Bright Future for Africa in 2024
In the year 2023, the countries of Sub-Saharan Africa encountered a multitude of difficulties but economist Moin Siddiqi points towards encouraging indications of a potential economic recovery in the year 2024.
During 2023, the nations of Sub-Saharan Africa faced a challenging period due to a sluggish global economy, weakened domestic currencies, elevated borrowing costs, security and geopolitical tensions, and a cost-of-living crisis. As a result, there was only modest growth, ranging between 2.5% and 3.3%, a decline from the 4% experienced in 2022. The larger economies such as South Africa and Nigeria contributed to dragging down the economic performance of the region, with per capita growth remaining stagnant since 2015.
Nevertheless, there is optimism on the horizon as consumer price inflation is expected to decelerate to 7.3% in 2023, alleviating global supply chain disruptions, lower commodity prices, and contractionary monetary policy being significant contributing factors. While public finances are showing signs of stabilisation, fiscal deficits continue to exceed pre-pandemic levels for two-thirds of countries, and half of the least developed countries in the region are at high risk or in debt distress. The average public debt-to-GDP ratio in the region has increased from 35% in 2005 to 63% by 2022.
Despite these challenges, there are positive indicators for the future. Economic activity is anticipated to rebound to a range of 3.2% to 4% in 2024, with growth projected at 5% for Sub-Saharan Africa excluding major economies like Nigeria and South Africa. Both the International Monetary Fund (IMF) and the Economist Intelligence Unit (EIU) expect Sub-Saharan Africa to be the world’s second fastest-growing economy in 2024, driven by the service sector, agriculture, industrial sectors, and exports. The EIU holds particular optimism for East Africa, which is expected to propel the economic growth of the region.
There is a notable disparity in growth projections between ‘resource-intensive’ and ‘non-resource-intensive’ economies. While ‘resource-intensive’ economies are anticipated to experience growth boosted by consumption and new hydrocarbon and mining projects, ‘non-resource-intensive’ economies are projected to undergo robust growth due to expansion in services, recovery in consumption and investment, and lower import bills.
Nevertheless, the economic prospects of Africa are still vulnerable to global downside and upside risk scenarios. A deeper-than-anticipated contraction in China’s real estate market and weaker consumer confidence in advanced economies could have a negative impact on Sub-Saharan Africa’s output. Conversely, faster disinflation, higher commodity prices, and a robust recovery in investment in advanced economies could have a positive impact on the economy of Africa.
In conclusion, despite the significant challenges faced by Sub-Saharan Africa in 2023, there are promising signs for economic growth in 2024. With a focus on the service sector, agriculture, and industrial sectors, as well as positive contributions from exports, Africa is positioned for a potential economic rebound.
