World Bank: New growth forecasts for 10 largest African economies in 2023 and 2024
If new growth forecasts from the World Bank are to be believed, a strong recovery in the long-awaited growth of African economies will not happen this year. It should be noted that the global economic situation is not the most favorable.
Inflation, tighter global financial conditions, food price tensions and supply chain disruption exacerbated by the Russia-Ukraine war are among the main factors holding back economic growth. Added to these parameters are the uncertainty of budget situations, the burden of debt services, the strong depreciation of African currencies and the fall in prices of some raw materials… All these factors have a negative impact on growth. African economies. . Added to these factors affecting all African economies are those specific to each country’s short-term and/or structural challenges.
Thus, “compared to the forecasts of June, growth in 60% of countries, including more than 70% of metal exporters, which should be punished due to the continuous decline in world prices, has been revised downwards,” the World Bank report emphasizes. .
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These declines have particularly affected the continent’s major economies. Thus, for Sub-Saharan Africa’s top three economic powers, “the growth of the three largest economies in sub-Saharan Africa – South Africa, Angola and Nigeria – has fallen sharply to just 2.6% in 2022”.
Nigeria, the continent’s leading economic powerhouse, is expected to register a growth rate of 2.9% in both 2023 and 2024. The country, which depends on the production of black gold, did not really benefit from the good performance of oil prices in 2022, recording an increase of about 3.1. % and should suffer from falling oil prices in 2023. The country suffers from high inflation and a shortage of foreign exchange and faces a huge debt service burden.
As for South Africa, in addition to the factors mentioned above, the continent’s most industrialized economy suffers from the heavy impact of timely power outages on the country’s economy.
Some countries will show significant growth, despite downward revisions to forecasts. This is followed by Ethiopia (5.3% in 2023e and 6.1% in 2024p), Tanzania (5.3% in 2023e and 6.1% in 2024p) and Kenya (5.0% in 2023e and 5.3%) in 2024p. These are generally agriculture-based economies and engage in infrastructure development programs that compound their growth.
However, the food systems of some of these countries, “already struggling with high agricultural costs and weather-related production losses, remain particularly vulnerable to future disruptions that could lead to higher food prices and aggravated food insecurity,” the agency explained.
Also read: South Africa: Still “fragile” economy with GDP down 0.7%
At the level of North African countries, while Egypt should show the strongest growth in the region (4.5% in 2023 and 4.8% in 2024), the country is experiencing a sharp economic crisis due to the results of previous reforms. Inflation of more than 21% is worrying, reducing real wages and posing a risk to domestic consumption.
Recent devaluations, which have caused the Egyptian pound to lose more than 100% against the dollar in less than a year, will add to inflationary pressures. Added to this is the impact of lower growth in external demand, which affects the manufacturing and tourism sectors, which are the country’s main foreign exchange earners. In addition, the World Bank report said that “fiscal and monetary policy tightening to curb high inflation and a large current account deficit are expected to further restrain growth.”
In Morocco, “growth is expected to accelerate to 3.5% in 2023 (a slower pace than previous forecasts) and to 3.7% in 2024 as the agricultural sector gradually recovers from last year’s drought. Public spending should partially offset weakness in household consumption due to high inflation,” the World Bank said.
As for Algeria, despite the level of oil prices per barrel, its GDP growth will be sluggish, settling at 2.3% in 2023, slowing to 1.8% in 2024p. This situation can be explained by the strong dependence of the Algerian economy on hydrocarbons and its inability to diversify.
New World Bank growth forecasts for major African economies for 2023 and 2024
|country||GDP growth in 2022||GDP growth in 2023||GDP growth in 2024 p|
Source: World Bank
Unlike major African economies, it should be noted that a number of countries will record high growth rates despite unfavorable economic conditions. All categories combined, the growth premium at the continental level is Senegal (8.0% in 2023e and 10.5% in 2024p), Niger (7.1% in 2023e and 10.1% in 2024p), Rwanda (in 2023 6.7%) should be given. 7.0% in 2024p), DRC (6.4% in 2023e and 6.6% in 2024p) and Mauritania (5.1% in 2023e and 7.9% in 2024p).