East Africa To Lead Africa’s Growth Rebound In 2024- Report

By Jean-Pierre Afadhali

African economies remain resilient amid multiple shocks, with their average growth projected to stabilize at 4.0 percent in 2024–25, nearly one percentage point higher than the 3.1 percent estimated in 2023, revealed the Africa Economic Outlook report launched  on Thursday in Nairobi, Kenya.

The report released by the African Development Bank during the Annual Meetings, looks into the continent’s economic performance and the challenges that hinder its growth.

Speaking during the report launch Dr AKinwumi Adesina, the president of AFDB group said Africa still faces many challenges to finance its economic development, including the high cost of borrowing.

“The era of cheap money is gone,” said Dr Adesina.

The projected rebound in Africa’s average growth will be led by east Africa (up 3.4 percentage points) and Southern Africa and West Africa (each rising by 0.6 percentage points), noted the AFDB’S flagship report.

“East Africa is expected to bounce back as Africa’s fastest growing region, with real GDP growth rising from an estimated 1.5 percent in 2023 to 4.9 percent in 2024 and 5.7 percent in 2025,” read the AFDB report. The downward revision of 0.2 per- centage points for 2024 compared with the forecast in the January 2024 MeO (Marco-economic  Performance Outlook) is due to larger-than-expected contractions in Sudan and South Sudan due to the ongoing conflict in the former.

Meanwhile, growth in Central Africa is expected to moderate from 4.3 percent in 2023 to 4.1 percent in 2024 before improving strongly to 4.7 percent in 2025. The upgraded forecast of 0.6 per- centage point for 2024 over the January 2024 projections is attributable to expectations of stronger growth in Chad and the Democratic Republic of Congo due to expectations of favourable metal prices.

Growth to pick up in West Africa

The Africa Economic Outlook report states the growth is projected to pick up in West Africa, rising from an estimated 3.6 percent in 2023 to 4.2 percent in 2024 and consolidating at 4.4 percent the following year. This is an upgrade of 0.3 percentage points for 2024 over the January MeO 2024 projections, reflecting stronger growth upgrades in the region’s large economies—Côte d’Ivoire, Ghana, Nigeria, and Senegal.

In North Africa, growth is projected to decline from an estimated 4.1 percent in 2023 to 3.6 percent in 2024 and 4.2 percent in 2025, with a downward revision of 0.3 percentage point for 2024 from the January 2024 MeO. except for Libya and Mauritania, growth has been revised downward for all other countries in the region.

Growth in Southern Africa is projected to pick up slightly from an estimated 1.6 percent in 2023 to 2.2 percent in 2024 and firm up to 2.7 percent in 2025. The growth rates for 2024 and 2025 show an upgrade of 0.1 percentage point over the January 2024 projections, mainly reflecting a 0.7 percentage point increase

in South Africa’s projected growth. Due to South Africa’s larger weight in the region, the upgraded growth forecast offset the com- bined effect of downward revisions in Angola, Botswana, Lesotho, Zambia, and Zimbabwe.

Growth in non-resource-intensive economies to improve

Average growth in non-resource–intensive economies is projected to improve from an estimated 4.8 percent in 2023 to 5.3 percent in 2024 and 5.6 percent in 2025. This growth is underpinned by increased public investments in major growth sectors and substantial capital outlays on critical public infrastructure includ- ing electricity, transport, and logistics.

Growth for tourism-dependent economies is projected to decelerate from 5.8 percent in 2023 to 4.7 percent in 2024 and further to 3.9 percent in 2025. This deceleration reflects the stabilization of tourism numbers to trend levels, with projected slower economic growth in Mauritius and Seychelles as the key driver for the group.

Average growth in oil-exporting countries is expected to decline from an estimated 3.7 percent in 2023 to 3.5 percent in 2024 but could pick up the pace to 4 percent in 2025.

Growth in other (non-oil) resource-intensive economies on the continent is estimated to improve strongly from 0.3 percent in 2023 to 2.7 percent and consolidate at 3.3 per- cent projected for 2024 and 2025. The sharp increase in growth will be driven largely by rebound in China’s demand for metals and minerals linked to expansions in smart grids and construction.

Growth in other (non-oil) resource-intensive economies on the continent is estimated to improve strongly from 0.3 percent in 2023 to 2.7 percent and consolidate at 3.3 per- cent projected for 2024 and 2025. The sharp increase in growth will be driven largely by rebound in China’s demand for metals and minerals linked to expansions in smart grids and construction.

Consumer price inflation increases

Average consumer price inflation in Africa is estimated to have increased by 3 percent- age points to 17 percent in 2023, from 14 percent in 2022. The increase reflects a com- bination of higher local food prices induced by

drought-related domestic supply shortages, liquidity overhangs from pandemic-related fiscal and monetary policy stimulus undertaken in 2020– 21, and the pass-through effects of currency depreciation against a strong US dollar propelled

Public debt is declining but still above pre- pandemic levels, highlighting the severity of the debt burden on the continent. Africa’s average public debt ratio, which rose from 54.5 per- cent of GDP in 2019 to 64 percent in 2020, stabi- lized at around 63.5 percent from 2021–23 and is expected to decline further to around 60 percent from 2024—halting a decade-long upward trend.

AFDB report notes  mix of policies is needed in the short, medium, and long terms to address Africa’s macroeconomic challenges and put economies back on the path of sustained, higher growth.