Speaking in Arusha, Tanzania, at the weekend, director of the Africa Department, Antoinette Sayeh, said there were clear indications it was following that of the more developed countries.
“They are now also at the centre of the storm. Heightened risk aversion has already led to a sharp decline in capital flows to emerging economies,” she said.
“Ample reserves, low levels of sovereign debt, and sound economic policies will help some weather the storm more easily than others, but all will be faced with reduced growth prospects in 2009.”
While sub-Saharan Africa remained less integrated in global financial markets, it was not immune from global events.
“Banking systems might be weakened through a decline in the quality of their credit portfolios, losses on other financial assets such as deposits with troubled foreign correspondent banks, or capital repatriations by troubled parent banks – which are often foreign-owned,” Sayeh said.
The impact of the crisis was being felt in southern Africa’s capital and foreign exchange markets. Exchange rates in many countries had come under severe pressure in recent weeks, and equity markets had fallen sharply.
Inflation remained above most countries’ comfort levels. – Sapa