According to a new World Bank report, economic growth in Africa is set to slow down from 3.6% in 2022 to 3.1% in 2023 but will bottom out and rise to 3.7% and 3.9% in 2024 and 2025.
Dubbed Africa’s Pulse, the World Bank’s April 2023 economic update attributes the growth deceleration to the slowdown in the global economy, high inflation, and the underperformance of the continent’s largest economies.
“Stubbornly high inflation and low investment growth continue to constrain African economies,” the report said. “While headline inflation appears to have peaked in 2022, inflation is set to remain high at 7.5% for 2023, and above central bank target bands for most countries.”
The bank said growth in the region, excluding large countries such as Angola, Nigeria, and South Africa, is projected at 4.3 per cent in 2023 and set to expand to 5.1% and 5.2% in 2024 and 2025, respectively.
In Eastern and Southern Africa, economic activity would grow at 3.0% in 2023, down from 3.5% in 2022, but accelerate to 3.7% and 3.9% in 2024 and 2025, respectively.
The economic performance of the subregion is dragged down by the underperformance of two of its largest economies, South Africa and Angola.
“In South Africa, economic activity is set to weaken further as structural constraints—particularly, the energy crisis—and headwinds persist. Growth will decelerate to 0.5% in 2023 (from 2.0% in 2022), and it is expected to rebound to 1.3% in 2024 and 1.6% in 2025,” writes the report’s authors.
Excluding South Africa and Angola, the Eastern and Southern Africa subregion is expected to grow at 4.4% in 2023 and is set to speed up to 5.1 and 5.3% in 2024 and 2025, respectively.
In Western and Central Africa, economic activity would grow at 3.4% in 2023, down from 3.7% in 2022, and accelerate to 3.9 and 4.0% in 2024 and 2025, respectively. Nigeria- its largest economy, has dragged down the economic performance of the sub-region.
“The Nigerian economy is set to grow by 2.8% in 2023, down from 3.3% in 2022. It is expected to accelerate slightly to an average annual rate of 3%t in 2024–25.”
Economic activity in the subregion, excluding Nigeria, is set to grow 4.2% in 2023, rising to 5.3% in 2024–25.
In North Africa, double-digit food price inflation will weigh on the region, causing growth to slow to 3% in 2023 after growing 5.8% in 2022.
“Developing Oil Importers in the region, including Djibouti, Morocco, Egypt and Tunisia, grappled with the double hit of high oil and high food prices—both of which they import—and grew very little. The exception is Egypt, which outpaced other oil importers,” the World Bank noted in its Middle East and North Africa update.
World Bank economists expect developing oil importers to grow on average by 3.6% in 2023 and 3.7% in 2024. These projections reflect moderately high growth forecasts for Egypt, expected to grow at 4.0% in both fiscal years 2023 and 2024.
Relative to other developing oil importers in North Africa, Egypt’s forecast reflects the expectation that its competitiveness might be increased due to the recent depreciation of the Egyptian pound, growth in the services sector (mainly tourism and Suez Canal activity) and construction, which will sustain growth.
Excluding Egypt, other developing oil importers are forecasted to grow at lower levels—at 2.8% for 2023 and 3.1% in 2024.
Despite these challenges, many countries in the region showed resilience amid multiple crises.
In Kenya, growth of economic activity remained solid at 5.2% in 2022, thanks to strengthened manufacturing, improved investor confidence, and a more general improvement in risk appetite.
Côte d’Ivoire’s economy grew 6.7%, driven by private consumption and shielded from inflation through increased public wages and investment. Industry and services were the main engines of growth on the production side.
In the Democratic Republic of Congo, growth accelerated to 8.6% in 2022 from 6.2% in 2021. The mining sector—particularly copper and cobalt—was the main driver of growth due to an expansion in capacity and a recovery in global demand.
Growth in Niger Republic would jump by 10.1 percentage points to 11.5% in 2022 on the back of expansion of the agriculture sector after a severe drought that dragged down growth in 2021.
Investment in several infrastructure projects, particularly the construction of the oil pipeline and the Kandadji Dam, boosted growth on the demand side.
Namibia’s economic activity increased to 3.5%in 2022 from 2.7% in 2021. The growth acceleration occurred due to strong mining—particularly increased production of diamonds, copper, and uranium.
Similarly, economic activity accelerated in Mauritius and Mozambique by 8.3 and 4.1 percentage points, respectively, in 2022.
Growth in Mozambique stemmed from increased coal and aluminium output, thanks to high global demand, high prices, and the start of liquefied natural gas exports to Europe, while Mauritius benefited from the recovery in tourism.
The report urges African policymakers to restore macroeconomic stability, deepen structural reforms to foster inclusive growth, and implement policies that seize the opportunities available during the transition to low-carbon economies.
“Rapid global decarbonisation will bring significant economic opportunities to Africa,” said World Bank Senior Economist, James Cust.
“Metals and minerals will be needed in larger quantities for low-carbon technologies like batteries and, with the right policies, could boost fiscal revenues.”
He added that it would also increase opportunities for regional value chains that create jobs and accelerate economic transformation.
bird story agency