The fund added that the escalation of geopolitical tensions will increase the suffering of countries from rising import prices, or even cause these countries to lose access to major export markets, which could affect about half of the value of the country. international trade in the region.
It is estimated that sub-Saharan Africa could experience a 4% decline in GDP after 10 years under this extreme binary polarization.
The situation of these countries could deteriorate if capital flows to them were affected, which could cause permanent damage to long-term economic development. The IMF report estimates that foreign direct investment in the region could decline by up to $10 billion.
The report stressed that “countries need to build their resilience, and this can be achieved by strengthening regional trade integration.” Deepening domestic financial markets can also lead to expanding sources of funding and reducing the volatility associated with overreliance on foreign flows.
And the IMF warned in a previous report that African countries are facing their toughest economic challenges this century with much-needed financing evaporating, selling dollar bonds over the past year.
And with what the world is currently experiencing the strongest monetary policy tightening in major economies in decades, this has led to the minting of African countries’ currencies and driving them away from funding markets, at a time when donor funding also fell, pushing public debt and inflation to high levels, the highest in decades.
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