Source: AFP
Africa saw the pace of economic growth slow last year as inflation continued to rise, but is set to recover this year, the African Development Bank said on Friday.
In its latest report on the state of the continent’s economy, the ADB said Africa has yet to benefit from the fall in inflation seen elsewhere in the world.
By contrast, average inflation rose 3.6 percentage points to 17.8 percent last year, the highest rate in a decade.
“Inflationary pressures in Africa remain entrenched and have eroded people’s purchasing power and adversely affected livelihoods,” the bank’s president, Akinwumi Adesina, said in his introduction to the report.
High global interest rates and the devaluation of many African currencies against the US dollar have also increased debt servicing costs, limiting the investment needed to boost growth and social spending.
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While economic growth slowed to 3.2 percent last year, from 4.1 percent in 2022, according to ADB estimates, that still makes it the world’s second-fastest growing region after Asia.
The ADB noted that 15 African countries posted growth rates higher than 5 percent thanks to higher investment spending, a recovery in tourism and strong performance in the mining sector.
“Despite the slowdown in growth in 2023, the continent’s economies remain resilient, with growth in 2024 forecast to rise to 3.8 percent,” ABD said in its report.
The projected higher growth reflects efforts to diversify economies and boost consumer spending, it said.
And while ADB said it expects medium-term growth prospects to improve, it said risks remain to the downside, reflecting both global and regional uncertainty.
“Africa’s economic growth is projected to recover if the global economy remains resilient, the implementation of infrastructure projects on the continent begins to pay dividends, and progress in debt restructuring and fiscal consolidation in countries facing heightened debt challenges continues,” it said.
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However, if inflation remains stubborn on the continent, possibly due to conflicts driving prices higher again, it could erode any gains, he warned.
Source: AFP