By Chibuike Nwabuko
ABUJA (PRECISE POST) – The International Monetary Fund (IMF) has said that a hard-won recovery in sub-Saharan Africa has been overtaken by recent shift in global outlook.
The April report released by the Fund on its official X account said the sudden shift in the global outlook has clouded the region’s short-term prospects and significantly complicated policy making. After four years of crisis, sub-Saharan Africa’s authorities had already faced a significant challenge in their efforts to deliver economic stability while also advancing long-term development goals, all amid high social expectations.
This task has now been made even more difficult by yet another shock, in the form of higher global borrowing costs, additional constraints on external funding, a downturn in global demand, lower prices for some key commodities, and a step increase in economic uncertainty. An extra premium is now on resilience—a country’s ability to rebound quickly from future shocks.
The region’s progress and perseverance over the past few years is notable, but continued efforts will be needed to sustain the recovery and enhance the region’s resilience. Caution, consistency, and credibility are now more important than ever.
Economic activity exceeded expectations in 2024, with regional growth reaching 4 percent compared to 3.6 percent in 2023. Reflecting improved policies,
macroeconomic imbalances narrowed, including decelerating inflation and the stabilization of public debt. Notably, median headline inflation reached 4.5 percent in early 2025, while the median debt-to-GDP ratio held steady below 60 percent.
But after four years of crisis many countries in sub-Saharan Africa are not yet out of the woods, and the region faces yet another shock in the form of an abrupt shift in the external economic landscape as governments around the world reorder their policy priorities—including in particular a series of sizable tariff measures by the United States, and
countermeasures by trading partners.
Growth in the region is now expected to ease to 3.8 percent in 2025 and 4.2 percent in 2026, a downward revision of 0.4 percentage point and 0.2 percentage point, respectively. The slowdown has been driven in large part by turbulent global conditions, as reflected in lower external demand, subdued commodity prices, and tighter financial conditions, with more significant downgrades for commodity exporters and countries with larger trade exposures to the United States.
In addition to the subdued global outlook, uncertainty surrounding the world economy is exceptionally high, and a further increase in trade tensions or tightening of global financial conditions in advanced economies could weigh on regional confidence and activity, while raising borrowing costs. Moreover, official development assistance inflows into sub-Saharan Africa will likely decline going forward, placing an added burden on the region’s most vulnerable.
Moreover, these developments arrive against a backdrop of ongoing vulnerabilities, particularly in countries facing a funding squeeze and higher borrowing costs that in many cases is constraining their ability to finance essential services and development needs.
Similarly, although inflationary pressures are easing at the regional level, several countries continue to grapple with elevated inflation, requiring a tight monetary policy stance and continued support
from fiscal policy.
These uncertain times call for continuous fine-tuning of policies to strike a balance between advancing growth and social development with macroeconomic stability. The times also place an extra premium on building fiscal and external buffers, together with credibility and consistency in policymaking.
In this context, policymakers will need to increasingly draw on their own sources of strength and resilience, and mobilize domestic revenues, improve the efficiency of spending, and strengthen public financial management and fiscal frameworks to lower borrowing costs. Looking forward, the private sector will need to do much of the heavy lifting to achieve long-term development goals. Structural reforms that enhance governance, improve the business climate, and support regional trade integration, together with greater investment in human capital and infrastructure, can create a more fertile ground for the private sector to grow. Nearly one-third of sub-Saharan Africa’s population continues to live below the poverty line, highlighting the need for broad-based growth strategies that prioritize job creation and support the most vulnerable.
A strong, stable, and prosperous Africa is good for the world. But this prosperity is far from guaranteed and will depend on continued external support. For the region overall, the best support is simply predictable market access for traded goods and services. For poorer or more fragile countries, however, this should be accompanied by financial support from bilateral and multilateral partners, which remains essential to ensure the region is not left behind.
SOURCE: (IMF)
