Economic growth in Africa is projected to expand moderately over 2025 and 2026, driven by a recovery in its largest economies, Egypt, Nigeria, and South Africa. However, the United Nations World Economic Situation and Prospects (WESP) 2025 report highlights several constraints that threaten to limit the continent’s growth potential, including balance of payments constraints, shrinking fiscal space, lingering debt sustainability risks, and the escalating impact of climate disasters.
The UN’s flagship economic report also projects that global economic growth will remain steady at 2.8 percent in 2025, unchanged from 2024. While the global economy has demonstrated resilience amid a series of reinforcing shocks, growth remains well below the pre-pandemic average of 3.2 per cent, hindered by weak investment, sluggish productivity, and high debt levels.
The report notes that lower inflation and ongoing monetary easing in many economies could provide a modest boost to global economic activity in 2025. However, significant uncertainty remains, with risks stemming from geopolitical tensions, fiscal constraints, and elevated borrowing costs in many regions. These challenges are particularly pronounced in low-income and vulnerable countries, where fragile and sub-par growth threatens to undermine progress toward the Sustainable Development Goals (SDGs).
United Nations Secretary-General António Guterres emphasized the need for global cooperation in addressing these challenges, stating, “Countries cannot ignore these perils. In our interconnected economy, shocks on one side of the world push up prices on the other. Every country is affected and must be part of the solution—building on progress made.”
For Africa, economic growth is expected to rise from an estimated 3.4 per cent in 2024 to 3.7 per cent in 2025, and 4.0 per cent in 2026. This expansion is fueled by improvements such as easing supply bottlenecks in South Africa’s power sector, more favourable financial conditions, and a strong recovery in international tourism. However, the outlook remains precarious due to persistent geopolitical risks, with many African nations still grappling with balance of payments constraints.
While overall inflation has cooled, food prices remain high in several countries due to the adverse effects of extreme weather events on crop yields. Africa’s fiscal space continues to shrink due to pandemic-related expenditures, stimulus measures, and ongoing investments in essential social programs. External debt stocks have reached historic highs, leading to a debt overhang in many countries. Interest payments now account for over 25 per cent of government revenues in several African economies, including Angola, Egypt, Ghana, Kenya, Malawi, and Nigeria.
Although recent debt restructuring agreements in Ghana and Zambia mark progress, the path to fiscal sustainability remains challenging, particularly amid social tensions arising from fiscal reforms in Kenya and Nigeria. Africa’s trade outlook reflects divergent trends, with South Africa’s ongoing power shortages curbing manufacturing exports, while surging gold prices have benefited major producers such as Ghana and South Africa. However, projected declines in global commodity prices threaten the economic stability of resource-dependent African nations.
Despite the advances made in the African Continental Free Trade Area (AfCFTA), implementation challenges persist. On a brighter note, tourism continues its recovery, with arrival numbers approaching pre-pandemic levels, spurred by a 7 per cent growth rate in 2024.
Africa’s vulnerability to climate change remains a major concern, with extreme weather events in 2024 exacerbating food insecurity and limiting access to hydropower. The report underscores the urgent need for Africa to adapt to climate change, though international support for climate adaptation finance has been slow, leaving the continent vulnerable to worsening risks.
The report also highlights the potential of critical minerals like lithium, cobalt, and rare earth elements to drive progress toward the SDGs and accelerate Africa’s energy transition. While global demand for these minerals presents a unique opportunity for resource-rich African countries to boost growth and create jobs, the report warns of risks associated with poor governance, unsafe labour practices, environmental degradation, and over-reliance on volatile commodity markets.
Li Junhua, United Nations Under-Secretary-General for Economic and Social Affairs, urged governments to adopt forward-looking policies and regulatory frameworks to ensure that the extraction of critical minerals is sustainable and equitable. “Critical minerals have immense potential to accelerate sustainable development, but only if managed responsibly,” he said.
