Sub-Saharan Africa is bracing itself for a slowdown in economic growth, with projections indicating a decline from 3.6 per cent in 2022 to 2.5 per cent in 2023, as per the latest World Bank forecast.
The World Bank released its findings on Wednesday, October 5, underlining a grim economic outlook for Africa, characterized by sluggish growth recovery. It emphasised the urgent need for stability, increased growth, and job creation to avert a potential "lost decade."
ALSO READ: World Bank official talks support for disaster-struck families
Andrew Dabalen, the World Bank's Chief Economist for Africa, highlighted that the region's poorest and most vulnerable populations are disproportionately affected by this economic deceleration, leading to sluggish poverty reduction and limited job opportunities.
"With up to 12 million young Africans entering the labor market across the region each year, it has never been more crucial for policymakers to revamp their economies and provide better job opportunities for the people," Debalen stressed.
The report reveals that regional growth is projected to slow to 2.5 per cent in 2023, dropping from 3.6 per cent in the previous year, with an anticipated rebound to 3.7 per cent next year and 4.1 per cent in 2025. However, in per capita terms, the region has not experienced positive growth since 2015, as economic activity has failed to keep pace with the rapid increase in population.
The report also notes that while approximately 12 million Africans join the labor market annually, the current growth patterns generate only 3 million jobs in the formal sector.
South Africa, the continent's most developed economy, is expected to grow by a mere 0.5 per cent this year, primarily due to its severe energy crisis. Similarly, economic growth in Nigeria and Angola, top oil-producing nations, is anticipated to slow to 2.9 per cent and 1.3 per cent, respectively. Sudan, amidst a major internal armed conflict, faces a significant 12 per cent contraction. Excluding Sudan, regional growth is estimated at 3.1 per cent.
Bright spots
Despite domestic challenges and uncertain global growth, the World Bank identifies "pockets of resilience" within the region. For instance, the Eastern African community is projected to achieve a growth rate of 4.9 per cent in 2023, while the West African Economic and Monetary Union (WAEMU) anticipates a growth rate of 5.1 per cent.
Analysing the speed and persistence of per capita growth over two timeframes --2001-2019 and 2022-2025 -- the report shows that a few countries, including Rwanda, Benin, Côte d'Ivoire, Ethiopia, Mauritius, and Uganda, had demonstrated economic resilience, maintaining growth rates above 2.5 per cent in both periods
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
However, the report raises concerns about the quality and sustainability of this growth in the future.
ALSO READ: Rwanda projected to register highest GDP growth in region
According to the World Bank, Rwanda's economic activity had a robust start in 2023, with real GDP growing by 9.2 per cent year-on-year in the first quarter, following an 8.2 per cent increase in 2022. The Bank attributes this expansion to robust growth in private consumption and increased net exports.
While inflation is on a downward trend, it remains above central bank targets in most regional countries, including Rwanda. Contributing factors include a global demand slowdown, easing global supply chain disruptions, lower commodity prices, and contractionary monetary policies, all leading to lower inflation. In 2023, inflation is expected to decrease to 7.3 per cent, down from 9.3 per cent in 2022.
Inflationary pressures stem from higher food and fuel prices, coupled with weaker domestic currencies, disproportionately affecting the income and consumption of the poor who allocate a larger portion of their income to food.
