(Ecofin Agency) - Africa’s GDP is projected to grow by 4.2% in 2025, according to the latest Foresight Africa report published by the Brookings Institution this week. This forecast suggests an improvement from the 3.1% growth recorded in 2023, as reported by the African Development Bank (AfDB). The projection reflects a notable recovery after a challenging period marked by inflation, limited access to financing, and the lingering effects of the COVID-19 pandemic.

Brookings attributes this anticipated growth to several key factors, including increased investments in infrastructure and ongoing economic reforms in many countries. The continent also benefits from strong domestic demand, driven by rapid urbanization and a growing young population. The gradual implementation of the African Continental Free Trade Area (AfCFTA) is expected to create new economic opportunities by promoting regional integration and boosting intra-African trade.

However, the report highlights risks that could threaten this outlook. External debt remains a major concern, with nearly half of African countries classified as being in or at high risk of financial distress. Additionally, extreme weather conditions such as droughts and floods continue to disrupt agricultural production and threaten food security in several regions.

Brookings’ projection aligns with Moody’s forecast, which also predicts 4.2% growth for sub-Saharan Africa in 2025, up from an estimated 3.8% in 2024. Moody’s attributes this potential growth to improved global financial conditions, increased foreign investment, and ongoing economic reforms. However, the credit rating agency warns that high borrowing costs, driven by external debt servicing and a potentially stronger US dollar, may limit some countries' ability to sustain growth.

The World Bank, in an October 2024 report, also forecasted a 4% growth rate for Africa in 2025 and 2026. However, it described the region’s economic prospects as “uncertain,” despite declining global inflation and improving global economic activity.

Achieving these projections will require significant efforts. Structural reforms, careful debt management, and policies aimed at building resilience against climate shocks will be critical to ensuring sustainable growth. If these conditions are met, Africa could embark on a stronger economic recovery, creating new opportunities for its people and international partners.