Sub-Saharan Africa set for faster growth at 3.8% amid cooling inflation – World Bank

Sub-Saharan Africa is poised for a stronger economic rebound this year, as easing inflation and stabilising currencies create room for policymakers to loosen monetary conditions, according to a new World Bank report.

• The World Bank upgraded Sub-Saharan Africa’s 2025 growth forecast to 3.8%, citing easing inflation and stable exchange rates.
• Inflation in the region has dropped below 4%, while currencies in major economies, such as Nigeria and Ethiopia, have stabilised.
• Growth in Ethiopia, Nigeria, and Côte d’Ivoire was revised upward, driven by rising real incomes and renewed investment.
• The Bank urged African governments to prioritise job creation and SME growth to tackle youth unemployment and sustain recovery.

The Africa Pulse report, released on Tuesday, October 7, projects regional growth to reach 3.8% in 2025, up from an earlier forecast of 3.5%.

The Bank attributes the upgrade to “favourable conditions” in several major economies, including Ethiopia, Nigeria, and Côte d’Ivoire, where falling prices and more stable exchange rates have boosted investment and consumer confidence.

“These favourable conditions are fuelling a recovery in private consumption and investment,” the report noted.

Growth is expected to further accelerate to an average of 4.4% over the next two years.

Andrew Dabalen, the World Bank’s Chief Economist for Africa, stated that the median inflation rate in the region has fallen below 4%. At the same time, many African currencies that previously slumped against the U.S. dollar have regained stability.

“Most of the currencies which were cratering relative to the U.S. dollar have now recovered and are stable,” Dabalen told journalists.

The softer U.S. dollar, down nearly 10% since the start of the year, has also improved conditions for emerging markets, giving African economies some breathing space after years of external shocks.

Major economies drive momentum

The World Bank has upgraded forecasts for Ethiopia, Nigeria, and Côte d’Ivoire, highlighting a revival in real incomes and renewed investor confidence.

Still, Dabalen cautioned that the rebound remains gradual after a decade marked by global disruptions, high debt, and sluggish productivity.

“While this marks a gradual recovery from a decade of successive shocks, the rebound has yet to gain strong momentum,” the report stated.

Job creation remains urgent

Despite improved growth prospects, the Bank warned that the region’s long-term stability depends on job creation, especially for Africa’s rapidly growing youth population.

Dabalen emphasised the need to foster an environment that supports small and medium-sized enterprises, which drive employment across the continent.

“These jobs have to be jobs that provide a living wage and secure lives,” he said, noting that nearly three-quarters of Africa’s jobs are in the informal sector.

Youth unemployment and underemployment have already sparked unrest in countries like Nigeria, Kenya, and Madagascar.

“The consequences of not solving these problems are hard to contemplate. They will be very disruptive, and we’re beginning to see the signs of it,” Dabalen cautioned.

While the outlook for 2025 is brighter, the World Bank warned that trade uncertainty, especially the future of the U.S.-Africa trade pact (AGOA), and persistent debt vulnerabilities remain key risks to the continent’s recovery trajectory.