Africa, Growth Sustainability and the Great Recession

Sub-Saharan Africa as a whole did remarkably well during the Great Recession exceeding global growth by 4.7% in 2008 and a whopping 6.2% 2 009. Though there was some variation, overall growth was 2.9% higher than the world as a whole over the period 2018--13. A number of factors are examined. First, a number of African countries have built up significant reserves and tapped new sources of finance which allowed them greater policy space to avoid IMF loans and associated conditionality while maintaining anti-cyclical fiscal and monetary policy. New financing sources permitted historically larger levels of infrastructural spending during the Great Recession effectively acting as anti-recessionary public work projects. Second, SSA countries were able to reorient their economies away from traditional export markets and sources of FDI toward Asian and other emerging countries. This allowed them to diminish their ties with Europe and other developed countries which were hit much harder during the Great Recession. Third, SSA countries continued to rely heavily on commodity production before and during the Great Recession. Prior to the Great Recession there was a commodity boom led by the high level of commodity prices which held up remarkably well during the Great Recession. There is little doubt that this helped build stimulate economic growth and build up reserves. However, the structural conditions related to the reliance on commodity production are a threat to the sustainability of growth in SSA.

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