Sub-Saharan Africa's economic outlook for 2024 presents a picture of gradual recovery, with growth projected to rise from 2.4% in 2023 to 3% in 2024, and reaching 4% by 2025-2026. This recovery is driven by improving private consumption and investment, fueled by easing inflation, which is expected to decline from 7.1% in 2023 to 4.8% in 2024, allowing for potential monetary policy rate cuts. However, the region’s macroeconomic performance remains challenged by high public debt, estimated at 58% of GDP in 2024, and a fiscal deficit projected to improve to 3.3% of GDP. Risks to the outlook include conflict (e.g., in Sudan), climate-related disasters, and the region's vulnerability to external shocks, with 53% of low-income countries facing high risk of debt distress. Addressing these challenges requires fiscal reforms and targeted investments to ensure sustained growth and stability.

1. Growth Outlook in Sub-Saharan Africa:

• Growth Recovery: Economic activity in Sub-Saharan Africa is expected to grow by 3% in 2024, up from 2.4% in 2023, and further accelerate to 4% by 2025-2026​.
• Per Capita Growth: Real income per capita is forecasted to grow by 0.5% in 2024 and 1.4% in 2025​.
• Strong Performers: Countries like Côte d’Ivoire (6.5%), Uganda (6%), and Tanzania (5.4%) are among the top performers expected to post over 5% growth in 2024​.

2. Growth Environment:

• Private Consumption and Investment: These are the main drivers of growth recovery, boosted by easing inflation which is expected to decline from 7.1% in 2023 to 4.8% in 2024​.
• Inflation Decline: Inflation is declining across the region, with around 70% of countries expected to register lower inflation rates in 2024​.
• Monetary Policy: As inflation cools, countries may pursue monetary policy rate cuts, fostering greater investment​.

3. Sub-Saharan Africa's Macroeconomic Performance:

• Public Debt: Government debt remains high at around 58% of GDP in 2024. Sub-Saharan African countries are expected to pay US$19 billion in public external debt service, mostly to private creditors​.
• Fiscal Balance: The median fiscal deficit is projected to decrease from 3.9% of GDP in 2023 to 3.3% of GDP in 2024, with efforts to raise revenue and reduce expenditure​.

4. Risks to the Outlook:

• High Debt: An elevated debt burden reduces the fiscal space for governments to invest in critical infrastructure and human capital​.
• Conflict and Climate Change: Ongoing conflict, such as in Sudan, and climate-related disasters, including floods and droughts, are key risks affecting growth and food security in the region​.

The Africa's Pulse October 2024 report key points about Sub-Saharan Africa's economic outlook

Sub-Saharan Africa is experiencing a gradual recovery in economic growth, but significant challenges like high debt, conflict, climate change, and limited fiscal space present risks to sustained progress. The region needs to address these challenges through fiscal reforms, targeted investments, and efforts to enhance macroeconomic stability.

1. Economic Growth Recovery: The region's economy is projected to grow by 3% in 2024, up from 2.4% in 2023, with further acceleration to 4% by 2025-2026. This is driven mainly by private consumption and investment, supported by easing inflation and anticipated interest rate cuts. However, the growth recovery remains modest compared to other global regions.
2. Inflation and Consumption: Inflation is expected to decline from 7.1% in 2023 to 4.8% in 2024, improving the purchasing power of households, which in turn supports private consumption. This cooling of inflation allows for potential monetary policy easing, encouraging investment and economic activity.
3. Macroeconomic Performance: Despite growth prospects, the region faces significant challenges:
   • High Debt Levels: Public debt remains at 58% of GDP, with US$19 billion in debt service payments, mostly owed to private creditors. This reduces the fiscal space for essential investments in infrastructure and social services.
   • Fiscal Balance: Fiscal deficits are improving slightly, from 3.9% of GDP in 2023 to 3.3% in 2024, thanks to revenue collection efforts and spending cuts. However, the region's debt burden continues to limit overall progress.
4. Risks to the Outlook:
   • Conflict and Climate Change: Ongoing conflicts, such as the war in Sudan, and extreme weather events (floods, droughts) are major risks to economic stability. These challenges undermine growth, disrupt food security, and exacerbate poverty in affected countries.
   • Vulnerability: Over 53% of low-income countries in Sub-Saharan Africa are at high risk of debt distress, and many countries are vulnerable to external shocks due to their high reliance on global financing and commodity exports.

Source: Africa’s Pulse October 2024 report