The International Monetary Fund (IMF) forecasts a 4.2% economic growth for Africa by 2025, indicating stable but slow progress across the continent. This projection is detailed in the IMF’s October 2024 World Economic Outlook, released during the ongoing Annual Meetings in Washington, D.C.
These Annual Meetings, a collaborative event with the World Bank Group, provide finance leaders with a platform to review the previous year’s global economic developments and to discuss solutions to ongoing challenges.
According to the IMF, while growth for 2024 is expected to remain steady at 3.6%, the Gross Domestic Product (GDP) of Sub-Saharan Africa is anticipated to increase to 4.2% by the end of 2025. IMF Chief Economist Pierre-Olivier Gourinchas noted, “The Sub-Saharan African region is seeing fairly steady growth rates this year compared to last year, at about 3.6%, with an expected increase to about 4.2% next year.” He acknowledged that the region has faced challenges from weather shocks and conflicts, contributing to subdued and uneven growth.
Jean-Marc Natal, Division Chief at the IMF’s Research Department, emphasized that while there has been progress in the region over the past year and a half, growth levels remain “uneven… and too low.” He noted that while inflation is stabilizing in some countries and nearing target levels, many are still far from these goals, with a significant number experiencing double-digit inflation.
Concerns regarding debt levels in the region persist, with Natal stating, “Debt in the region is still high. It has not increased, but it remains too high.” He called for tight monetary policy and fiscal consolidation, particularly in countries experiencing high inflation, to help manage inflation and its broader impacts.
“It’s complicated. In many countries, there are trade-offs… consolidating fiscal policies is difficult when relief efforts are also necessary, as seen in Nigeria due to flooding. Targeting support to the poor and vulnerable is part of the consolidation package,” Mr. Natal added.
In its World Economic Outlook, the IMF projected global economic growth to hold steady at 3.2% for 2024 and 2025. The U.S. economy is expected to cool down, while other advanced economies are set to rebound.
Performance in emerging Asia remains robust, although growth in China has been slightly revised downwards to 4.8% for 2024.
The IMF also revised growth expectations for low-income countries downward, citing ongoing conflicts and climate-related shocks. The organization noted that the battle against inflation, which peaked at 9.4% year-on-year in the third quarter of 2022, is nearly won.
The IMF projects headline inflation to decline to 3.5% by the end of next year, as many countries approach central bank targets.
The report recommends a policy framework that balances monetary policy with fiscal policy and structural reforms to return inflation to near central bank targets.
