The April 2015 IMF World Economic Outlook (WEO) projected global growth to pick up modestly to 3.5 percent in 2015 and further to 3.7 percent in 2016, a rise from the 3.4 percent recorded in 2014. Downside risks to the growth prospects include a sudden Fed lift-off and slower growth in major emerging economies including China.
The global financial stability risks have elevated since the IMF’s assessment in October 2014, as a result of increased emerging market risks and declined risk appetite (IMF, April 2015 GFSR). For Sub-Saharan Africa (SSA), risks to financial stability remain tilted to the downside and could be undermined by sudden Fed lift-off and large currency depreciations in the region.
The domestic banking sector continued to be sound and solvent in the first quarter of 2015, as most of the key performance indicators showed improvement. However, the sector’s ability to absorb losses as captured by the capital adequacy ratio (CAR) declined marginally during the period.
