- Nearly 50% of African countries expected to achieve growth rates exceeding 5% by 2025; 12 out of the world’s 20 fastest-growing economies projected to be in Africa.
AFRICA – Recent analysis reveals an uptick in Africa’s economic performance, although the continent continues to face vulnerabilities from global economic fluctuations, as indicated in the African Development Bank’s latest Macroeconomic Performance and Outlook (MEO) report for 2025.
Presented during the 38th Ordinary Session of the African Union Assembly, the findings forecast real GDP growth to reach 4.1% in 2025 and 4.4% in 2026, driven by substantial economic reforms, declining inflation rates, and strengthened fiscal and debt management.
Despite this upward trend, the report warns that growth remains below the critical 7% threshold necessary for significant poverty alleviation. Ongoing challenges such as geopolitical conflicts, structural issues, climate change impacts, and lasting tensions in regions like the Sahel and the Horn of Africa persist. The estimated average real GDP growth for 2024 stands at 3.2%, a modest increase from 3.0% in 2023.
The report highlights control over inflation, anticipating a decrease in the average inflation rate from 18.6% in 2024 to 12.6% during 2025-2026 due to intensified monetary policies. While fiscal deficits are projected to widen slightly from 4.4% to 4.6% of GDP in 2024, they are expected to contract to 4.1% by 2025-2026. Although public debt levels have stabilized, they remain higher than pre-pandemic figures, with nine countries in debt distress and eleven facing high risks.
The MEO, released biannually to furnish policymakers, investors, and other stakeholders with timely economic insights, points to 24 nations, including Djibouti, Niger, Rwanda, Senegal, and South Sudan, as likely to achieve over 5% GDP growth by 2025. Africa is recognized as the second-fastest-growing region globally, following Asia, with a significant number of the world’s rapidly expanding economies located on the continent.
In response to the report, an Ethiopian finance representative commended its analytical depth, noting the fragile nature of the projected economic growth around 4%. The official emphasized the urgency for proactive policy measures to ensure sustained economic development and stability, highlighting Ethiopia’s commitment to enhance macroeconomic stability and resilience through economic liberalization and private sector empowerment.
Strengthening Africa’s economic resilience
At the unveiling of the report, a senior official from the African Development Bank stressed the continent’s potential to be a key driver of global economic growth, urging the need for decisive and coordinated policies to realize this objective.
“To navigate the complexities of the economic landscape, policymakers must take a proactive approach to enhance resilience and promote sustainable growth,” the official stated, affirming that while Africa’s economic prospects are promising, substantial challenges remain.
The report’s chief economist underlined the importance of alignment between monetary and fiscal policies to mitigate inflation and support growth. He called for stronger foreign reserves and proactive debt restructuring to help stabilize economies against external shocks.
Strategic efforts should focus on enhancing integrated infrastructure investments for economic transformation and diversification, while fostering a conducive business environment through regulatory reforms, the economist advised.
The MEO report offers crucial recommendations, advocating for proactive debt restructuring, integrated infrastructure investments to boost diversification, and regulatory reforms to improve investment conditions.
Path forward
Subsequent panel discussions highlighted the necessity of activating continental development initiatives, including the African Continental Free Trade Area agreement, and advancing new proposals like the Africa Credit Rating Agency and the African Financial Stability Mechanism.
The discussions also featured insights from various stakeholders, emphasizing the need for private sector involvement to enhance Africa’s economic initiatives. Urging increased logistics and manufacturing investments, experts called on businesses to capitalize on the continent’s potential.
