According to the World Bank report, growth in the region is expected to rebound in 2024, rising from a low of 2.6 percent in 2023 to 3.4 percent in 2024, and 3.8 percent in 2025…reports Asian Lite News
Increased private consumption and declining inflation are supporting an economic rebound in Sub-Saharan Africa, but the recovery remains fragile due to uncertain global economic conditions, growing debt service obligations, frequent natural disasters, and escalating conflict and violence, according to World Bank’s latest Africa’s Pulse report.
The multinational bank suggested transformative policies were needed to address deep-rooted inequality to sustain long-term growth and effectively reduce poverty.
According to the World Bank report, growth in the region is expected to rebound in 2024, rising from a low of 2.6 percent in 2023 to 3.4 percent in 2024, and 3.8 percent in 2025.
However, this recovery remains tenuous, it asserted.
While inflation is cooling across most economies, falling from a median of 7.1 to 5.1 percent in 2024, it remains high compared to pre-COVID-19 pandemic levels.
Additionally, while growth of public debt is slowing, more than half of African governments grapple with external liquidity problems, and face unsustainable debt burdens.
Overall, the report underscored that despite the projected boost in growth, the pace of economic expansion in the region remained below the growth rate of the previous decade (2000-2014) and is insufficient to have a significant effect on poverty reduction.
Moreover, due to multiple factors including structural inequality, economic growth reduces poverty in Sub-Saharan Africa less than in other regions.
“Per capita GDP growth of 1 percent is associated with a reduction in the extreme poverty rate of only about 1 percent in the region, compared to 2.5 percent on average in the rest of the world,” said Andrew Dabalen, World Bank Chief Economist for Africa.
“In a context of constrained government budgets, faster poverty reduction will not be achieved through fiscal policy alone. It needs to be supported by policies that expand the productive capacity of the private sector to create more and better jobs for all segments of society.”
The World Bank’s Africa’s Pulse report called for several policy actions to foster stronger and more equitable growth. These include restoring macro-economic stability, promoting inter-generational mobility, supporting market access, and ensuring that fiscal policies do not overburden the poor.
Africa will account for eleven of the world’s 20 fastest-growing economies in 2024, the African Development Bank Group said in its latest Macroeconomic Performance and Outlook (MEO) of the continent released on Friday.
Overall, real gross domestic product (GDP) growth for the continent is expected to average 3.8% and 4.2% in 2024 and 2025, respectively. This is higher than projected global averages of 2.9% and 3.2%, the report said.
The continent is set to remain the second-fastest-growing region after Asia.
The top 11 African countries projected to experience strong economic performance forecast are Niger (11.2%), Senegal (8.2%), Libya (7.9%), Rwanda (7.2%), Cote d’Ivoire (6.8%), Ethiopia (6.7%), Benin (6.4%), Djibouti (6.2%), Tanzania (6.1%), Togo (6%), and Uganda at 6%.
“Despite the challenging global and regional economic environment, 15 African countries have posted output expansions of more than 5%,” Bank Group President Dr Akinwumi Adesina said, calling for larger pools of financing and several policy interventions to further boost Africa’s growth.
Africa’s Macroeconomic Performance and Outlook, a biannual publication released in the first and third quarters of each year, complements the existing African Economic Outlook (AEO), which focuses on key emerging policy issues relevant to the continent’s development.
The MEO report provides an up-to-date evidence-based assessment of the continent’s recent macroeconomic performance and short-to-medium-term outlook amid dynamic global economic developments.
The latest report is calling for cautious optimism given the challenges posed by global and regional risks. These risks include rising geopolitical tensions, increased regional conflicts, and political instability—all of which could disrupt trade and investment flows, and perpetuate inflationary pressures.
President Adesina emphasised that fiscal deficits have improved, as faster-than-expected recovery from the pandemic helped shore up revenue.
He explained further: “This has led to a stabilisation of the average fiscal deficit at 4.9% in 2023, like 2022, but significantly less than the 6.9% average fiscal deficit of 2020. The stabilisation is also due to the fiscal consolidation measures, especially in countries with elevated risks of debt distress.”
He cautioned that with the global economy mired in uncertainty, the fiscal positions of the African continent will continue to be vulnerable to global shocks.
The report shows that the medium-term growth outlook for the continent’s five regions is slowly improving, a pointer to the continued resilience of Africa’s economies.
Presenting the key findings of the report, the African Development Bank’s Chief Economist and Vice President, Prof. Kevin Urama said: “Growth in Africa’s top-performing economies has benefitted from a range of factors, including declining commodity dependence through economic diversification, increasing strategic investment in key growth sectors, and rising both public and private consumption, as well as positive developments in key export markets.”
He added: “Africa’s economic growth is projected to regain moderate strength as long as the global economy remains resilient, disinflation continues, investment in infrastructure projects remains buoyant, and progress is sustained on debt restructuring and fiscal consolidation.”
ALSO READ: UK man reaches his goal of running the length of Africa