Africa to survive world financial turbulence - Report

Accra, Nov. 1, GNA - The latest world economic outlook report has warned of an outbreak of financial turbulence but said developing countries were the least to be affected because of their continued strong growth.

The report launched every year by the International Monetary Fund (IMF) said the largest impact was expected to be felt in the advanced countries, particularly the United States and Europe. Speaking at the launch of the outlook in Accra on Thursday, Mr Charles Collyns, a Deputy Director of the IMF, said after several years of strong growth, the global economy had been tested in recent months but sound economic fundamentals would contain the impact on the world at large.

He said the condition might deteriorate further and cited the recent problems in the US housing market, which could start to have a more damaging impact on the rest of the US economy. He said emerging markets, such as China and India, appeared resilient despite pockets of vulnerabilities particularly among countries where heavy capital inflows had supported rapid credit expansion.

Mr Collyns added that the rising oil prices were also a source of concern. The way forward for policy makers in developing countries such as Ghana, he said, was to adapt to the changeable global environment while continuing to make headway on the reforms needed to sustain strong growth.

He said in many countries rising food prices, continued high oil prices and strong foreign exchange inflows had raised inflation concerns and monetary tightening might be required. Mr Collyns said growth in sub-Saharan Africa (SSA) should reach 6.0 per cent this year and about 6.75 per cent in 2008, both slightly lower than what was projected in last April's Regional Economic Outlook but up from about 5.5 per cent in 2006.

The report on SSA, which excluded Zimbabwe, said inflation in the region should average 7.5 per cent in 2007 with 32 out of 44 countries in single digit and 6.75 per cent in 2008. He said the emerging markets were doing well because of strong macroeconomic policy framework, strengthening of capital inflows and balance of payment position.

Mr Collyns said high commodity prices and private capital inflows to developing countries could fan inflationary pressures but could be checked through strong monetary tightening and fiscal discipline. He said countries needed not to try to prevent globalisation or adoption of new technology but rather make sure new opportunities opened for a full range of social groups.