The report on Macroeconomic Performance and Prospects for Africa in 2023 projects that average GDP growth in the birthplace continent will stabilize at 4% over the next two years, up from 3.8% in 2022.
In presenting the report, Chief Economist and Vice President of the African Development Bank, Kevin Urama, noted that African economies could benefit from high demand for their commodities as countries seek alternatives for food and energy in response to interruptions caused by the war in Ukraine.
Urama urged African countries to strive for higher growth rates, more inclusive economies and greater resilience to external shocks.
As the global economy faces increasing uncertainty, the projected stable outlook for 2023-2024 reflects continued political support in Africa and global efforts to mitigate the impact of external shocks.
The new publication, to be released in the first and third quarters of each year, will provide African policymakers, global and domestic investors, researchers and other development partners with an up-to-date, evidence-based assessment of the continent's recent macroeconomic situation.
However, African countries face unfavorable global conditions, including rising inflation, higher debt service costs and increased risk of debt distress.
Urama noted that tightening financial conditions and the appreciation of the US dollar had dire consequences for most African economies, making it difficult for African countries to access international capital markets for new financing.
Most African currencies, especially in exporting countries, lost substantial value against the dollar in 2022 due to monetary policy tightening in the United States.
Depreciation rates ranged from 21% in Malawi to 69% in South Sudan. Urama warned that currency weaknesses in Africa's more globally integrated economies, such as Algeria, Kenya, Nigeria and South Africa, could persist into 2023.
The report also highlights other economic headwinds, including the impacts of policy responses to Covid-19, rising geopolitical tensions and the knock-on effects of the Russian invasion of Ukraine. These conditions are pushing price stability beyond the reach of most central banks.
Urama called for bold policy action to address the significant financing gaps in Africa, stating that "it is imperative to enact policies that can mobilize and leverage private finance for development in Africa".
African countries' fiscal positions have already been undermined by policy responses to Covid-19 and support for vulnerable populations against rising food and energy prices amid high debt and the impacts of climate change.
The report provides valuable insights into the current state of African economies and highlights the need for strategic policy actions to address challenges and seize opportunities for growth and development.
