A New Decade: Economic Growth in Africa
With more than 1 billion inhabitants, half of whom will be under 25 by 2050, Sub-Saharan Africa is a diversified continent with abundant natural and human resources that might lead to inclusive growth and the eradication of poverty in the area. The continent is forging a whole new path for growth by utilizing the potential of its resources and people. It has the largest free trade area in the world and a market of 1.2 billion people.
The region consists of 22 fragile or conflict-affected countries with incomes ranging from low to upper middle class to affluent. There are 13 little states in Africa, each with a small population, little human capital, and a small piece of territory.
Sub-Saharan Africa's (SSA) economic growth is anticipated to slow from 4.1% in 2021 to 3.3% in 2022 as a result of a slowdown in global growth, rising inflation fueled by the conflict in Ukraine, unfavorable weather, tightening financial conditions globally, and an increase in the risk of debt distress. These developments jeopardize efforts to reduce poverty, which have already been hampered by the COVID-19 pandemic's effects. SSA's economic growth is being hampered by rising inflation, which is reducing both business investments and household spending. 29 of the 33 SSA nations having information as of July 2022 had inflation rates exceeding 5%, while 17 nations experienced double-digit inflation.
In SSA, the significant pass-through of food and fuel prices to consumer prices has driven inflation to record highs in many countries, exceeding the upper limit of central bank targets in the majority of nations that have them. Given that food accounts for more than 40% of total expenditures in Sub-Saharan Africa, the great majority of the population is impacted by these high food prices.
These economic difficulties occur at a time when nations' capacities to foster growth and safeguard vulnerable households are severely curtailed. During the pandemic, the region's fiscal deficit increased from 3.0% of GDP in 2019 to 5.6% of GDP in 2020. The deficit is 4.8% of GDP in 2022 as a result of consolidation efforts.
In SSA, debt is expected to remain high in 2022 at 59.5% of GDP. In the area, eight of the 38 IDA-eligible nations are in debt trouble, and 14 more are at high danger of doing so. In comparison to less than 5% in 2010, African countries spent 16.5% of their revenue on servicing external debt in 2021. Going ahead, it is predicted that SSA will rise by 3.5% in 2023 and 3.9% in 2024. The Eastern and Southern African subregion is anticipated to increase to 4.5% next year and 5.0% in 2024, excluding South Africa and Angola. The economy of South Africa contracted by 0.2% annually in 2022Q2 from 2.7% the previous quarter. This year, the economy is expected to grow by 1.9%, which is a 0.2 percentage point decrease from the first predictions made in April. One of the main beneficiaries of favorable trade terms is the Angolan economy, which will see real growth of 3.1% in 2022, up from 0.8% the year before. Kenya's growth is anticipated to be 5.0% in 2023 (down from 5.5%), then 5.3% in 2024.
The Western and Central Africa subregion, excluding Nigeria, is anticipated to develop at a rate of 5.0% in 2023 (up from 4.2%), and growth will go up in 2024 (5.6%). While the country's economy continues to be hampered by a weak oil industry, real GDP growth in