April 17, 2024

Africa dominates list of the world’s 20 fastest growing economies in 2024

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Africa will account for 11 of the world’s 20 fastest growing economies in 2024, the African Development Bank Group (AfDB) states in its latest Macroeconomic Performance and Outlook (MEO) of the continent.

Overall, real gross domestic product (GDP) growth for the continent is expected to average 3.8% and 4.2% in 2024 and 2025, respectively. This is higher than projected global averages of 2.9% and 3.2%, the report says. The continent is set to remain the second-fastest growing region after Asia.

The top 11 African countries projected to experience strong economic performance forecast are Niger (11.2%), Senegal (8.2%), Libya (7.9%), Rwanda (7.2%), Cote d’Ivoire (6.8%), Ethiopia (6.7%), Benin (6.4%), Djibouti (6.2%), Tanzania (6.1%), Togo (6%) and Uganda at 6%.

“Despite the challenging global and regional economic environment, 15 African countries have posted output expansions of more than 5%,” AfDB group president Dr Akinwumi Adesina says, calling for larger pools of financing and several policy interventions to further boost Africa’s growth.

The MEO, a biannual publication released in the first and third quarters of each year, complements the existing African Economic Outlook, which focuses on key emerging policy issues relevant to the continent’s development. The MEO report provides an up-to-date evidence-based assessment of the continent’s recent macro-economic performance and short- to medium-term outlook amid dynamic global economic developments.

The latest report is calling for cautious optimism, given the challenges posed by global and regional risks. These risks include rising geopolitical tensions, increased regional conflicts and political instability – all of which could disrupt trade and investment flows, and perpetuate inflationary pressures.

Adesina emphasises that fiscal deficits have improved, as faster-than-expected recovery from the pandemic helped shore up revenue. He explains further: “This has led to a stabilisation of the average fiscal deficit at 4.9% in 2023, like 2022, but significantly less than the 6.9% average fiscal deficit of 2020. The stabilisation is also due to the fiscal consolidation measures, especially in countries with elevated risks of debt distress.”

He cautions that with the global economy mired in uncertainty, the fiscal positions of the African continent will continue to be vulnerable to global shocks.

The report shows that the medium-term growth outlook for the continent’s five regions is slowly improving, a pointer to the continued resilience of Africa’s economies.

Presenting the key findings of the report, the AfDB’s chief economist and vice-president, Professor Kevin Urama, says: “Growth in Africa’s top-performing economies has benefited from a range of factors including declining commodity dependence through economic diversification, increasing stra­tegic investment in key growth sectors, and rising both public and private consumption, as well as positive developments in key export markets.

“Africa’s economic growth is projected to regain moderate strength as long as the global economy remains resilient, disinflation continues, investment in infrastructure projects remains buoyant, and progress is sustained on debt restructuring and fiscal consolidation,” he adds.

“The future of Africa rests on economic integration. Our small economies are not competitive in the global market. A healthy internal African trade market can ensure value-added and intra-African production of manufactured goods,” comments Commissioner for Economic Development, Trade, Tourism, Industry and Minerals of the African Union Commission, Ambassador Albert Muchanga.

He assures that the MEO forecast and recommendations will be made available to African heads of state and that the report will be useful when the African Union makes its proposals to the G20: an informal gathering of many of the world’s largest economies to which the African Union was admitted last year.

The improved growth figure for 2024 reflects concerted efforts by the continent’s policymakers to drive economic diversification strategies focused on increased investment in key growth sectors, as well as the implementation of domestic policies aimed at consolidating fiscal positions and reversing the increase in the cost of living and boosting private consumption.

Zimbabwe’s Minister of Finance and Economic Development, Prof. Mthuli Ncube, describes the report as being “on point” and consistent with the reality in his country, describing it as useful for economic planning across Africa. He urges the AfDB to continue its thought leadership to help policymakers continue to build resilience to withstand shocks and drive growth.

He says: “Zimbabwe expects slower growth due to climate shocks in the region. Southern African countries depend on agriculture for economic growth, so climate-proofing agriculture is key. We are in talks with creditors to restructure its debt, which is slowing economic growth. Internally, the country will focus on economic and governance reforms and reforms around property rights to increase agricultural production.”

Up to 41 countries across the continent will, in 2024, achieve an economic growth rate of 3.8% – and in 13 of them, growth will be more than 1 percentage point higher than in 2023.

Director of the Center for Sustainable Development at Columbia University, Prof. Jeffrey Sachs, notes that long-term affordable financing must be part of Africa’s strategy to achieve growth of 7% or more per year, and warns that Africa is paying a very high-risk premium for debt financing. He calls for this point to be made to the G20.

“Long-term development cannot be based on short-term loans. Loans to Africa should be at least 25 years or longer. Short-term borrowing is dangerous for long-term development. Africa must act as one, in scale,” he explains.

Sachs, who is the UN Secretary-General António Guterres’ Advocate for Sustainable Development Goals, also calls for a much larger African Development Bank, better resourced to meet Africa’s financing needs.

Overview of economic outlook across regions

The confluence of shocks notwithstanding, the resilience of the continent’s economies remains strong, with positive growth projected for the continent’s five regions.

  • East Africa – East Africa will continue to lead Africa’s growth momentum, with growth projected to rise to 5.1% in 2024 and 5.7% in 2025, supported by strong strategic investments to improve internal connectivity and deepen intra-regional trade.
  • North Africa – Successive adverse weather conditions and macro-economic challenges will hold the region’s growth steady at 3.9% in 2024, with a slight improvement to 4.1% in 2025.
  • Central Africa – Growth is forecast to moderate to 3.5% in 2024, but projected recovery in private consumption and increases in mining investment and exports could help push growth to 4.1% in 2025.
  • Southern Africa – Growth will remain sluggish at 2.2 and 2.6% in 2024 and 2025, respectively. This reflects continued economic weakness in South Africa, the region’s largest economy.
  • West Africa – Growth is projected to pick up to 4% and 4.4% in 2024 and 2025, respectively. Strong growth in most countries in the region is projected to offset slowdowns in Nigeria and Ghana. The announced withdrawal of Burkina Faso, Mali and Niger from the Economic Community of West African States casts a shadow over the sustainability of gains amid growing uncertainty.

Driving faster and more sustainable economic growth

The 2024 MEO says in the short term, tackling persistent inflation will need a mix of restraining monetary policy coupled with fiscal consolidation and stable exchange rates.

The report identifies structural reforms and strategic industrial policies as key to accelerating economic diversification and strengthening the export sector.

It recommends that countries invest more in human capital and pursue a resource-based industrialisation and diversification strategy that allows the continent to exploit its comparative advantage and build resilience to shocks.

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