IMF cuts 2012 Africa growth forecast, raises outlook for 2013

TOKYO, Oct 9 (Reuters) - The International Monetary Fund onTuesday cut its 2012 forecast for Africa along with most othercountries around the world as the euro zone crisis dampensglobal demand and higher food prices weigh on food-importingcountries in the region.

In its latest World Economic Outlook, the IMF shaved its2012 projections for Africa to 5 percent from 5.4 percent.However, it revised up its 2013 outlook to 5.7 percent from 5.3percent.

The Fund said spillovers from the euro zone crisis intoAfrica have so far been modest except for South Africa, whichhas close financial and trading ties with Europe.

The IMF cut its 2013 forecast for South African growth to 3percent from a July projection of 3.3 percent mainly due to theimpact from the continuing euro zone debt crisis. It maintainedits 2012 projection of 2.6 percent.

"If the euro area crisis escalates further and global growthslows further, Sub-Saharan Africa's prospects will be lessfavorable," the IMF said.

"South Africa, strongly linked to Europe, would beparticularly affected, with possible repercussions for someeconomies in southern Africa," the Fund said, "Softer commodityprices would adversely affect the region's natural resourceexporters," it added.

The IMF cautioned that African countries could also be hitif China's economy slowed sharply. China's economic growth isexpected to be the lowest in more than a decade this year.

Increasing Chinese foreign direct investment and governmentfunding to African countries has made it an important player inthe region.

"The priority in much of the region is to continue tostrengthen policy buffers and prepare contingency plans ifdownside risks materialise," the IMF added.

(Reporting By Lesley Wroughton; Editing by Neil Fullick)


Keywords: IMF AFRICA/