Africa’s economic performance is showing signs of improvement but remains vulnerable to global shocks, according to the 2025 Macroeconomic Performance and Outlook (MEO) report from the African Development Bank.
The report, unveiled on the sidelines of the 38th Ordinary Session of the African Union Assembly in Addis Ababa, projects real GDP growth to accelerate to 4,1% in 2025 and 4,4% in 2026. The forecast is attributed to economic reforms, declining inflation, and improved fiscal and debt positions.
Despite the positive trajectory, the report highlights that Africa’s growth remains below the 7% threshold required for substantial poverty reduction. The continent also continues to grapple with geopolitical tensions, structural weaknesses, climate-related disasters, and prolonged conflicts in regions such as the Sahel and the Horn of Africa.
It estimated Africa’s average real GDP growth to be 3,2% in 2024, slightly higher than the 3% recorded in 2023.
The report notes that while inflationary pressures persist, Africa’s average inflation rate is expected to decline from 18,6% in 2024 to 12,6% in 2025-2026 due to tighter monetary policies. Fiscal deficits have widened slightly from 4,4% of GDP in 2023 to 4,6% in 2024 but are projected to narrow to 4,1% by 2025-2026. Public debt levels have stabilized but remain above pre-pandemic levels, with nine countries in debt distress and eleven at high risk of distress.
The MEO, published by the Bank biannually in the first and fourth quarters, responds to a critical need for timely economic data amid global uncertainty. It serves policymakers, development partners, global investors, researchers, and other stakeholders.
The 2025 report identifies 24 African nations, including Djibouti, Niger, Rwanda, Senegal, and South Sudan, as poised to exceed 5% GDP growth in 2025. Additionally, Africa remains the world’s second-fastest-growing region after Asia, with 12 of the 20 fastest-growing economies projected to be on the continent.
Nnenna Nwabufo, vice-president for regional development, integration and business delivery at the African Development Bank, highlights the continent’s potential for driving global economic expansion but says achieving this requires decisive and well-coordinated policies.
“As Africa navigates an increasingly complex economic landscape, policymakers must adopt a forward-looking approach to reinforce resilience and drive sustainable growth. Africa’s economic resilience and growth prospects remain strong, but challenges persist,” said Nwabufo.
Presenting the report, Professor Kevin Urama, the Bank group’s chief economist and vice-president for economic governance and knowledge management, underscores the need for stronger coordination between monetary and fiscal policies to manage inflation while fostering economic expansion.
He urges countries to strengthen foreign reserves to shield economies from external shocks and currency depreciations, alongside pre-emptive debt restructuring to prevent defaults and enhance financial stability.
Medium- to long-term strategies should include increasing investments in integrated infrastructure to drive economic transformation and diversification. Governments must work to enhance the business environment through regulatory reforms and long-term strategies to attract private investment, Urama says.
The 2025 MEO report outlines key policy recommendations, including implementing pre-emptive debt restructuring to enhance financial stability, investing in integrated infrastructure to support economic diversification and improving the business environment through regulatory reforms and investment strategies.