Overview

Africa Economy Growth Outlook

Africa's economy has faced significant challenges in recent years, driven by both external and internal factors. In 2023, the continent's real GDP growth slowed to 3.2%, down from 4% in 2022, as a result of global crises including inflation, climate change, and geopolitical tensions. These challenges, particularly exacerbated by the war in Ukraine and its impact on food and energy prices, hindered the post-pandemic recovery efforts.

Africa's contribution to global GDP remains modest, at just 3%, despite housing nearly 1/5th of the world’s population. The continent's manufacturing sector is also underdeveloped, with only 2% of the world’s manufacturing value added (MVA). Northern and Western Africa lead in MVA contribution, while Eastern and Central Africa continue to lag.

Inflation has surged across Africa, with average consumer price inflation rising from 14.2% in 2022 to 18.2% in 2023. This increase has eroded many socioeconomic gains made before the pandemic, as food and energy prices rise sharply. Despite aggressive monetary policy interventions, structural inflationary pressures remain high.

The continent's labor market continues to struggle, particularly for youth. In sub-Saharan Africa, 72% of young adults were engaged in insecure forms of employment in 2023. Additionally, Africa’s youth unemployment rate stood at 8.9%, with significant gender disparities, as young women face higher unemployment rates than men.

Another significant challenge is the continued economic influence of France through the CFA Franc, used by 14 former African colonies. Despite their political independence, these nations are required to deposit a portion of their foreign reserves in French treasury accounts, with France controlling exchange rates. This limits their economic autonomy, slows growth, and perpetuates dependency, hindering efforts to alleviate poverty and fully realize their economic potential.

Despite ongoing challenges, Africa remains the second fastest-growing region globally, trailing only Asia. Key countries such as South Africa, Egypt, Ethiopia, Nigeria, and Algeria continue to attract substantial investments. As of 2024, Africa dominates the list of the world's 20 fastest-growing economies. While the continent demonstrates economic resilience, external pressures including rising debt, inflation, global market instability, and geopolitical tensions, pose significant obstacles to sustained growth. However, Africa’s young and expanding population presents long-term opportunities for industrialization and economic transformation.

In 2023, Gauteng remained the largest contributor to South Africa's nominal GDP, representing 33.2%. Following Gauteng were KwaZulu-Natal and Western Cape. Together, these three provinces accounted for a total of 63.4% of the country's nominal GDP.

Future Outlook of Africa's Economy

The economic outlook for Africa is cautiously optimistic, with real GDP growth projected to rise to 4.3% in 2025, according to the African Development Bank. Notably, 40 African countries are expected to experience higher growth rates in 2024 compared to the previous year, with 15 nations projected to expand by more than 5%.

Inflation remains a critical challenge, with an average rate projected to reach 18.4% in 2024 due to persistent high food prices and elevated energy costs, particularly affecting net oil-importing nations. However, inflation is forecasted to moderate over the long term, with expectations of a return to single digits as food and energy prices stabilize and tight monetary policies are maintained.

Thus, Africa's economic landscape is marked by promising growth prospects tempered by challenges, including inflation and external influences. As the continent strives for resilience and transformation, it must capitalize on its potential while safeguarding against predatory practices that threaten its development.

Scope of the Africa Economy Performance Report

Makreo Research has released an in-depth analysis titled " Africa Macroeconomic Growth Outlook- Performance of Industrial, Services and Agriculture Sectors - Edition 2024," providing a comprehensive overview of the continent's economic performance. The report begins by examining the historical and current economic trends across Africa, breaking it down into sub-regions. It explores job market developments, FDI trends, Trade performance (import and exports) and the performance of key industries in the region.

Additionally, the report assesses the economic performance of major countries within Africa, analyzing factors such as GDP, inflation, FDI, job market trends, trade, and the performance of key industries for each country. It highlights both the prominent and emerging industries expected to impact the continent's economic growth. Moreover, it covers the future economic outlook, considering various factors that could influence Africa's growth trajectory. The report also examines the impact of key geopolitical events on Africa's economy and their potential future implications. This thorough analysis provides stakeholders and industry experts with valuable insights into the continent's evolving economic landscape.

• What has been the historical performance of the African economy, and what are its current conditions?

• Which countries are considered the major economies within the African continent?

• How does the GDP performance of the continent appear, and what factors are influencing this performance?

• What has been the inflation rate across various countries and regions in Africa, and what factors contribute to these inflation rates?

• What does the job market look like in Africa, and what is the situation regarding youth unemployment on the continent?

• What is the current scenario for foreign direct investment (FDI) in Africa, and how does FDI vary across different countries and sub-regions?

• What does the trade performance (including import and export) in key African countries look like?

• What are the key industries in Africa, which countries dominate these sectors, and what emerging industries are developing on the continent? How are these industries performing?

• What is the current economic performance of South Africa?

• How is Egypt's economy performing?

• What is the economic situation in Ethiopia, Nigeria and Algeria?

• What does the future outlook for Africa's economy entail, and which geopolitical factors are expected to influence it, as well as those that are currently having an impact?