Press Release No. 24/395

IMF's Sub-Saharan Africa Regional Economic Outlook: Reform Amid Great Expectations

October 25, 2024

• Growth in sub-Saharan Africa is projected at 3.6% in 2024, unchanged from 2023, with a modest increase to 4.2% in 2025 -- insufficient to significantly reduce poverty or address development challenges.
• Macroeconomic vulnerabilities persist and inflation remains high in many countries, while elevated public debt and rising debt service costs are crowding-out resources for development spending.
• Policymakers face a tough balancing act in reducing vulnerabilities while addressing development needs and ensuring socially acceptable reforms amid tight financing constraints.

Washington, DC: Sub-Saharan Africa's economic growth is projected to remain subdued at 3.6 percent in 2024, unchanged from 2023, with a modest pickup to 4.2 percent expected in 2025, according to the latest IMF Regional Economic Outlook for Sub-Saharan Africa published today. The report notes that countries in the region are still grappling with macroeconomic imbalances, tight financing conditions, amid rising social pressures, leaving policymakers facing difficult choices in implementing reforms.

"Sub-Saharan African countries are navigating a complex economic landscape marked by both progress and persistent vulnerabilities," said Abebe Aemro Selassie, Director of the IMF's African Department. “While many of the region’s countries are among the world’s fastest-growing economies, resource-intensive countries —particularly oil exporters— continue to struggle with lower growth rates. Inflation is declining but remains in double digits in nearly one-third of countries. Public debt has stabilized at a high level, with rising debt service burdens crowding out resources for development spending.”

"While we are seeing some improvement in macroeconomic imbalances, growth remains insufficient to significantly reduce poverty or address substantial developmental challenges in the region."

The report includes focused notes addressing critical issues facing the region: the urgent need for job creation, the economic divergence between resource-rich and non-resource-rich countries, and the positive effects of striving for greater gender equality.

Against this backdrop, Mr. Selassie pointed to priorities for policymakers in the region:

“The policy mix should be consistent with the size of macroeconomic imbalances, while taking into account the political economy constraints that will affect the pace of reforms.

"Countries with high macroeconomic imbalances are more likely to resort to relatively large and frontloaded fiscal reforms, given the tight financing constraints. The need for financial support from the international community is most acute for this group.

“For countries with lower imbalances, policymakers should consider easing monetary policy toward a more neutral stance, while rebuilding fiscal and external buffers over time.”

"Policymakers need to focus on designing reforms that are socially acceptable, including effective communication and consultation strategies and measures to protect the most vulnerable.

"With continued efforts, sub-Saharan Africa can address its current challenges and move towards more sustainable and inclusive growth," Mr. Selassie concluded. "However, the path ahead requires careful policy calibration and a strong commitment to implementing necessary reforms while managing social pressures."