Africa's economy to grow second fastest globally – report

International research unit Economic Intelligence has said Africa will be the world’s second-fastest-growing major region in the world, in 2024.

It ranks behind Asia, which will be propelled by China and India.

It says almost all African states will post a positive growth story, with an exception of Sudan and Equatorial Guinea being the only economies that look set to contract this year.

“Indeed, 12 of the world’s 20 fastest-growing economies in 2024 will be in Africa, and Africa's real GDP is forecast to grow by 3.2 per cent in 2024, up from 2.6 per cent in 2023,” EIU says.

“East Africa, encompassing Ethiopia, Kenya, Uganda, Rwanda, Tanzania and the DRC, will once again be the ones powering the continent’s growth prospect.”

This on the back of services sector boom, which is projected to continue playing a major role in driving the economies of East Africa.

Noting the specific sectors, the report highlights the resurgent travel, tourism and hospitality, resilient transport and logistics, and the vibrant financial and telecommunications industries.

Apart from East Africa, EIU says other resource-intensive economies and major commodity exporters in the continent will also continue to do well.

“This is because of the intense competition and high prices for Africa’s supplies of hydrocarbons, mining sector output and agricultural produce,” it says.

Nevertheless, the unit projects that substantial investment will continue to flow into Africa’s energy sector ventures, as well as minerals and metals that are crucial to the global energy transition and digital transformation.

Despite the continental projected growth, it cautions that it faces substantial risks, including security threats, political instability and debt repayment burdens.

It says more countries will be pushing for debt restructuring and relief in the better part of this year.

“Africa nations will feel the financial squeeze created by excessive debt and a heavy debt-repayment burden in 2024, which will weigh on economic growth and stability in some countries,” it adds in part.

“The financial pressure created by elevated external debt has been compounded by the fallout from multiple external shocks in recent years, including the covid-19 pandemic, Russia’s invasion of Ukraine and adverse weather conditions linked to global climate change.”

Further, it anticipates continued currency depreciation across the continent.

This is against the US dollar. However, it notes that adjustments are expected to be less severe than those recorded in 2023.

Matters inflation levels, EIU says the pressures are expected to ease from the more elevated levels recorded in 2023 for all, but a small handful of African countries namely Angola, Seychelles, Sudan and Tanzania, where country-specific factors will push up consumer price inflation.

“An easing of consumer price pressures will be a welcome relief for policymakers and households.

"However, inflation will run strong into 2024 and remain a central story for several large economies as these countries will continue to suffer the economic instability generated by another year of double-digit consumer price inflation, largely driven by elevated oil prices.”