Africa to outgrow economic forecast, Afreximbank says

By The Inspirer.

African economies will grow at an average rate of 3.8% in 2024, outpacing the global growth forecast of 3.2, according toThe African Export-Import Bank (Afreximbank).

The predictions are included in the 2024 African Trade Report and the African Trade and Economic Outlook Report, which was unveiled during its 2024 Annual Meetings 2024 held in Nassau, The Bahamas.

The new report is considered a significant milestone in assessing and projecting the economic trajectory of African economies amid global uncertainties.

This growth is expected to further accelerate to 4% in 2025, according to the report, which is titled “A Resilient Africa: Delivering Growth in a Turbulent World.”

It is expected to provide a comprehensive analysis of the economic landscape, trade dynamics, debt scenarios, and future economic projections for African nations, according to Yemi Kale, Yemi Kale, Afreximbank’s Group Chief Economist.

“This performance reflects the resilience of the African economy and the potential impact of the AfCFTA’s single market in protecting the continent from global shocks,” said Kale.

“Our analysis also reveals substantial untapped potential in intra-African trade, particularly in sectors such as machinery, electricity, motor vehicles, and food products.”

The impact of global challenges on Africa’s trade performance led to a contraction of 6.3% in 2023 following a significant expansion of 15.9% in 2022.

However, intra-African trade showed resilience, expanding by 3.2% during the same period, Kale said, emphasizing the importance of the African Continental Free Trade Area (AfCFTA) as a critical tool for mitigating global shocks and enhancing economic resilience.

The report also underscores several downside risks facing African economies, including rising sovereign debt levels and associated sustainability risks, vulnerability to adverse terms-of-trade shocks, escalating geopolitical tensions, volatile domestic political environments, high commodity prices, inflationary pressures, and potential food insecurity.

Despite these challenges, the outlook for 2024 remains positive. Most macroeconomic indicators are expected to improve in 2024 and 2025, with projected growth rates exceeding the global average. Inflation, although currently high, is anticipated to decrease, continuing its downward trend into 2025.

The African Trade Report 2024, also explores the environmental impact of the AfCFTA, noting how continental trade will achieve it’s developmental goals while addressing climate change concerns.

“There are divergent views on the AfCFTA’s climate impact,” DKale explained. “One perspective argues that increased urbanisation and industrialisation will exacerbate carbon emissions. Another perspective suggests that by promoting intra-African trade and reducing reliance on extra-African trade, carbon emissions could be reduced through shorter shipping distances.”

Monique Nsanzabaganwa, Deputy Chairperson of the African Union Commission, hailed the report as a testament of Afreximbank’s pivotal role in shaping Africa’s economic future, “providing valuable insights and strategic directions for policymakers, businesses, and stakeholders across the continent.”

“The bank’s ongoing commitment to promoting trade and economic growth continues to be a beacon of hope and progress for Africa amidst a complex global landscape,” she said.

Afreximbank, founded in 1993, is a leading pan-African multilateral financial institution mandated to finance and promote intra- and extra-African trade.

The bank’s annual meetings are a platform for high-level dialogue among African leaders, policymakers, and experts on trade and economic issues facing the continent. The 2024 edition in Nassau focuses on fostering economic resilience and sustainable growth in Africa, reflecting the bank’s commitment to addressing both current challenges and future opportunities.

theinspirerpublications@gmail.com