20 group to try to
tame speculation fueling food price volatility and to find
innovative ways to finance development in Africa."
The IMF says a setback in U.S. or European recovery could
have "substantial spillovers" to Sub-Saharan Africa,
undermining prospects for exports, remittances, official aid
and private capital flows. [ID:nW1E7JU00C]
But experts warn impacts will differ widely across such a
varied region of 44 countries.
South Africa, hard hit by the last crisis and still trying
to recover, could struggle to maintain the 3.5 percent growth
forecast by the IMF, if the global situation worsens.
"If things look much worse, it could be difficult to
achieve that" Sayeh said.
"You're seeing generalized risk aversion, so in this
environment the South African rand has been affected," said
Selassie, referring to the South African currency's ZAR=D3
losses against the dollar in recent weeks.
But he saw this depreciation as being "in tandem" with the
depreciation of other large emerging market currencies, such as
the Brazilian real and Mexican peso.
For oil exporters like Nigeria and Angola, the outlook
would hinge on how oil prices reacted to the global situation.
Selassie said falling global demand would have a downward
impact on oil prices, but looser monetary policies in many
countries could also help support commodity prices.
In East Africa, regional states faced inflationary
pressures spilling from higher international food prices, and
from the Horn of Africa drought and famine.
In the west, new oil producer Ghana, whose growth is
forecast to top 13 percent this year, needed to work to contain
spending and tackle its fiscal deficit to avoid "ruining the
opportunity that oil provides," the IMF's Sayeh said.
(Reporting by Pascal Fletcher; Editing by Andrea Ricci)