Africa and the Great Recession: The Dynamics of Growth Sustainability

Abstract

Sub-Saharan Africa (SSA) as a whole did remarkably well during the Great Recession. On average, over the 2008–13 period, SSA (excluding South Africa) grew at a rate that was 2.9 per cent higher than that achieved by the world as a whole. The paper explores the reason for this performance. First, a number of African countries in recent years have built up significant reserves and tapped new sources of finance. Like many Latin American and Asian countries, they were able to avoid IMF loans and create policy space for the adoption of anti-cyclical fiscal and monetary policies. Second, SSA countries reoriented their economies away from traditional export markets and sources of FDI toward Asian and other emerging countries which had been less badly affected than their traditional western partners by the recession. Third, both before and during the Great Recession SSA countries continued to rely heavily on commodity production, which allowed them to ride the boom in commodity prices. However, in the long run this reliance generates structural weaknesses that are a threat to the sustainability of growth in SSA.