The continent of Africa will be the second fastest-growing major economy in the world in 2024, according to the Economist Intelligence Unit (EIU), the research and advisory unit of the Economist Group.
With a population surpassing 1.2 billion, the continent is projected to outpace North America, South America, Antarctica, Europe, and Australia in growth estimates for 2024. However, Asia, propelled by China and India, is expected to surpass the continent in growth, according to the EIU.
The research agency’s forecasts about Africa were captured in its “Africa Outlook 2024: Strong Growth Amid Heated Elections and Financial Woes” report published earlier this week.
In its report, EIU said that despite external shocks coming from the COVID-19 pandemic of 2020–2021, the Russia inversion of Ukraine, the rising debt, and the inflationary situation, Africa will post a positive growth story for the coming year.
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It said, “We forecast that Africa will be the world’s second-fastest-growing major region in 2024, just behind Asia, which will be propelled by China and India. Almost all African states will post a positive growth story, with war-torn Sudan and struggling Equatorial Guinea the only economies that look set to contract in 2024.”
The research firm analysed various tools to gauge the macroeconomic strength of nations and found that 12 out of the world’s 20 fastest-growing economies in 2024 will be in Africa.
Notably, the continent, abundant in natural resources, is anticipated to experience a rise in its real GDP, projecting growth from 2.6 percent in 2023 to 3.2 percent in 2024.
It advised foreign investors and economic observers to pay close attention to East African nations, particularly Kenya, Ethiopia, Uganda, Rwanda, and Tanzania.
It said, “East Africa, encompassing Ethiopia, Kenya, Uganda, Rwanda, Tanzania, and the DRC, will once again prove to be the most dynamic part of the continent in terms of economic growth.
“The services sector will continue to play a major role in driving the economies of East Africa, including resurgent travel, tourism, and hospitality; resilient transport and logistics; and vibrant financial and telecommunications industries.
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“Resource-intensive economies and major commodity exporters will continue to do well given the intense competition and high prices for Africa’s supplies of hydrocarbons, mining sector output, and agricultural produce.
“Substantial investment will continue to flow into Africa’s energy sector ventures, as well as minerals and metals that are crucial to the global energy transition and digital transformation.”
Yet, the EIU cautioned about the substantial risk Africa faces in meeting its 2024 economic growth projections due to the strain from excessive external debt. The report underscores that this debt pressure, exacerbated by various recent shocks like the COVID-19 crisis and adverse weather conditions, might impede Africa’s attainment of its growth targets for 2024.
It said, “African nations will feel the financial squeeze created by excessive debt and a heavy debt-repayment burden in 2024, which will weigh on economic growth and stability in some countries.
“The financial pressure created by elevated external debt has been compounded by the fallout from multiple external shocks in recent years, including the COVID-19 pandemic, Russia’s invasion of Ukraine, and adverse weather conditions linked to global climate change.
“Softer economic growth, higher inflation, weaker currencies, and more costly international capital have exposed Africa’s debt frailties in 2023, and risks are likely to mount in 2024 in the absence of external debt restructuring.
“Kenya’s biggest financial event in 2024 is the June 24th deadline to redeem a US$2bn Eurobond in a single bullet payment, on top of other debt-servicing commitments.”
