Sub-Saharan Africa growth set to firm, but risks cloud region’s recovery: World Bank

Economic growth in Sub-Saharan Africa (SSA) strengthened in 2025 and is expected to pick up further over the next two years, supported by easing inflation, improving financial conditions and stronger investment and exports.

This is according to the World Bank’s Global Economic Prospects: Sub-Saharan Africa regional report released on Wednesday.

The bank said growth in the region is estimated to have risen to 4.0% in 2025 from 3.7% in 2024.

The improvement was driven in part by moderating inflation and higher-than-expected commodity prices, particularly for gold, other precious metals and coffee, which boosted fiscal revenues in several countries.

However, the report notes that performance across the region remained uneven, with growth slowing among some industrial commodity exporters while strengthening in others.

Divergent trends were evident among SSA’s three largest economies. Growth firmed in Nigeria and South Africa but moderated in Ethiopia.

South Africa’s economy expanded by an estimated 1.3% in 2025, supported by more reliable electricity supply, a bumper agricultural harvest and improving business confidence.

Nigeria’s growth edged up to 4.2%, driven by expansion in services such as finance and information and communication technology, alongside a modest recovery in agriculture.

By contrast, Ethiopia’s growth slowed to 7.2% from 8.1% in 2024, though it remains one of the fastest-growing economies in the region.

Inflationary pressures continued to ease across much of SSA in 2025, reflecting lower global food and energy prices and strong agricultural output.

However, the report highlights that core inflation picked up for the first time in two years, prompting some central banks to pause monetary easing, while others raised policy rates as underlying price pressures re-emerged.

Financial conditions have generally improved, with government bond yields declining, sovereign spreads narrowing and several currencies appreciating against the US dollar.

A number of countries, including Angola, Kenya, Nigeria and the Republic of Congo, regained access to international capital markets, helping to ease financing constraints.

Looking ahead, growth in SSA is projected to firm to 4.3% in 2026 and 4.7% in 2027, underpinned by stronger investment and export growth.

However, the World Bank cautions that this outlook depends heavily on the external environment not deteriorating further and on meaningful improvements in security in several fragile and conflict-affected countries.

Even with the projected pickup, growth is expected to remain below the region’s long-term average and insufficient to significantly reduce extreme poverty.

The sharp reduction in official development assistance since 2024 has further constrained fiscal space, weakening the region’s resilience to external shocks.

While most SSA economies have limited direct exposure to global trade fragmentation, several countries — including Côte d’Ivoire, Kenya, Lesotho, Madagascar, Mauritius and South Africa — are heavily reliant on the US market for exports.

The bank said the expiration of the US African Growth and Opportunity Act (Agoa) in late 2025 is expected to have a significant impact on some economies unless preferential access is restored. Fortunately, the US House of Representatives on Monday extended the Agoa for another three years.

Per capita income in SSA is projected to grow by an average of 2% annually in 2026–27, a slight improvement on earlier forecasts but still too low to generate sufficient jobs for the region’s rapidly expanding labour force.

With an estimated 270 million youths in 2025, Sub-Saharan Africa faces the world’s largest increase in working-age population, while productive job creation remains limited.

Risks to the outlook remain tilted to the downside. Growth could disappoint if trade barriers rise further, reforms stall, conflict persists, climate shocks intensify or global financial conditions tighten.

On the upside, stronger global growth, firmer commodity prices, progress in regional integration and expanded duty-free access to key markets could help support a more robust recovery across the region.

Meanwhile, the World Bank said the global economy is proving more resilient than previously expected despite persistent trade tensions, geopolitical strains and policy uncertainty

Global growth is now projected to remain broadly steady over the next two years, easing slightly to 2.6% in 2026 before picking up to 2.7% in 2027, an upward revision from the Bank’s June forecast.

The improved outlook reflects stronger-than-anticipated performance in several major economies, particularly the United States, which accounts for roughly two-thirds of the upward revision to the 2026 forecast.

However, the World Bank on Wednesday cautioned that even with this resilience, the global economy remains on track for its weakest growth decade since the 1960s.

Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President for Development Economics, said that with each passing year, the global economy has become less capable of generating growth and seemingly more resilient to policy uncertainty.

“But economic dynamism and resilience cannot diverge for long without fracturing public finance and credit markets. Over the coming years, the world economy is set to grow slower than it did in the troubled 1990s—while carrying record levels of public and private debt,” Gill said.

“To avert stagnation and joblessness, governments in emerging and advanced economies must aggressively liberalize private investment and trade, rein in public consumption, and invest in new technologies and education.”

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