Sub-Saharan Africa is poised for a gradual economic upturn in the coming years, buoyed by an enhanced external milieu that diminishes the risk of significant currency devaluations and sovereign defaults, Capital Economics said in a note on March 28. However, the persisting stringency in monetary and fiscal policies across most nations is likely to keep growth rates below the consensus.

Africa has been growing fast, largely driven by its burgeoning demographics, however, analysts warn that growth rates are constrained as concurrent rises in productivity have yet to appear limiting the rates of growth across the continent.

Notably, the region is braced for potential deviations from austerity measures under pressure from the run-up to elections, with South Africa at the forefront of concerns regarding an escalation in public debt apprehensions.

In Nigeria, a recent policy shift has catalysed a return to growth momentum, crucial for attracting essential foreign investment and stabilising the naira. Despite the impending inflation hike and anticipated monetary tightening, the government's relaxed fiscal approach may counterbalance immediate impacts. Yet, this poses a risk of accruing macroeconomic imbalances detrimental to Nigeria's long-term growth trajectory.

South Africa's burgeoning economic optimism may have overshot realistic expectations. Although GDP growth in 2024 is set to outpace 2023, it is expected to remain subdued. The looming fiscal risks, particularly around the May elections, could compel the South African Reserve Bank (SARB) to sustain elevated interest rates.

Kenya stands as a beacon of above-consensus growth from 2024 to 2026, driven by improved weather conditions, eased balance of payments pressures, and declining inflation and interest rates.

Conversely, Angola is stuck in continued economic stagnation, with diminishing oil production and prices threatening the nation's external stability and heightening the risk of the kwanza's depreciation. Our growth forecasts for Angola remain significantly below consensus.

Ghana's journey towards recovery from its recent debt predicament is anticipated to gain momentum, supported by receding inflation and interest rates. Despite the drag of stringent fiscal policies, growth is expected to outstrip most predictions.

The economies of East Africa, including Ethiopia, Tanzania and Uganda, are projected to experience a temporary slowdown this year. However, a revival is on the horizon over 2025-26 as inflation abates, with energy-related projects fuelling some of the region's most robust growth rates.

Elsewhere in Africa, enhanced copper and cocoa prices are set to mitigate production hurdles for Zambia and Côte d'Ivoire, bolstering growth prospects. Zambia's newly secured debt relief deal is pivotal for attracting vital external financing.

Meanwhile, Mozambique's economic future remains intertwined with the fruition of key LNG projects, holding the promise of substantial economic benefits.

 

Africa Key Macro Forecasts (% y/y)
	Share of World	GDP				Inflation
		2023	2024f	2025f	2026f	2023	2024f	2025f	2026f
Nigeria	0.78	3.3	2.8	3	3.3	18.8	33.8	17.5	10.3
South Africa	0.58	1.9	1.3	1.5	1.8	5.9	5.3	4.8	4.8
Ethiopia2	0.22	5.3	5	5.5	5.5	33.8	27	18.3	17.3
Kenya	0.19	4.8	5.8	5.5	5	7.5	6.3	5.8	5
Angola	0.15	3.3	0.5	0.8	1.3	21.4	25.3	19.5	17.5
Ghana	0.13	3.1	5	5.3	5.8	31.9	18.5	13	13.3
Tanzania	0.13	4.7	5.3	5.5	6.3	4.3	3.5	5.5	5.3
Côte d'Ivoire	0.11	6.7	6	5.5	6	5.2	2.5	2	1.5
Uganda	0.08	4.6	5.5	6.3	6.5	7.2	4.8	6	5.5
Zambia	0.05	4.7	2.8	4.3	5	11	12	7.5	9.5
Mozambique	0.03	4.2	4	5.5	6.8	8.9	3.5	5.8	6.5
Sub-Saharan Africa	2.5	3	2.9	3.9	3.8	15.3	16.3	18.2	11.5
US	15.5	2.5	2.4	2	3	4.1	2.9	2.3	2.3
China1	18.4	9	4.5	3.5	2.9	0.2	0.5	1	1
Euro-zone	11.9	0.5	0.2	1.2	1	5.4	2.2	2	1.8
Sources: IMF, National Sources, Capital Economics. 1) Based on our China Activity Proxy (CAP), 2) Fiscal Years.