Catherine Pattillo: Africa Must Balance Macroeconomic Stability With Critical Development Spending To Drive Growth
Deputy Director of the IMF’s African Department, Catherine Pattillo, has highlighted Africa’s mixed economic outlook, emphasising both the region’s growth potential and the ongoing challenges of inflation, high debt, and the need for crucial reforms.
With the IMF forecasting a growth upgrade to 4.2% in 2025, Pattillo, in an interview with ARISE NEWS on Monday,outlined how countries must balance macroeconomic stability with essential development spending, while also stressing the importance of STEM education to unlock Africa’s demographic dividend and drive long-term economic transformation.
Pattillo began by discussing the IMF’s upgrade of Africa’s growth forecast to 4.2% in 2025, a positive adjustment from the previous forecast. “This is important, we do this twice a year and so immediately we finish one in the fall, we start the process of doing the other one,” she explained.
“It’s a team in the African department, in our region studies division, 6 to 10 people, working on the countries and the data comes from a range of different sources. A lot of the data comes from our country teams, then we would get the data from the countries, and use a lot of other public sources, market data sources.
“The data is a good value added to the report because a lot of people are interested in the data and we make that data available on our website both for wall data as well as the data underlying and all of the chart analysis.”
Turning to the challenges that sub-Saharan Africa faces, Pattillo acknowledged that many countries in the region are walking a delicate policy tightrope. “The times are still difficult for a lot of countries right now, we talk about this balancing act that policymakers are facing,” she said.
“That is, they are working to still address macro imbalances to keep up the progress that has been made already in reducing inflation, stabilising public debt, and building foreign exchange reserves, but they have to balance that with the need for a lot of attention and spending on development in education, health, and social protection because of the needs in the population and across the growing populations, they have to balance that.”
She went on to explain the complexities of implementing necessary reforms in such challenging times. “Trying to make sure these reforms, which are more needed but often difficult in the difficult times, are socially and politically acceptable.”
When asked about the factors influencing the IMF’s positive growth outlook for 2025, Pattillo pointed to improvements expected in the coming year. “We have a number of things weighing on the forecast this year,” she said.
“We projected 3.6%, which is flat from last year, and you had climate shocks, a lot of flooding in a range of countries including Nigeria, drought in Southern Africa that really affected growth, as well as hydropower and food security.
There were also power issues in a range of countries, and the impact of conflict and security, and higher interest rates given high inflation.”
However, she noted that the outlook for 2025 is more optimistic, with growth expected to improve. “Next year, we are expecting that the impact of some of these would ease,” she said.
“If the drought in Southern Africa improves, we have higher growth there. Also, bigger economies like South Africa, post-elections, strong confidence, and improvement in some of the power outages that they have been having. I think that is one of the factors that could improve growth for next year.”
Turning to the ongoing issue of inflation, Pattillo noted that while inflation has been decreasing globally, it remains a major challenge for many African countries. “Around the world, inflation, post-pandemic, has really accelerated, and central banks around the world, in turn, have been increasing policy rates to contain inflation, which keeps the cost of living really high.
“The same is true in sub-Saharan Africa, where countries have taken steps, the central banks have raised interest rates, and thus has had a lot of positive impact on containing inflation,” she explained.
Despite some progress, Pattillo acknowledged that inflation remains a persistent issue. “Overall, we see now inflation going down on average, but there are still countries, a third of the countries, where inflation is still in double digits, and half of the countries have gotten inflation back below their target, but that means the other half has not.”
She noted the negative impact of inflation on growth, saying, “As you know, this is a headwind to growth. Without a stable macro environment, including stable prices, people are less likely to feel confident to save and invest, and it’s also, importantly, it’s difficult for people because we know if inflation goes down, food prices are still high, and this is part of the cost of living crunch that so many people in the region are facing.”
On the issue of Africa’s rising debt, Pattillo acknowledged the significant challenge that many countries face but reassured that there is no systemic debt crisis. “Debt is quite high in a lot of countries, but we are not seeing any kind of systemic debt crises,” she said.
“We are seeing really difficult times with liquidity that a lot of countries are facing, where the borrowing costs are so high and debt is high. The ratio of interest payment that they have to make to the revenue that they bring in has doubled in the past decade. These put a huge squeeze on the available resources again for the important development spending that they need, the populations are demanding that they do.”
Finally, Pattillo addressed the importance of education, particularly in STEM (Science, Technology, Engineering, and Mathematics) fields, for Africa’s future economic development. “The issue is super important because Africa’s youth population is going to be the largest globally by 2030, so the demographic dividend offers this really amazing opportunity for economic transformation,” she said.
“But to have that to be positive, you need education, and particularly STEM education, given the developments in the global economy. And Africa lags behind in STEM education overall.
“A lot of estimates point to the millions of jobs that are going to be needed in healthcare, engineering, IT, AI, where we know something now, but we don’t know how it’s going to evolve,”she said.
Boluwatife Enome
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