The World Bank has upgraded its growth forecast for sub-Saharan Africa to 3.8 percent in 2025 from 3.5 percent, citing falling inflation, stabilising currencies and renewed investment in major economies such as Ethiopia, Nigeria and Côte d’Ivoire.
In its newly released report, the Bank said the region is gradually recovering from a decade of global shocks, with private consumption and investment showing renewed momentum.
The October 2025 edition of Africa’s Pulse highlights that following a trough in 2023, regional economic activity is set to expand further, with growth expected to accelerate to an annual average of 4.4 percent in 2026–27.
Median consumer price inflation has declined from a peak of 9.3 per cent in 2022 to 4.5 per cent in 2024, and is projected to stabilize between 3.9 and 4.0 per cent annually over 2025–26.
“These favourable conditions are fueling a recovery in private consumption and investment,” reads the report.
Andrew Dabalen, the World Bank’s Chief Economist for Africa, said most regional currencies that had weakened against the U.S. dollar have now stabilised.
“Most of the currencies which were catering relative to the US dollar have now recovered and are stable,” he said, noting that the softer dollar, down nearly 10 percent since the start of the year, has also supported emerging markets.
The Bank upgraded forecasts for Ethiopia, Nigeria, and Côte d’Ivoire, pointing to rising real incomes and renewed investor confidence in these economies. However, Dabalen warned that the recovery remains gradual after a decade of successive shocks, high debt and low productivity.
“While this marks a gradual recovery from a decade of successive shocks, the rebound has yet to gain strong momentum,” the report states.
Despite improved growth prospects, the World Bank stressed that long-term stability hinges on employment generation, especially for the continent’s growing youth population. Dabalen emphasised the need to support small and medium-sized enterprises (SMEs), which are key drivers of job creation.
He warned that youth unemployment and underemployment have already triggered unrest in countries such as Nigeria, Kenya and Madagascar.
The report also cautioned that trade uncertainty, particularly surrounding the future of the U.S.-Africa trade pact (AGOA), and persistent debt vulnerabilities remain significant risks.
While declining inflation has allowed many central banks to ease monetary policy, high interest payments on public debt continue to strain government budgets, diverting funds from essential services.
MG/as/APA