Africa is poised for steady economic growth in 2025 despite global stagnation, according to the World Economic Situation and Prospects 2025 report by the United Nations Department of Economic and Social Affairs (DESA). The continent’s economic trajectory is expected to improve from 3.4% in 2024 to 3.7% in 2025, with further growth projected at 4.0% in 2026. This positive outlook is driven by economic recoveries in Nigeria, Egypt, and South Africa, along with ongoing regional integration efforts through the African Continental Free Trade Area (AfCFTA).
Global Stagnation and Africa’s Economic Outlook
While Africa’s economic performance is expected to strengthen, global economic growth is projected to remain stagnant at 2.8% in 2025, falling short of the pre-pandemic average of 3.2%. The report indicates that despite economic resilience in 2024, weak investment and sluggish productivity continue to hinder a full global recovery. Economic challenges worldwide are slowing the pursuit of economic progress, affecting living standards and long-term development goals.
East Africa is expected to remain one of the fastest-growing regions on the continent, while Central Africa faces economic stagnation due to declining oil production and political instability. However, across the continent, several challenges, including high inflation, rising debt burdens, and youth unemployment, continue to pose risks to sustained growth.
Challenges: Inflation, Debt, and Unemployment
Inflation remains a major economic hurdle for many African nations, with some countries experiencing double-digit inflation rates. Food inflation, in particular, is persistent, affecting many developing economies and worsening food insecurity in vulnerable populations. The report notes that around half of developing countries faced food inflation rates above 5% in 2024, a trend that is expected to continue in 2025.
Debt levels have also become a growing concern, as interest payments consumed an average of 27% of government revenues across Africa in 2024, a sharp increase from 19% in 2019. This rising debt burden limits governments’ ability to invest in healthcare, education, and infrastructure, potentially slowing long-term economic progress. Additionally, high youth unemployment remains a pressing challenge, requiring strategic interventions to boost job creation and workforce development.
Opportunities in Critical Minerals
Africa’s vast reserves of critical minerals, including cobalt and lithium, offer significant opportunities for economic growth. The report highlights that countries with these mineral resources have the potential to drive industrialization, innovation, and sustainable development. However, environmental degradation, governance issues, and unequal distribution of benefits remain key concerns that must be addressed.
To fully capitalize on these resources, governments are encouraged to implement tax policies, fiscal rules, and stabilization funds to manage revenues effectively. Proper management of the mining sector could enhance long-term economic resilience while ensuring environmental and social responsibility.
Call for International Cooperation
The report underscores the importance of bold international cooperation in addressing Africa’s development challenges. Reforming the global financial system to provide better support for developing economies is deemed essential. Additionally, investments in renewable energy and sustainable infrastructure are critical for economic resilience and long-term stability.
With net-zero emissions targets by 2050 requiring large-scale clean energy investments, Africa faces both challenges and opportunities in balancing economic growth with sustainability. The interconnected nature of the global economy means that economic shocks in one region have ripple effects worldwide. To address these challenges effectively, international collaboration and policy reforms will be necessary to ensure Africa can achieve its growth potential in the coming years.
