Africa's economy forecast to grow positively in 2025

(Source: News Central)

Africa's economy is showing signs of improvement but remains vulnerable to global shocks, according to the Macroeconomic Performance and Outlook 2025 (MEO) report released by the African Development Bank (AfDB) on Friday.

The report, released on the sidelines of the 38th Ordinary Session of the African Union Council in Addis Ababa, forecasts that real GDP growth in the region will rise to 4.1% in 2025 and 4.4% in 2026. This improvement is driven by economic reforms, lower inflation, and improved fiscal and public debt conditions.

However, the report also points out that current growth is still below the 7% threshold needed to significantly reduce poverty. Africa continues to face geopolitical tensions, structural weaknesses, climate-related disasters, and persistent conflicts in some regions such as the Sahel and the Horn of Africa. Africa’s average real GDP growth in 2024 is estimated at 3.2%, slightly higher than 3.0% in 2023.

The report also notes that while inflationary pressures remain, Africa’s average inflation rate is expected to decline from 18.6% in 2024 to 12.6% in 2025-26, driven by tighter monetary policies. The fiscal deficit has increased slightly from 4.4% of GDP in 2023 to 4.6% in 2024, but is forecast to decline to 4.1% in 2025-26. Public debt levels have stabilized, but remain higher than pre-pandemic levels, with nine countries in debt distress and 11 at high risk.

The MEO Report, published by the AfDB twice a year in the first and fourth quarters, addresses the urgent need for timely economic data amid global uncertainty. It serves policymakers, development partners, global investors, researchers and other stakeholders.

The 2025 Report identifies 24 African countries, including Djibouti, Niger, Rwanda, Senegal and South Sudan, that are expected to grow by over 5% of their GDP in 2025. Africa remains the second fastest growing region in the world, after Asia, with 12 of the 20 fastest growing economies in Africa.

Ethiopian Finance Minister Ato Ahmed Shide praised the report’s in-depth analysis. “It underscores the fragility of Africa's economic growth, which is projected to hover around 4% in the near term," he said, emphasising the need for proactive policy measures to sustain growth and stability. 

He also mentioned that Ethiopia has taken bold steps to restore macroeconomic stability, strengthen resilience and accelerate growth, with a focus on economic liberalization, strengthening the role of the private sector and maintaining fiscal discipline.

Ms. Nnenna Nwabufo, AfDB Vice President for Regional Development, Integration and Business Services, stressed that Africa has the potential to become an engine of growth for the global economy, but achieving this requires decisive and coordinated policies.

“As Africa navigates an increasingly complex economic landscape, policymakers must adopt a forward-looking approach to reinforce resilience and drive sustainable growth. Africa’s economic resilience and growth prospects remain strong, but challenges persist,” said Ms. Nwabufo, speaking on behalf of AfDB President Dr. Akinwumi Adesina.

African Union Trade Commissioner Albert Muchanga called on the private sector to step up its support for the African Continental Free Trade Area (AfCFTA), including by investing more in logistics and manufacturing.

“What I would expect [African businesses] to do is come up with logistics centres and warehouses across Africa; I would also expect the African private sector to start planning to develop an African shipping line. We are sitting on potential; the business sector has not responded,” said Mr. Muchanga.

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Source: Phaata.com (According to African Development Bank | Freightnews)

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