Africa’s GDP Growth Rate to Accelerate to 4.1% in 2023-2024 vs. 3.8% in 2022

Growth in Africa will rise, but only gradually, according to the forecast of the African Development Bank (ADB). Growth averaged 3.8% last year, with a 3.4% increase in global GDP, and is expected to accelerate to 4.1% over the next two years. Most countries are no longer running ultra-high inflation or budget deficits, while many have high current account deficits, raising the risk of higher food or energy prices.

African GDP growth rates in 2023-2024 will accelerate to 4.1% against 3.8% in 2022 (and 4.8% in 2021), follows from the review of the African Development Bank (global economic growth last year amounted to 3.4%. In 18 countries, this figure will exceed 5% this year, next year their number may increase to 22. This forecast takes into account the recovery of the Chinese economy, as well as the gradual easing of monetary policy in developed countries amid slowing inflation, the bank says.

For most countries, statistics on growth rates, inflation, the state of the current balance and budget do not show any incredible figures, economic recession in the next two years is expected only in Equatorial Guinea, but only a few countries will show extremely high growth rates, among them Libya ( plus 13%) and Niger (9.4%). The Democratic Republic of the Congo is also among the leaders in growth (7.6%), in the CAR growth will be only 2.4%. In Somalia and Sudan, growth rates will remain within 3%. On average, higher growth rates will be observed in East Africa, lower ones in South Africa. Growth in oil exporters, in turn, will support higher commodity prices.

Inflation in Africa is mostly in single digits, with 20 countries already below 5%. Zimbabwe remains the leader in price growth – in the next two years it may reach 84.2% (long-term hyperinflation has already led to the fact that the country officially uses the US dollar, the central bank also resorts to issuing a digital currency pegged to gold). In addition to Zimbabwe, above 20% inflation is expected only in Sudan, Sierra Leone, Ethiopia and Ghana. With foreign trade, the situation is different – most countries are expected to maintain a high current account deficit against the backdrop of significant volumes of food and fuel imports (in this case, the inflow of funds into the country can be provided by money transfers from abroad – their total volume so far exceeds the inflow of direct investment). The highest surplus is in Libya and Djibouti (in both cases more than 20%), the deficit is in Mozambique (25%). According to the state of the budget, most countries are in the “green” zone (the deficit does not exceed 3% of GDP), here, however, there is an important exception – Egypt with a deficit of 5.4%, while Libya has a record surplus of 20.5%. The debt burden remains high on average – in 2022, the public debt to GDP ratio decreased from 68% to 65%, this year the ratio may rise to 66%.

Last year, most of the countries of the continent faced the weakening of national currencies against the backdrop of tightening monetary policy and the strengthening of the US dollar – the Zimbabwean dollar depreciated more than others over the year (minus 323.4%), as well as the currencies of Ghana and Sierra Leone (minus 42.5% and minus 34%), the currencies of Angola, Seychelles and Zambia, on the contrary, strengthened. The pace of weakening is expected to slow this year, but in more integrated economies (Kenya, Nigeria, South Africa), pressure on rates will continue to come from capital outflows to developed markets, as well as persistently high food and energy prices. Here, the bank notes, first of all, the risks associated with the continuation of the military operation of the Russian Federation in Ukraine. The increase in the cost of imports, in turn, will lead to an acceleration in price growth – inflation will rise from 14.2% in 2022 to 15.1% in 2023, but will decrease to 9.5% a year later, the bank predicts.

Tatyana Edovina