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

Tanzania's economic outlook for 2024 shows strong growth potential, with a projected GDP increase of 5.4%, significantly higher than the 3% average for Sub-Saharan Africa (SSA). As part of the East African Community (EAC), which is forecasted to grow by 4.7% in 2024, Tanzania benefits from macroeconomic stability and strategic investments in infrastructure, particularly in energy, telecommunications, and transport. These investments, combined with stable inflation, are expected to boost private consumption and investment. However, Tanzania's public debt is projected to rise from 42.5% to 48.4% of GDP, reflecting infrastructure spending, while the fiscal deficit is expected to stabilize at 3.3% of GDP. Risks remain, especially around rising debt and climate-related challenges like droughts and floods, which could impact agriculture and economic stability. Despite these risks, Tanzania's growth prospects remain robust in comparison to other SSA countries.

1. Growth Outlook

• Tanzania is expected to experience GDP growth of 5.4% in 2024, outperforming the regional average growth of 3% for SSA​.
• The East African Community (EAC), which includes Tanzania, is one of the strongest economic performers in SSA, with expected growth of 4.7% in 2024 and 5.7% by 2025–26​.

2. Growth Environment

• Tanzania benefits from macroeconomic stability and rising investments in sectors like energy, telecommunications, and transport, which help enhance productivity. The country’s inflation rate is expected to stabilize, supporting private consumption and investment​.
• Private consumption is expected to increase as inflation eases across SSA, with countries like Tanzania reaping benefits from stable inflation and favorable monetary policies, further bolstering growth​.

3. Macroeconomic Performance

• Government debt in Tanzania is estimated to rise slightly from 42.5% of GDP in 2023 to 48.4% of GDP in 2024, reflecting investments in key infrastructure projects​.
• In terms of sectoral performance, Tanzania’s growth is bolstered by services and infrastructure projects in energy and transport. Investment in these areas is critical for sustaining long-term growth​.
• Fiscal Balance: Tanzania's fiscal deficit is expected to improve slightly, with a fiscal deficit of around 3.3% of GDP in 2024​.

4. Risk Outlook

• High Debt: Public debt remains a key risk in Tanzania, as in many other SSA countries. The rising debt levels could strain fiscal resources, especially in a region where debt service obligations are already significant​.
• Climate Change and Conflict: Tanzania is exposed to climate risks and ongoing economic volatility in the region, which could affect agriculture and food security. Extreme weather events such as droughts or floods are persistent risks across the region​.

Tanzania's economic position relative to other Sub-Saharan African (SSA) countries

Tanzania's economy is performing well relative to other Sub-Saharan African countries, with solid growth prospects and important investments. However, the country must address challenges related to debt and climate change to ensure that growth is sustainable.

1. Tanzania’s Strong Growth Outlook: With a projected GDP growth of 5.4% in 2024, Tanzania is set to grow much faster than the Sub-Saharan African average of 3%. This positions Tanzania as one of the leading economies in the region, especially within the East African Community (EAC) where growth is also expected to be robust.
2. Growth Environment: Tanzania benefits from macroeconomic stability and is making significant investments in energy, transport, and telecommunications. These investments are crucial for reducing productivity bottlenecks and fostering economic expansion. Stable inflation will also boost private consumption and investment, further enhancing growth.
3. Macroeconomic Performance: Tanzania's debt level is rising but remains relatively manageable. The government is using this debt to finance critical infrastructure, which is essential for long-term economic development. The country’s fiscal deficit is also improving, suggesting prudent fiscal management.
4. Risk Outlook: Despite its positive growth outlook, Tanzania faces risks related to its rising debt levels, which could become a burden if not managed properly. Additionally, climate-related risks such as droughts and floods, which are common in SSA, pose threats to Tanzania’s agricultural sector and overall economic stability.

Source: Africa’s Pulse October 2024 report