The African Development Bank (AfDB) has revised its economic outlook for the period, lowering its growth projection for the continent’s economy from 4.3% to 3.8% in 2024. The bank had previously predicted in May that the continent’s economy would grow by 4.0 Cortana% in 2023 and 4.3% in 2024; now, it expects the continent to grow by 3.4% in 2023 and 3.8% in 2024. Africa’s economy is still growing faster than the world average and faster than any other economic region outside of Asia.
The bank explained that the downward forecast in GDP growth for the continent is predicated upon slow post-COVID-19 recovery, climate change shocks, political instability, weak global growth and high interest rates.
It mentioned the recent spate of coups in Africa, the renewed Israel-Palestine conflict and the lingering Russia-Ukraine war as highlights of geopolitical risk stifling growth in the continent.
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It stated, “The downward revision is attributed to multiple factors – the scarring long-term effects of COVID-19, geopolitical tensions and conflicts, climate shocks, a slowdown in the global economy, and constrained fiscal space to adequately respond to shocks and preserve economic activity.”
Also, the bank noted that the projected decline in GDP growth is broad-based and billed to affect 33 countries in the continent.
In the regional outlook for the continent, growth in Central African countries will decline by 0.8% to 4.1% in 2023. It reported that persistent security and political challenges in Chad, D.R Congo, Gabon and Equatorial Guinea are responsible for the decline.
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For West Africa, the bank reported that subsidy removal and unification of the foreign exchange market in Nigeria coupled with Ghana’s debt problems and the effects of terrorism in the Sahel could drag the region’s GDP growth down from 3.3% to 2.8%.
Also, the report noted that African economies largely dependent on tourism and oil sales could see a drop in economic growth while non-resource-intensive economies will see an increase in economic growth.
The report states, “Across country groupings, for Africa’s tourism-dependent countries, growth is projected to decline from 9.3% in 2022 to 5.9% in 2023, before moderating to 4.1% in 2024. Oil-exporting countries are expected to see a marginal decline from 4.4% in 2022 to a projected 3.7% and 3.5% in 2023 and 2024, respectively.
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“Growth in non-resource-intensive economies is projected to rise to 4.8% in 2023, reflecting a 0.5 percentage point upward revision from 2022, and to rise further to 5.3% in 2024.”
The bank attributed the growth decline in oil-dependent economies to stem from oil production cuts aimed at shoring up falling oil prices, tightening global financial conditions and high inflation strangling growth in non-oil sectors of those economies.
The bank further highlighted that high inflation coupled with weakening currencies in many African countries are some of the macroeconomic factors affecting growth in the continent.
