Over the next two years, Africa is expected to outpace the rest of the globe in terms of economic growth, with real gross domestic product (GDP) averaging about 4% in 2023 and 2024.
According to the African Development Bank Group’s assessment on the region’s macroeconomic performance and outlook, which was published on Thursday in Abidjan, this is higher than the expected 2.7% and 3.2% global averages.
Despite confronting considerable challenges brought on by global socio-economic shocks, the report’s extensive regional growth analysis demonstrates that all five of the continent’s regions are resilient and have a stable prognosis for the medium term. It also called for strong monetary and fiscal measures supported by structural policy to address possible concerns.
Every year, the first and third quarters will see the publication of the Macroeconomic Performance and Outlook report. It completes the bank’s yearly African Economic Outlook report, which emphasizes important new policy strands important to the continent’s advancement.
According to the analysis, the anticipated average real GDP growth in Africa fell to 3.8% in 2022 from 4.8% in 2021 because of serious difficulties brought on by the Covid-19 shock and Russia’s invasion of Ukraine. In spite of the global economic slump, 53 of Africa’s 54 nations experienced growth. With a stable outlook for the medium term, all five of the continent’s regions continue to be resilient.
The report does, however, provide a warning over the prognosis in light of recent global and regional challenges. These dangers include escalating food and energy costs, tightening international financial conditions, and the resulting rise in the cost of servicing local debt. Climate change poses equally difficult risks because of its detrimental effects on the local food supply and the potential for policy reversals in nations holding elections in 2023.
To assist African economies in reducing the dangers that keep mounting, the report encourages strong policy efforts at the national, regional, and international levels.
African Development Bank Group President Dr. Akinwumi Adesina stated during remarks at the report’s introduction that it was published at a time when African economies were demonstrating their resilience in the face of considerable challenges.
“Given that there are 54 countries, each with a unique economic structure, resource endowment, and stage of development, the pass-through impacts of global shocks inevitably vary by region and by nation. Therefore, the effects on African economies of slowing global demand, tighter financial conditions, and disrupted supply networks varied, he said. “Growth across all five African areas was positive in 2022, despite the confluence of many shocks, and the outlook for 2023–24 is forecast to be steady.”
The publishing of this report by our bank, the African Development Bank Group, at this time of year is a fantastic opportunity for Africa and its international partners, according to Niale Kaba, Minister of Planning and Development of Côte d’Ivoire. To evaluate the macroeconomic performance and prospects of our countries, we require these frequent reports. Potential investors in Africa will benefit from this trustworthy information’s assistance in making decisions and managing risks.
The top five performing economies in Africa before to COVID-19 are anticipated to expand by an average of more than 5.5% in 2023–2024 and restore their place among the world’s 10 fastest–growing economies. These nations are Tanzania (5.6%), Benin (6.4%), Ethiopia (6.0%), Rwanda (7.9%), and Côte d’Ivoire (7.1%).
It is anticipated that other African nations will expand by more than 5.5% between 2023 and 2024. They are The Gambia (6.4%), Mozambique (6.5%), the Democratic Republic of the Congo (6.7%), Niger (9.6%), Senegal (9.4%), and Togo (6.3%).
At the report’s release, economist Jeffrey Sachs, director of the Center for Sustainable Development at Columbia University, praised it for demonstrating how rapidly and steadily African economies are expanding.
“Africa can and will climb to growth of 7 percent or more per year continuously in the future decades,” said Sachs, who also serves as Antonio Guterres’ advocate for the Sustainable Development Goals. Building on the resilience we see in this research, we may expect to see a genuine acceleration of Africa’s sustainable development, making it the region of the world economy that is growing the fastest. The best location to invest is in Africa.
Brave policy moves can assist African economies in reducing the risks that keep mounting
The report urges drastic action to reduce the risk. A variety of monetary, fiscal, and structural policies are among them, such as:
In countries where inflation is severe, monetary policy should be tightened promptly and aggressively, and slowly in those where inflationary pressures are minimal. The mechanisms to reduce inflationary pressures will be further strengthened by coordination with fiscal policy.
increasing intra-African trade, particularly in industrial goods to protect economies from fluctuating commodity prices, to increase resilience
Enhancing transparency, reducing illicit financial flows, and scaling up domestic resource mobilization all need accelerating structural reforms to increase tax administration capability.
Enhancing institutional governance, passing legislation to leverage private sector funding, especially for greenfield projects that are resilient to pandemics and climate change, and mobilizing African resources for inclusive and sustainable development.
reducing structural budget deficits and the buildup of public debt in nations that are either already in fiscal trouble or are at significant risk of entering it.
overview of regional economic outlook
All five of Africa’s regions experienced solid growth in 2022 despite the convergence of numerous shocks, and the forecast for 2023–24 is expected to be stable.
South Africa –
The continent’s growth is predicted to have been the fastest at 4.7%, up from 3.6% in 2021, buoyed by favorable commodity prices.
Growth in Southern Africa slowed down the greatest, from 4.3% in 2021 to roughly 2.5% in 2022. This downturn is a result of South Africa’s economy being burdened by high borrowing rates, sluggish domestic demand, and frequent power outages.
West Africa – It is predicted that growth will have decreased from 4.4% in 2021 to 3.6% in 2022. This is due to slowdowns in the two biggest economies in the area, Côte d’Ivoire and Nigeria. Despite being hindered by Covid-19, instability, and low oil output despite increased international oil prices, Nigeria’s growth in 2023 should gain from continued attempts to reestablish peace in the unrest-plagued oil-producing region.
Due to the severe contraction in Libya and the drought in Morocco, it is predicted that growth in North Africa will have decreased by 1.1 percentage points to 4.3% in 2022 from 5.4% in 2021. The forecast robust rebound in the two nations and ongoing growth elsewhere in the area will help growth settle at 4.3% in 2023.
Growth in East Africa is predicted to have slowed from 5.1% in 2021 to 4.2% in 2022. It is anticipated that in 2023 and 2024, it will return to the pre-pandemic level of above 5.0%. East African nations are primarily net importers of goods, despite the region’s relatively diverse production structure. As a result, they suffer the most from high global pricing as well as frequent climate shocks and insecurity, notably in the Horn of Africa.
Acting Chief Economist and Vice President of the African Development Bank Kevin Urama noted in his presentation that Africa is still a desirable location for investments in infrastructure, human capital, private sector development, and natural capital.
According to Urama, Africa can significantly contribute to inclusive growth and sustainable development on a global scale. In important areas like agriculture, energy markets, minerals, the pharmaceutical and healthcare infrastructure industries, light manufacturing, transportation and logistics, the digital economy, and more, there are numerous chances for wise investments. For wise investors worldwide, the continent is still a gold mine.
