Question 1

6. Trading Places: Real Spillovers from G20 Emerging Markets. IMF 2024 April WEO: Chapter 4

Accepted Answer

As G20 emerging markets account for almost one-third of world GDP and about one-quarter of global trade, spillovers from shocks originating in these economies can have important ramifications for global activity. Chapter 4 documents that, since 2000, spillovers from shocks in G20 emerging markets—particularly China—have increased and are now comparable in size to those from shocks in advanced economies. Trade, notably through global value chains, is a key propagation channel. Spillovers generate a reallocation of economic activity across firms and sectors in other countries. Looking ahead, a plausible growth acceleration in G20 emerging markets, even excluding China, could support global growth over the medium term and spill over to other countries. Policymakers in recipient economies should maintain sufficient buffers and strengthen policy frameworks to manage the possibility of larger shocks from G20 emerging markets.

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Question 2

5. Light on the Horizon? IMF October 2023 Regional Economic Outlook: Sub-Saharan Africa

Accepted Answer

Still emerging from the COVID-19 pandemic, countries in sub-Saharan Africa have been hit by a sluggish global economy, worldwide inflation, high borrowing costs, and a cost-of-living crisis. In many cases, inflation is still too high, borrowing costs are still elevated, exchange-rate pressures persist, and political instability is an ongoing concern. To ensure that the coming rebound is more than just a transitory glimpse of sunshine, it is important for authorities to guard against a premature relaxation of stabilization policies, while also focusing on reforms to both claw back lost ground from the four-year crisis and also to create new space to address the region’s pressing development needs.

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Question 3

4. The Big Funding Squeeze. IMF April 2023 Regional Economic Outlook: Sub-Saharan Africa

Accepted Answer

A funding squeeze has hit the region hard.

Persistent global inflation and tighter monetary policies have led to higher borrowing costs for sub-Saharan African countries and have placed greater pressure on exchange rates. Indeed, no country has been able to issue a Eurobond since spring 2022. The interest burden on public debt is rising, owing to a greater reliance on expensive market-based funding combined with a long-term decline in aid budgets. The lack of financing affects a region that is already struggling with elevated macroeconomic imbalances. Public debt and inflation are at levels not seen in decades, with double-digit inflation present in about half of the countries—eroding household purchasing power and striking at the most vulnerable. In this context, the economic recovery has been interrupted. Growth in sub-Saharan Africa will decline to 3.6 percent this year. Amid a global slowdown, activity is expected to decelerate for a second year in a row. Still, this headline figure masks significant variation across the region. The funding squeeze will also impact the region’s longer-term outlook. A shortage of funding may force countries to reduce resources for critical development sectors like health, education, and infrastructure, weakening the region’s growth potential.

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Question 4

3. Living on the Edge. IMF October 2022 Regional Economic Outlook: Sub-Saharan Africa

Accepted Answer

Sub-Saharan Africa’s recovery has been abruptly interrupted. Last year, activity finally bounced back, lifting GDP growth in 2021 to 4.7 percent. But growth in 2022 is expected to slow sharply by more than 1 percentage point to 3.6 percent, as a worldwide slowdown, tighter global financial conditions, and a dramatic pickup in global inflation spill into a region already wearied by an ongoing series of shocks. Rising food and energy prices are impacting the region’s most vulnerable, and public debt and inflation are at levels not seen in decades. Against this backdrop, and with limited options, many countries find themselves pushed closer to the edge. The near-term outlook is extremely uncertain as the region’s prospects are tied to developments in the global economy and with a number of countries facing difficult sociopolitical and security situations at home. Within this challenging environment, policymakers must confront immediate socioeconomic crises as they arise, while also endeavoring to reduce vulnerabilities to future shocks, building resilience. Ultimately, however, the region’s safety and prosperity will require high-quality growth and the implementation of policies that will set the stage for a sustainable recovery, helping countries move away from the edge.

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Question 5

2. A New Sock and Little Room to Maneuver. IMF April 2022 Regional Economic Outlook: Sub-Saharan Africa

Accepted Answer

Yet another shock.

The economic recovery in sub-Saharan Africa surprised on the upside in the second half of 2021, prompting a significant upward revision in last year’s estimated growth, from 3.7 to 4.5 percent. This year, however, that progress has been jeopardized by the Russian invasion of Ukraine which has triggered a global economic shock that is hitting the region at a time when countries’ policy space to respond to it is minimal to nonexistent. Most notably, surging oil and food prices are straining the external and fiscal balances of commodity-importing countries and have increased food security concerns in the region.

Moreover, the shock compounds some of the region’s most pressing policy challenges, including the COVID-19 pandemic’s social and economic legacy, climate change, heightened security risks in the Sahel, and the ongoing tightening of monetary policy in the United States. Because of this, the growth momentum for the region has weakened this year with economic activity expected to expand by 3.8 percent. While the economic recovery is projected to accelerate in 2023 to about 4 percent over the medium term, this pace is not enough to make up for lost ground from the pandemic. Beside accelerating the COVID-19 vaccination campaign, immediate policy priorities include helping the most vulnerable households cope with high food and energy costs without adding to existing debt vulnerabilities, containing inflation pressures, and managing exchange rate adjustments. 
 
Looking beyond the pandemic and current geopolitical tensions, job creation and meeting the Sustainable Development Goals will require strong, inclusive, and sustainable growth in the region. To this end, decisive policy action is needed to enhance economic diversification, unleash the private sector’s potential, and address the challenges posed by climate change.

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Question 6

1. One Planet, Two Worlds, Three Stories. IMF October 2021 Regional Economic Outlook: Sub-Saharan Africa

Accepted Answer

A fraught recovery. Despite some encouraging signs, another difficult year.

The world remains in the grip of the COVID-19 pandemic and a seemingly accelerating pace of climate change, both of which underscore the need for increased global cooperation and dialogue. Solutions to these global problems must involve all countries and all regions, especially sub-Saharan Africa, with the world’s least vaccinated population, most promising renewable energy potential, and critical ecosystems. Sub-Saharan Africa’s economy is set to expand by 3.7 percent in 2021 and 3.8 percent in 2022. This follows the sharp contraction in 2020 and is much welcome, but still represents the slowest recovery relative to other regions.

In particular, the economic outlook points to divergences at three levels: between sub-Saharan Africa and other regions, within sub-Saharan Africa, and within countries. These divergences reflect the region’s slower vaccines rollout, more limited fiscal space, and regional disparities in resilience.  The outlook remains extremely uncertain, and risks are tilted to the downside. In particular, the recovery depends on the path of the global pandemic and the regional vaccination effort, food price inflation, and is also vulnerable to disruptions in global activity and financial markets.

Looking ahead, sub-Saharan Africa’s potential remains undiminished. The region is at a critical juncture to implement bold transformative reforms to capitalize on this potential.

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Hanomics

Policy Research

6. Trading Places: Real Spillovers from G20 Emerging Markets. IMF 2024 April WEO: Chapter 4

5. Light on the Horizon? IMF October 2023 Regional Economic Outlook: Sub-Saharan Africa

4. The Big Funding Squeeze. IMF April 2023 Regional Economic Outlook: Sub-Saharan Africa

3. Living on the Edge. IMF October 2022 Regional Economic Outlook: Sub-Saharan Africa

2. A New Sock and Little Room to Maneuver. IMF April 2022 Regional Economic Outlook: Sub-Saharan Africa

1. One Planet, Two Worlds, Three Stories. IMF October 2021 Regional Economic Outlook: Sub-Saharan Africa