According to a recent report from the International Monetary Fund (IMF), Africa’s economic outlook has shown signs of improvement, although it faces various risks that could impede its progress. The IMF’s regional economic outlook, released on Friday, indicates that the region’s growth is expected to increase by four tenths of a percentage point to 3.8% in the current year, with a further uptick to 4% projected for 2025.
Despite this positive trend, Africa remains vulnerable to several challenges, ranging from the impact of a resurgent dollar to severe droughts that exacerbate existing economic shocks. The IMF described these risks as contributing to a “brutal cocktail” of challenges facing the region.
One notable development highlighted in the report is the resumption of access to capital markets for African countries. This includes successful eurobond offerings by Ivory Coast, Benin, and Kenya, marking the end of a two-year hiatus for African credits. While these transactions have enabled these countries to access much-needed financing, they have come at the cost of higher yields compared to pre-hiatus levels.
Looking ahead, the IMF expects more African countries to follow suit in accessing capital markets next year, although they may also face the challenge of elevated borrowing costs. Despite these challenges, the IMF’s report underscores a cautiously optimistic outlook for Africa’s economic trajectory in the coming years.
