AFRICA’S economic growth is expected to gain momentum in 2025, but lingering vulnerabilities pose significant risks, according to the 2025 Macroeconomic Performance and Outlook (MEO) report by the African Development Bank (AfDB). The report, launched at the 38th Ordinary Session of the African Union Assembly in Addis Ababa, projects real GDP growth of 4.1 percent in 2025, rising to 4.4 percent in 2026.
The improved outlook is attributed to economic reforms, lower inflation, and better fiscal management, though growth remains below the 7 percent threshold needed to drive significant poverty reduction.
Growth prospects and challenges
Africa’s economic expansion slowed to 3.0 percent in 2023 but is set to rise to 3.2 percent in 2024 before accelerating in 2025. However, the report warns that global economic uncertainties, geopolitical tensions, and climate-related challenges continue to hinder sustained progress.
While inflation remains a concern, the AfDB projects that average inflation across the continent will decline from 18.6 percent in 2024 to 12.6 percent in 2025-2026, thanks to tighter monetary policies. Fiscal deficits, which widened slightly to 4.6 percent of GDP in 2024, are expected to narrow to 4.1 percent by 2026.
Despite stabilisation efforts, public debt remains above pre-pandemic levels, with nine African nations already in debt distress and eleven at high risk. The report stresses the need for pre-emptive debt restructuring to enhance financial stability.
Africa’s fastest-growing economies
The report identifies 24 African countries poised for GDP growth above 5 percent in 2025, including Djibouti, Niger, Rwanda, Senegal, and South Sudan. Africa continues to rank as the second-fastest-growing region globally, with 12 of the world’s 20 fastest-growing economies located on the continent.
Ethiopia’s Finance Minister Ato Ahmed Shide acknowledged the report’s insights into Africa’s fragile economic recovery, calling for bold policy measures to maintain stability. Ethiopia, he noted, has embraced economic liberalisation, private sector investment, and fiscal discipline to drive growth.
Building economic resilience
Speaking at the report’s launch, Nnenna Nwabufo, AfDB Vice President for Regional Development, stressed the need for proactive policies to strengthen Africa’s resilience in a shifting economic landscape.
‘Africa’s economic resilience remains strong, but navigating current challenges requires well-coordinated policies and long-term investment strategies,’ she said.
Prof. Kevin Urama, AfDB’s Chief Economist, urged African nations to enhance foreign reserves, implement strategic debt restructuring, and foster a stable financial environment to protect against external shocks.
He also highlighted the need for integrated infrastructure investment to drive economic diversification and attract private sector investment through regulatory reforms.
The path forward
The report’s findings sparked discussions on Africa’s economic future, with panellists highlighting the role of regional trade agreements, such as the African Continental Free Trade Area (AfCFTA), in boosting intra-African commerce.
Albert Muchanga, the African Union’s Trade Commissioner, called on African businesses to invest in logistics, manufacturing, and transport infrastructure to strengthen supply chains.
‘We need African businesses to establish logistics hubs, warehouses, and even a regional shipping line. Africa has enormous potential, but the private sector must respond,’ Muchanga said.
The AfDB’s 2025 MEO report offers a clear message: while Africa’s economic outlook is improving, resilient policies, strategic investments, and stronger financial coordination will be crucial in sustaining long-term growth.
