AfDB Report: Africa’s Economic Growth Shows Improvement Despite Global Challenges

The African Development Bank (AfDB) has revealed signs of economic recovery for Africa in its 2025 Macroeconomic Performance and Outlook (MEO) report, although challenges remain. The report, presented at the African Union Assembly in Addis Ababa, projects a GDP growth of 4.1% in 2025 and 4.4% in 2026, driven by economic reforms, reduced inflation, and better fiscal management. Despite the positive outlook, Africa’s growth rate is still below the 7% target needed for significant poverty reduction, and the continent faces geopolitical tensions, climate-related issues, and ongoing conflicts, particularly in the Sahel and Horn of Africa regions.

Inflation remains a concern, but is expected to decrease from 18.6% in 2024 to 12.6% in the following years, as monetary policies tighten. Fiscal deficits have slightly increased, but are expected to narrow in the next two years. Public debt levels have stabilized but remain high, with many countries still at risk of debt distress. The AfDB report is an important tool for stakeholders, providing critical data to guide policy decisions amidst global uncertainties.

The report also highlights the progress of several African countries, with 24 nations, including Djibouti, Niger, Rwanda, and Senegal, predicted to experience GDP growth above 5% in 2025. Africa remains the world’s second-fastest-growing region, with 12 out of the 20 fastest-growing economies projected to be on the continent. The report underscores Africa’s potential to drive global economic growth, yet stresses the need for coordinated and decisive policy measures to achieve sustained progress.

Ethiopian Finance Minister Ato Ahmed Shide praised the report’s insights but warned of the fragility of the region’s economic growth. AfDB officials, including Prof. Kevin Urama, emphasized the need for stronger coordination between fiscal and monetary policies, along with proactive steps to manage inflation, stabilize foreign reserves, and restructure debt to avoid defaults. These measures are seen as crucial for building financial stability and fostering long-term growth in Africa.

SOURCE: THISDAY