Supporting Africa’s Post-Crisis Growth: The Role of Macroeconomic Policies

Abstract

The objective of this paper is to discussmacroeconomic policies that would helpAfrican countries, especially the lowincome countries (LICs), reach strong,sustained and shared growth in the postcrisisworld. The paper first reviews, witha special focus on LICs, macroeconomicpolicies in Africa prior to the crisis. Itthen discusses factors behind ‘the Africasurprise’ that is the continent’s overallgood performance during the crisis andrelatively fast recovery. It underscoresthat in the aftermath of the crisis, theemphasis of the macroeconomic policyneeds to shift from the objective of verylow inflation that predominated prior tothe crisis towards growth. Fiscal policy iskey in this regard, through public outlayson infrastructure anchored in themedium term expenditure frameworksthat would also have a counter-cyclicalrole. Where conditions allow, frontiermarket LICs may want to consideradopting flexible inflation targetingframeworks that would provide sufficientroom for expansion of credit to theprivate sector.