CEM REPORT, ECONOMY | West Africa’s GDP is expected to shrink to 2.8 per cent in 2024. This is a decline from the earlier projected 3.3 per cent.
Akiwunmi Adesina, AfDB President
The decline is attributed to subsidy removal and unification of the foreign exchange market in Nigeria.
The African Development Bank (AfDB) in its revised economic outlook for the African economy in 2024, projects that Africa’s economies will experience a growth of 3.8 per cent. A revision from earlier May prediction of 4.3 per cent.
The economic outlook documents details 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.
For West Africa, the bank reported that Ghana’s debt problems and the effects of terrorism in the Sahel could cascade the Africa’s GDP growth down from 3.3 per cent to 2.8 per cent in addition to subsidy removal and unification of the foreign exchange market in Nigeria.
The continuous security and political challenges in Chad, D.R. Congo, Gabon and Equatorial Guinea are expected to account for a 0.8 per cent decline in Central Africa. AfDB notes that the projected decline in Africa’s GDP growth is broad-based and billed to affect 33 countries in the continent.
Furthermore, Africa’s oil-dependent economies are predicted to see a decline in GDP to 3.5 per cent from 3.7 per cent, while non-resource-intensive economies are expected to experience an increase in economic growth.
“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.
“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.”.
AfDB attributed the Africa’s GDP 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.
AfDB further highlighted that high inflation coupled with weakening currencies in many African countries are some of the macroeconomic factors affecting growth in the continent.
[READ ALSO] Cocoa Prices Soar as Production Fall in Ivory Coast and Ghana
The report attributed the downward projection in Africa’s GDP growth for the continent to several factors, including a sluggish post-COVID-19 recovery, climate change shocks, political instability, weak global growth, and elevated interest rates.
“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.”
Additionally, it highlighted geopolitical risks as significant impediments to growth in Africa, citing recent coups, the renewed Israel-Palestine conflict, and the ongoing Russia-Ukraine war.
However, despite the downward revision, economic growth in Africa is still above the global average and that of any economic region except Asia.
