Although sub-Saharan Africa (s-SA) is likely to grow 5.4 percent in 2012‚ the region continues to face downside risks from the financial crisis in the eurozone.

In an s-SA region report released on Monday‚ Moody's said that while direct financial linkages between the financial sectors in the euro area and s-SA were limited‚ selected African markets had significant exposures to banks in European countries under market stress.

“The various banking systems across s-SA have differing levels of exposure to European banks in view of their varying levels of development‚ diverse market structures and range of buffers. These elements combine to provide effective cushions from any financial shocks stemming from the euro area.”

The report noted that the strong economic renaissance that the region had recorded since the mid-1990s was likely to continue in 2012‚ but that some of the region’s banking sectors faced downside risks from the ongoing euro area debt crisis‚.

“Moody's notes that various structural attributes effectively cushion most economies in the region from the impact of ongoing deleveraging in the euro area‚” it said.

The significant surge in growth that had been recorded across s-SA over the past decade had positioned the region as one of the two strongest-performing developing regions‚ second only to the developing countries in the Asia-Pacific region‚ the report noted.

Economic diversification; greater trade integration‚ particularly with other high-growth developing countries; improved political and macro-economic stability across the continent; and reforms of the business and investment environments‚ were some of the factors that had driven s-SA’s growth according to the report.

“These trends have led to growth across s-SA‚ including in non-commodity-exporting countries‚” the report noted.

Moody’s has identified four additional transmission channels for shocks from Europe‚ which the rating agency plans to discuss in forthcoming reports‚ including a decline in trade; volatility in foreign direct investment and portfolio flows; deteriorating remittances; and lower foreign aid.