By George Mwangi
Special to Dow Jones Newswires
Sub-Saharan Africa’s economy is expected to grow by 3.8% this year, down from 4.5% the prior year, mainly due to the Russia-Ukraine war, an International Monetary Fund director said on Thursday.
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“The war in Ukraine has already reshaped the near-term outlook for sub-Saharan Africa,” Abebe Aemro Selassie, director of the IMF’s African department said. “The shock to global commodity markets will add to inflation, hit the region’s most vulnerable households, exacerbate food insecurity, raise poverty rates, and possibly add to social tensions,” he said.
“Higher oil prices may generate a windfall gain for the region’s eight oil exporters. But for the other 37 countries, they will worsen trade imbalances and increase living costs,” Mr. Selassie said.
Inflation average for the region has been raised by 4% this year, representing the worst outcome since 2008, he said.
“This year, 11 countries will face double digit inflation; almost all of these have flexible exchange rates, and almost half of these are fragile,” he said.
Public debt ratios are at their highest level in over two decades, and many low-income countries are either in, or close to, debt distress, he said.
“Fiscal policy needs to protect vulnerable households from rising food and energy prices, without adding to debt vulnerabilities,” Mr. Selassie said.
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Credit: www.marketwatch.com /