Yemisi Izuora/Agency Report
Slowdown in China’s economy has been perceived as a dangerous trend that could pose risk to African countries.
The Managing Director of the International Monetary Fund (IMF), Christine Lagarde, has therefore warned that such scenario may cause hike in United States interest rates.
Lagarde, speaking during a visit to Rwanda, said IMF’s global economic forecasts have been revised down over the past few months despite a huge fall in oil prices.
Lagarde called for “vigilance” across Africa and added this slower growth has implications for a continent that is now more integrated into the global economy than ever before.
“Momentum is slowing in many advanced and emerging economies, including China – one of Africa’s main trading partners,” Reuters quoted Lagarde to have told Rwandan lawmakers in the capital Kigali.
Lagarde said the overall outlook for sub-Saharan Africa was promising at close to five percent, but growth forecasts for the region have been trimmed due to lower oil and commodity prices.
African countries such as Nigeria and South Sudan depend on oil for the majority of their revenues.
Lagarde said some African oil exporters will struggle in case oil prices remain low and warned of instability once the United States starts imminent “monetary policy normalisation”, a move that is expected to see the US raise interest rates.
“Even if this process is well-managed and well-communicated – and I believe that it has been and will be – there could be negative effects for emerging markets and global financial stability. African economies could also be impacted,” she said.Hurt by cooling investment, manufacturing and a sagging housing market, China’s economy grew 7.4 percent last year, a level not seen since 1990 when the country was hit by sanctions after the Tiananmen Square crackdown.