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IMF: Sub-Saharan Africa to Grow Above World Average in 2024

IMF: Sub-Saharan Africa to Grow Above World Average in 2024

In its World Economic Outlook Update, released at the end of January, the International Monetary Fund (IMF) predicted that GDP growth in sub-Saharan Africa should increase from an estimated 3.3 per cent in 2023 to 3.8 per cent in 2024 and 4.1 per cent in 2025.

The forecast for 2024 represents a downward revision of 0.2 percentage points compared to the previous report, released in October last year. According to IMF analysts, this drop is related to the reduction in the growth estimate for South Africa by 0.8 percentage points (from 1.8 per cent to just 1 per cent) due to increasing logistical constraints, particularly in transport.

Sub-Saharan Africa: less inflation, more investment and debt reduction

At the Media Briefing on Sub-Saharan Africa, held on 5 February, the IMF’s director for Africa, Abebe Aemro Selassie, was more optimistic, saying that “as we recently reported in the World Economic Outlook Update, what we see in Sub-Saharan Africa is a continuation of the recovery in economic activity in 2024. Also on the positive side, we see inflation continuing to decelerate, having peaked earlier this year, as average inflation is around 6 per cent, which is about 4 percentage points lower than at the beginning of 2023. Domestic and foreign investment has been recovering since last year, and finally, on the political side, we see governments making a big effort to stabilise public debt.”

Despite this favourable scenario, Ethiopia’s Abebe Aemro Selassie acknowledges that this year’s forecast expansion of 3.8% is below the region’s potential and that the external environment remains difficult: “Global financing conditions, although they have eased, are still very demanding for most countries, as evidenced by the continued pressure on exchange rates. Capital flows also remain modest, despite Ghana’s issue a few weeks ago that marked its re-entry into the capital market, something that should also happen soon with Kenya.”

In his opinion, another of the pressing challenges for sub-Saharan Africa in 2024 is the fight against climate change, and he spoke favourably of the agreement between Cape Verde and Portugal to convert the country’s foreign debt into investment to speed up the climate transition.

World economy: more China and the United States, less Europe

According to the same IMF report, world GDP should increase by 3.1 per cent in 2024, which represents an upward revision of 0.2 percentage points compared to the last Outlook. This increase is largely explained by the resilience shown by the US economy, which is expected to grow by 2.1 per cent this year (an increase of 0.6 percentage points).

Forecasts for China were also revised upwards (up 0.4), whose GDP will expand by 4.6 per cent, below the 5 per cent “threshold” set by the Chinese government, which aims to stimulate the economy in order to accelerate growth, while India will be the most dynamic country with 6.5 per cent expansion (up 0.2 per cent on October’s estimate).

Europe is heading in the opposite direction. The IMF revised its growth forecast for 2024 downwards to 0.9 per cent (0.3 percentage points less). The main culprit is Germany, where GDP will expand by just 0.5 per cent (0.4 points less than in October), while still managing to reverse the 0.3 per cent contraction estimated for 2023. France, Italy and Spain also saw their forecasts revised downwards and should see modest growth in 2024. The same will happen in other major economies such as Japan, the United Kingdom and Canada.

However, the good news, according to IMF analysts, is that inflation is falling at a higher rate than expected (forecast at 5.8 per cent in 2024 and 4.4 per cent in 2025), which will bring down interest rates and energy prices, thus stimulating investment and employment.

“Slow but resilient” are the words that summarise the economies of 2024.

How the major economies will grow from 2024 to 2025…

India 6.5% + 0.2 p.p. 6.5%

China 4.6% + 0.4 p.p. 4.1%

Sub-Saharan Africa 3.8% – 0.2 p.p. 4.1%

Global average 3.1% + 0.2 p.p. 3.2%

Nigeria 3% – 0.1 p.p. 3.1%

Mexico 2.7% + 0.6 p.p. 1.5%

Saudi Arabia 2.7% – 1.3 p.p. 5.5%

Russia 2.6% + 1.5 p.p. 1.1%

United States 2.1% + 0.6 p.p. 1.7%

Brazil 1.7% + 0.6 p.p. 1.9%

Spain 1.5% – 0.2 p.p. 2.1%

South Africa 1% – 0.8 p.p 1.3%

See Also

France 1% – 0.3 p.p 1.7%

Japan 0.9% – 0.1 p.p 0.8%

Italy 0.7% = 1.1%

United Kingdom 0.6% = 1.6%

Germany 0.5% – 0.3 p.p 1.6%

(*) Change in the GDP growth forecast compared to the previous report
(World Economic Outlook, October 2023) in percentage points (p.p).
Source: IMF World Economic Outlook Update, 31 January

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