Economic growth in Sub-Saharan Africa projected at 3.8% in 2024 - IMF

The International Monetary Fund (IMF) says economic growth in Sub-Saharan Africa (SSA) is projected to rise from 3.4 per cent in 2023 to 3.8 per cent in 2024.

Abebe Selassie, Director, African Department, IMF, said this at a news briefing on the IMF’s Regional Economic Outlook for SSA titled “A Tepid and Pricey Recovery” on Friday in Washington DC.

Selassie said economic recovery was expected to continue beyond 2024, with growth projections reaching 4.0 per cent in 2025. “After four challenging years and multiple shocks, SSA’s economy appears to be on the mend.

“We expect growth to accelerate to 3.8 per cent from 3.4 per cent last year, after peaking at almost 10 per cent in late 2022.

“We are also seeing inflation having been halved in the early months of this year, thanks to decisive actions by central banks.

“This includes slower food price increases, a positive development in a region where the cost-of-living crisis has been acute in recent years.”

He said further, fiscal consolidation efforts were starting to pay off, with the median public debt stabilising at around 60 per cent of Gross Domestic Product (GDP), halting a 10-year upward trend.

“With global financial conditions easing, a few countries have been able to return to international markets, ending a two-year hiatus.” The director said though the signs were encouraging, the region was not out of the woods.

Selassie said far too many countries still faced a funding squeeze, adding that their borrowing costs were high and funding sources curtailed.

“Government interest payments now account for about 12 per cent of revenues, more than double the level a decade ago, and official development assistance concessional financing has become much more scarce.

“What does this mean for countries? It means much-needed funds are being diverted from spending on investment development to interest payments, with consequences for the region’s growth potential and its ability to withstand future shocks.”

He said sustaining reforms would be important for macroeconomic conditions to continue to improve.

Selassie said this would ensure that countries in the region can build their resilience to shocks, generate jobs, diversify their economies, and improve living standards.

The director said three policy priorities could help countries in the region adapt to the challenges “First, to continue to improve public finances, with an emphasis on domestic revenue mobilisation.

“This will help meet the region’s vast development spending needs in the context of scarce concessional financing and high borrowing costs.”

He said the second policy priority was to sustain the focus on reducing inflation wherever inflation remained well above target.

Selassie said the third policy was to implement reforms that enhance skills development, spur innovation, improve the business environment, and promote trade integration to secure more affordable and stable financing.

“But the burden should not just be on countries alone. Support from the international community will remain essential.

“The IMF stands ready to support, having already provided 58 billion dollars in financing to the region since the start of the pandemic.

“Let me conclude by stressing that the region is at a turning point. With the right policy choices, I am very confident that the region will ensure that this will be the African century.