World Bank Sees Africa’s Growth at 3.8 Percent

Sub-Saharan Africa’s economic momentum is gathering pace, with the World Bank’s October 2025 Africa’s Pulse projecting regional GDP growth at 3.8%—an improvement from 3.5% in 2024—as inflation cools and domestic demand rebounds. Average regional inflation has eased to 8.9%, nearly two percentage points lower year-on-year, as food and transport costs stabilise. With monetary tightening cycles nearing their peak in several major economies, policy space is gradually reopening for selective fiscal and investment support.

Commodity trends continue to shape the regional outlook. Oil producers such as Nigeria and Angola, along with mineral exporters like the Democratic Republic of Congo, are benefiting from stable global benchmarks in Brent crude (CL=F) and gold (XAUUSD). Meanwhile, import-dependent economies are gaining from reduced freight costs and a softer U.S. dollar, which has eased import bills and improved current-account balances. Private credit in frontier markets is expanding at around 12% annually, supported by improved liquidity conditions and modest recovery in capital inflows. FX reserves, which had been depleted through 2023–24, are now rebuilding as external balances strengthen.

Debt remains the principal constraint. Nearly half of African economies continue to devote more than 20% of fiscal revenues to debt service, limiting budget flexibility for social and infrastructure spending. The continent’s median public debt-to-GDP ratio stands at roughly 60%, with primary deficits averaging 1.5%. Countries such as Kenya and Ghana have opted to maintain tight monetary stances to anchor inflation expectations, while Tanzania and Rwanda have leaned toward growth-supportive liquidity injections. South Africa’s real interest rates have turned positive, improving returns for fixed-income investors but slowing domestic credit demand.

Investor sentiment is cautiously improving. African Eurobond spreads have narrowed since the third quarter of 2025, tracking a broader rebound in global risk appetite. The MSCI Frontier Africa Index has gained about 3% year-to-date, reflecting growing investor confidence in policy stability and export earnings. Gold’s resilience and steady commodity prices have supported external accounts, even as several governments recalibrate fiscal policy to sustain recovery.

The World Bank stresses that sustaining this momentum requires deep structural reforms—particularly in infrastructure financing, tax efficiency, and digital integration. With inflation moderating, the continent’s medium-term potential could approach 5% growth if fiscal prudence and private investment mobilization persist.