- African Export-Import Bank projected that Africa’s average inflation rate will decelerate to 7.2 per cent in 2025
- It said most African economies exceeded expectations and some will maintain the upward trajectory in 2025
- Afreximbank said a stronger US dollar impacted African currencies
African Export-Import Bank (Afreximbank) has projected that Africa’s average inflation rate will decelerate from 8.6 per cent in 2024 to 7.2 per cent in 2025.
This was contained in the February 2025 Afreximbank Research Monthly Developments in the African Macroeconomic Environment report.
The report highlighted the intersection between inflation and interest rates across the continent.
It suggested that as inflationary pressures ease, central banks may gain more flexibility to adjust monetary policies, which will foster economic growth and enhance consumer purchasing power, lower borrowing costs, and attract greater investment.
African economies exceed expectations, to maintain trajectory
The report noted that 2024 saw 18 out of 29 monitored African economies outperform expectations, and projects that only 11 of these economies will continue an upward trajectory in 2025.
It stressed that the fragile economic performance was influenced by political instability, global economic fluctuations, and regional uncertainties.
In addition, the report highlighted the price volatility risks faced by commodity-dependent nations, which grapple with additional risks due to price volatility, stressing the importance of domestic policies in shaping future growth.
Stronger US dollar’s impact on African currencies
According to the report, the United States dollar impacted African currencies, with countries with weaker macroeconomic positions facing currency depreciations, in addition to concerns over trade wars and geopolitical uncertainty.
It noted that many import-reliant economies and those with heavy external debts are grappling with increased costs of goods and rising debt burdens.
The report, however, noted that countries like Angola and Morocco have shown resilience, supported by sound economic fundamentals, robust foreign exchange reserves, and effective policy measures.
“Countries with relatively weaker macroeconomic positions, such as Nigeria, Egypt, and Ghana, have faced sharper currency depreciations, exacerbated by inflationary risks, fiscal deficits, and investor concerns.
“Managing exchange rate fluctuations will require a mix of prudent monetary policies, increased foreign investments, and diversification strategies to reduce dependence on volatile external factors,” it added.
Strategies for countries’ resilience
The report noted that for African economies to build resilience and navigate economic uncertainties, governments must prioritise stabilising inflation, ensuring exchange rate stability, and creating investment-friendly environments.
It also stresses the importance of addressing structural weaknesses, improving governance, and adopting policies that foster long-term economic resilience.
Nigeria, South Africa, Ghana, 7 other countries owe 69% of Africa’s external debt – Afreximbank
Meanwhile, TheRadar earlier reported that a report by African Export-Import Bank (Afreximbank) Research revealed that Nigeria is one of the 10 African countries that collectively account for 69 per cent of the continent’s total external debt.
The report, titled ‘African Debt Outlook: A Ray of Optimism,’ stated that in the first half of 2024, the continent’s total external debt stock rose to 69 per cent from 67 per cent in 2023.
