AFRICAN ECONOMIC OUTLOOK 2024 : Driving Africa’s Transformation The Reform of the Global Financial Architecture

African Development Bank Group

2024

Despite entrenched structural challenges and susceptibility to exogenous shocks, most African economies have shown remark -able resilience. Over the past four years, they have had to contend with multiple overlapping exogenous shocks, including persistently high food and energy prices on the back of the sustained impacts of Russia’s invasion of Ukraine and other geopolitical tensions, climate change and extreme weather events on agricultural productivity and electricity generation, and pockets of political instability and conflicts. Against this backdrop, Africa’s average growth in real GDP decelerated to an estimated 3.1 percent in 2023 from 4.1 per cent in 2022, slowing the momentum of economic recovery, as successive shocks weakened post-pandemic gains.The forecast for 2024–25 looks promising, as global economic conditions brighten, creating optimism for a rebound and sustained economic growth across Africa. Real GDP growth is projected to rise to 3.7 percent in 2024 and consolidate higher at 4.3 percent in 2025. The sustained increase in Africa’s aver -age GDP growth underscores its resilience and benefits of policies instituted to mitigate impacts of underlying shocks and put economies back on a higher growth trajectory. This resilience is broadbased, ensuring that Africa remains the second-fastest growing region in the world after developing Asia. To underscore this, 40 countries are set to post higher growth in 2024 relative to 2023, and 15 are projected to grow by more than 5 percent in 2024. Further, 10 African countries will be among the world’s top 20 fastest growing economies, a trend sustained for more than a decade.Whereas Africa’s resilience amid global headwinds is a welcome development, challenges remain not only in strengthening the continent’s growth, but in ensuring that growth brings about sustainable economic and social transformation in the lives and livelihoods of Africa’s citizens. Therefore, there is much work to be done. Although Africa’s real GDP grew on average at 3.8 percent annually across the four decades preceding the COVID-19 period, this growth has been too little to offset increases in population growth. Over the four decades, therefore, per capita real GDP growth rates have been consistently the lowest in the world. This is partly because the pace of structural transformation has remained slow and uneven and the structure of most African economies has not changed much since the 1990s. Traditional sectors continue to drive Africa’s growth and employment. The structural transformation that has been observed across the continent has lacked a marked level of industrialization. Instead, it reflects the reallocation of economic activities and employment from agriculture to other relatively low productivity sectors, most notably in personal and retail services, rather than more productivity enhancing manufacturing. For instance, despite accounting for 42 percent of the continent’s workforce, productivity in the agricultural sector is still 60 percent lower than the average productivity of the economy.

English

African Development Bank

Book