In its latest report, IMF said the regional economic outlook is “generally subdued and uneven” as countries in the region continue grappling with macroeconomic imbalances.
The latest projected growth, down from April forecast of 3.8%, is expected to show a modest rebound next year to 4.2 percent.
“This pace is not sufficient to significantly reduce poverty or to recover ground lost in recent years, let alone address the substantial developmental challenges ahead,” said Abebe Selassie, Director of IMF’s African department.
“It is also still far from the 6-7 percent growth rates the region enjoyed until about a decade ago,” Selassie added.
The average growth also masks considerable differences among countries in the region.
For example, Selassie mentioned that 9 of the World’s 20 fastest growing economies are in Sub-Saharan Africa.
“Those with more diversified economic structures are the ones doing better,” Selassie continued. “In contrast, in many resource intensive countries, growth is very anemic and poverty is rising sharply.”
Overall, the IMF said internal and external imbalances have started to narrow mainly reflecting policy adjustments but the picture is varied.
The regional GDP-weighted headline inflation is projected to decline fro18.1% in 2024 to 12.3% in 2025.
“Inflation continues to decline, and budget deficits have begun to narrow, reverting to pre-crisis levels,” Selassie said.
“Debt-to-GDP ratios are also stabilizing albeit at a high level, which are positive signs for the region’s economic health.”.
However, challenges persist.
Inflation is still in double digits in almost one-third of
countries, while elevated public debt and rising debt service costs are crowding-out resources for development spending.
MG/abj/APA