West Africa’s economic growth to hit 4.4% by 2025, says AfDB
In a significant forecast by the African Development Bank (AfDB), West Africa’s economic growth is projected to accelerate from 3.6% in 2023 to 4.2% in 2024 and further to 4.4% in 2025. This optimistic outlook was presented by AfDB Vice-President and Chief Economist Kevin Urama during the highlight of the African Economic Outlook 2024, held on the sidelines of the bank’s annual meetings in Nairobi.
Theme of the Meetings: Driving Africa’s Transformation
The annual meetings, themed “Driving Africa’s Transformation: The Reform of the Global Financial Architecture,” provided a platform for discussing Africa’s economic trajectory amid global financial reforms. Urama emphasized that the upward revision in growth projections for West Africa, particularly for its major economies—Côte d’Ivoire, Ghana, Nigeria, and Senegal—reflects a promising economic recovery and resilience.
Economic Resilience Amidst Challenges
Urama highlighted that despite facing multiple shocks, African economies have shown remarkable resilience. The average growth for the continent is expected to stabilize at 4.0% in 2024–25, up from an estimated 3.1% in 2023. This resilience is noteworthy given the backdrop of persistent high food and energy prices, largely due to the ongoing impacts of Russia’s invasion of Ukraine.
Factors Influencing Economic Performance
The report noted that various factors have contributed to the economic slowdown in 2023, including:
– High Food and Energy Prices: Resulting from the sustained effects of geopolitical conflicts.
– Climate Change and Extreme Weather: Affecting agricultural productivity and power generation.
– Political Instability and Conflict: Particularly in specific regions of Africa, further exacerbating economic vulnerabilities.
Projected Economic Rebound
Looking ahead, the AfDB projects a robust rebound in Africa’s real GDP growth, anticipated to rise to 3.7% in 2024 and 4.3% in 2025, surpassing the 4.1% growth recorded in 2022. This rebound is expected as the adverse effects of the aforementioned factors gradually dissipate.
Regional Growth Dynamics
Urama detailed that East Africa is set to lead the growth rebound with an increase of 3.4 percentage points. Meanwhile, both Southern Africa and West Africa are projected to rise by 0.6 percentage points each. Importantly, 40 African countries are expected to post higher growth rates in 2024 compared to 2023, with 17 economies projected to grow by more than 5% in 2024, potentially rising to 25 economies in 2025.
Africa’s Global Economic Standing
With these projections, Africa is set to retain its position as the second fastest-growing region globally, following Asia, for the period 2024-25. The continent’s projected GDP growth is expected to exceed the global average of 3.2% in 2024, underscoring Africa’s growing economic significance.
Sector-Specific Growth Projections
The AfDB report also provided insights into sector-specific growth trajectories:
– Oil-Exporting Countries: Growth is expected to decline from an estimated 3.7% in 2023 to 3.5% in 2024, before potentially picking up to 4% in 2025. This slowdown is attributed to lower oil production targets set by OPEC and disruptions such as the vandalizing of oil pipelines in South Sudan.
– Non-Oil Resource-Intensive Economies: These economies are projected to see substantial growth improvements from 0.3% in 2023 to 2.7% in 2024, consolidating at 3.3% in 2025. This growth will be driven largely by increased demand from China for metals and minerals, spurred by expansions in smart grids and construction.
Implications for Policy and Investment
The positive outlook for West Africa and the broader continent has significant implications for policy and investment. The expected growth can attract increased foreign direct investment, foster economic diversification, and support the development of critical infrastructure. Policymakers are encouraged to focus on creating stable and conducive environments for business and investment to sustain and build upon this growth trajectory.
