African Development Bank: New report highlights Africa’s strengthening economic growth amid global challenges

According to the African Development Bank's 2025 Macroeconomic Performance and Outlook (MEO) report, which was released on Friday, Africa's economic performance is improving but is still susceptible to shocks from around the world.

The analysis, which was presented during the 38th Ordinary Session of the African Union Assembly in Addis Ababa, predicts that real GDP growth will pick up speed in 2025, reaching 4.1 percent, and in 2026, reaching 4.4 percent. Economic reforms, falling inflation, and better debt and budgetary conditions are all credited with the forecast.

Notwithstanding the encouraging trend, the research emphasizes that Africa's growth rate is still below the 7 percent mark needed to significantly reduce poverty. In addition, the continent still faces long-running wars in areas like the Sahel and the Horn of Africa, structural flaws, climate-related calamities, and geopolitical tensions. Africa's average real GDP growth in 2024 was projected to be 3.2 percent, which was marginally higher than the 3.0 percent growth in 2023.

According to the paper, tighter monetary policies are likely to cause Africa's average inflation rate to drop from 18.6% in 2024 to 12.6% in 2025–2026, even if inflationary pressures are still there.

From 4.4 percent of GDP in 2023 to 4.6 percent in 2024, fiscal deficits have slightly increased, but by 2025–2026, they are expected to drop to 4.1 percent. With nine nations in debt crisis and eleven at high danger of distress, public debt levels have steadied but are nonetheless higher than they were before to the epidemic.

The Bank releases the MEO every two years in the first and fourth quarters, meeting the urgent need for up-to-date economic data in the face of uncertainties around the world. Policymakers, international investors, development partners, scholars, and other stakeholders are among its clients.

24 African countries, including Djibouti, Niger, Rwanda, Senegal, and South Sudan, are predicted by the 2025 research to have GDP growth rates of more than 5% in 2025. Furthermore, with 12 of the 20 fastest-growing economies predicted to be in Africa, the continent continues to be the second-fastest-growing area in the globe, behind Asia.

Ato Ahmed Shide, Ethiopia's finance minister, commended the report's thoroughness of analysis. He emphasized the need for aggressive policy steps to sustain growth and stability, saying, "It underscores the fragility of Africa's economic growth, which is projected to hover around 4 percent in the near term."

He said that Ethiopia has made aggressive moves to strengthen resilience, restore macroeconomic stability, and quicken growth, with the government placing a high priority on budgetary restraint, economic reform, and private sector empowerment.

Nnenna Nwabufo, Vice President for Regional Development, Integration, and Business Delivery at the African Development Bank, emphasized the continent's potential to propel global economic expansion in her remarks at the report's launch. However, she also stated that doing so calls for decisive and well-coordinated policies.

"To strengthen resilience and promote sustainable growth, governments must take a forward-looking stance as Africa negotiates an increasingly difficult economic environment. Nwabufo, speaking on behalf of Dr. Akinwumi Adesina, president of the Bank Group, stated, "Africa's economic resilience and growth prospects remain strong, but challenges persist."

The Bank Group's Chief Economist and Vice President for Economic Governance & Knowledge Management, Prof. Kevin Urama, presented the research and emphasized the necessity of better coordinating fiscal and monetary policy in order to control inflation and promote economic growth.

In addition to proactive debt restructuring to avert defaults and improve financial stability, he urged nations to fortify their foreign reserves to protect their economy against outside shocks and currency depreciations.

Increasing investments in integrated infrastructure should be a part of medium- to long-term initiatives to promote economic diversification and transformation. According to Urama, governments must endeavor to improve the business climate by implementing long-term plans to draw in private investment and reforming regulations.

Key policy recommendations are outlined in the 2025 MEO report. These include investing in integrated infrastructure to support economic diversification, implementing preemptive debt restructuring to improve financial stability, and enhancing the business environment through investment strategies and regulatory reforms.

The significance of completing continental development projects, like the African Continental Free Trade Area accord, was emphasized in panel discussions that took place after the report's release. Accelerating new projects, such as the African Financial Stability Mechanism and the projected Africa Credit Rating Agency, was another topic of discussion.

The African Risk Capacity Group, represented by its chair, Dr. Mothae Maruping, contributed to the panel, which was moderated by Dr. Victor Oladokun, Senior Advisor (Communications and Stakeholder Engagement) to the Bank Group President. Seedy Keita, the finance minister of the Gambia, emphasized the African Development Bank's assistance in carrying out the nation's domestic revenue mobilization and fiscal reforms.

Albert Muchanga, the trade commissioner for the African Union, urged the corporate sector to support the African Continental Free Trade Area by investing more in manufacturing and logistics. "I would anticipate that African companies would establish warehouses and logistics hubs around the continent, and that the private sector in Africa would begin preparing to establish an African shipping company. The corporate community has not reacted, so we are sitting on potential," Muchanga stated.