AfDB: Africa’s Economic Growth Showing Signs of Improvement amid Global Challenges

Arthur Eriye

The African Development Bank (AfDB), in its 2025 Macroeconomic Performance and Outlook (MEO) report has revealed that Africa’s economic performance is showing signs of improvement but remains vulnerable to global shocks.

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

The report noted 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 stabilized 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 also 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.

Ethiopia’s Finance Minister, Ato Ahmed Shide, praised the depth of analysis of the report. “It underscores the fragility of Africa’s economic growth, which is projected to hover around 4 percent in the near term,” he said, emphasizing the need for proactive policy measures to sustain growth and stability.

In her remarks at the launch of report, Vice President for Regional Development, Integration, and Business Delivery at the African Development Bank, Nnenna Nwabufo, highlighted the continent’s potential for driving global economic expansion but said achieving this requires decisive and well-coordinated policies.

Presenting the report, the Bank Group’s Chief Economist and Vice President for Economic Governance & Knowledge Management, Prof. Kevin Urama, underscored the need for stronger coordination between monetary and fiscal policies to manage inflation while fostering economic expansion.

He urged countries to strengthen foreign reserves to shield economies from external shocks and currency depreciations, alongside pre-emptive debt restructuring to prevent defaults and enhance financial stability.