The economic slowdown in sub-Saharan Africa looks set to be mercifully brief. Recovery is now under way across the region. The region's relative resilience during this global recession, compared with previous global downturns, owes much to the health of its economies and the strengthening of policy frameworks in the run-up to the crisis. Countercyclical macroeconomic policies played an important role, with nearly two-thirds of sub-Saharan Africa countries experiencing a slowdown in 2009 increasing government spending to buttress economic activity. However, progress toward the Millennium Development Goals receded. Middle-income and oil-exporting countries were hit hardest by the collapse in world trade and commodity markets; the region's low-income countries escaped fairly lightly. Looking ahead, fiscal policies in sub-Saharan Africa generally need to be refocused toward medium-term objectives, macroeconomic policy buffers rebuilt, and financial systems strengthened.
As elsewhere, 2009 was a difficult year for most sub-Saharan African countries. But, playing off the revival in global economic activity, growth in the region is expected to rebound this year. Output is now projected to expand by some 4¾ percent in 2010, up from 2 percent last year.1 These numbers have been revised upwards by ½–1 percentage point since last October. And provided the global economy continues to improve, growth in the region should accelerate further still to 5¾ percent in 2011. In essence, the expectation is that growth in most countries is set to bounce back, albeit to rates a little shy of those that prevailed in the mid-2000s.
Since the economic downturn began, policymakers throughout sub-Saharan Africa, as elsewhere, have to varying degrees sought to use fiscal policy to counter the slowdown. Using information from a survey of IMF country desk officers,1 this chapter addresses two policy questions:2
The first decade of the 21st century witnessed a dramatic surge of private financial flows1 into emerging and developing regions, including sub-Saharan Africa. Gross private flows to the region increased fivefold from 2002 to 2007. Although, as in other regions, the global financial crisis caused inflows to plunge, there are tentative signs of renewed interest in the region from foreign investors.