* Forecasts revised slightly downwards since May
* Infrastructure investment drives expansion
* Global conditions expected to improve in 2014
By Joe Brock and Tim Cocks
ABUJA/LAGOS, Oct 31 Sub-Saharan Africa's
economic growth is expected to increase to 6 percent in 2014,
from 5 percent this year, supported by investment in
infrastructure and production capacity, the International
Monetary Fund said on Thursday.
The IMF had predicted in May that the region would grow 5.7
percent this year and 6.1 percent in 2014.
It said the slight downward revisions were due mainly to
weaker global economic conditions, while budget delays in oil
producer Angola and oil theft in Africa's top crude exporter
Nigeria also hurt growth.
Inflation on the continent is expected to be less than 6
percent next year, its third year of decline due to benign
prospects for food prices and the continuation of prudent
monetary policies, the IMF said.
"Countries like Kenya and Uganda were in high double digit
inflation and are now in single digits, and a lot of it has to
do with the conduct of monetary policy," IMF Africa director
Antoinette Sayeh told Reuters after the report's launch in
Nigeria's commercial capital, Lagos.
The fund expects growth to pick up next year.
"The improvement relative to 2013 reflects higher global
growth, especially in Europe, and other expected favourable
domestic conditions," the IMF said in its regional report,
giving Nigeria's electricity reforms and hopes of improved oil
output there as an example.
"The main factor behind the continuing underlying growth in
most of the region is ... strong domestic demand, especially
associated with investment in infrastructure."
Despite the strong growth outlook, the region remains
vulnerable to lower commodity prices and a slowdown in developed
and emerging economies, the report said.
The strongest growth will be felt in mineral-exporting and
low-income countries, the IMF said, with examples such as the
Democratic Republic of Congo, Mozambique and Sierra Leone.
Africa's top economy South Africa is expected to grow 2
percent this year and 2.9 percent in the next, as it lags the
broader region due to the relative maturity of its industrial,
extractive and services sectors.
South Africa has suffered this year from industrial strikes,
slowing private investment and disposable income growth and
weakening consumer confidence, the IMF said.
The World Bank sees growth of 5.3 percent for sub-Saharan
Africa in 2014, underpinned by strong private and public
The IMF gave similar policy prescriptions to previous
reports. It recommended African nations allow their currencies
to fall if they were being pressured by low commodity prices or
capital outflows rather than propping them up too much.
Some nations, such as Nigeria, intervened to prop up
currencies after portfolio outflows surged between May and
"We certainly don't dispute there are occasions when there
is undue volatility that needs to be dealt with," Sayeh said.
However, she added: "Exchange rate flexibility is important ...
for countries like Nigeria."
The IMF also said that African economies were more
vulnerable to volatile portfolio flows than ever before.
It suggested "capital flow measures", meaning restrictions
on capital coming in or out, should only be used to combat
volatility as a last resort, after addressing imbalances in
things such as interest rates had been tried.
"You could adopt measures ... so you have less of the
footloose short term money and a bit more of the longer term,"
fund deputy director Abebe Selassie told Reuters. "But it's not
something you want to use in the first instance."
The fund also suggested they work to improve the ease of
doing business and the collection of economic statistics.