Africa’s economy improving but remains vulnerable to shocks – Report

Africa’s economic performance is showing signs of improvement but remains vulnerable to global shocks, according to the 2025 Macroeconomic Performance and Outlook (MEO) report.

The report, unveiled on the sidelines of the 38th Ordinary Session of the African Union Assembly in Addis Ababa, projects real GDP growth to accelerate to 4.1 percent in 2025 and 4.4 percent in 2026. The forecast is attributed to economic reforms, declining inflation, and improved fiscal and debt positions.

“Growth rates above 5 percent are expected in close to half of the continent’s countries in 2025; 12 of the world’s 20 fastest-growing economies will be African,” it said.

Despite the positive trajectory, the report highlights that Africa’s growth remains below the 7 percent threshold required for substantial poverty reduction.

“The continent continues to grapple with geopolitical tensions, structural weaknesses, climate-related disasters, and prolonged conflicts in regions such as the Sahel and the Horn of Africa. It estimated Africa’s average real GDP growth to be 3.2 percent in 2024, slightly higher than the 3.0 percent recorded in 2023.

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The report notes that while inflationary pressures persist, Africa’s average inflation rate is expected to decline from 18.6 percent in 2024 to 12.6 percent in 2025-2026 due to tighter monetary policies.

Fiscal deficits have widened slightly from 4.4 percent of GDP in 2023 to 4.6 percent in 2024 but are projected to narrow to 4.1 percent by 2025-2026. Public debt levels have stabilised but remain above pre-pandemic levels, with nine countries in debt distress and eleven at high risk of distress.

The report, published by the Bank biannually in the first and fourth quarters, responds to a critical 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 nations, including Djibouti, Niger, Rwanda, Senegal, and South Sudan, as poised to exceed 5 percent GDP growth in 2025. Additionally, Africa remains the world’s second-fastest-growing region after Asia, with 12 of the 20 fastest-growing economies projected to be on the continent.

Ato Ahmed Shide, Ethiopia’s Finance Minister, said Ethiopia has taken bold steps to restore macroeconomic stability, build resilience, and accelerate growth, with the government prioritising economic liberalisation, private sector empowerment, and fiscal discipline.

Also, Nnenna Nwabufo, Vice President for Regional Development, Integration, and Business Delivery at the African Development Bank, highlighted the continent’s potential for driving global economic expansion but said achieving this requires decisive and well-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 Nwabufo, who represented the Bank Group’s President, Akinwumi Adesina.