IMF predicts six top global economies in 2024 to be from Sub-Saharan Africa

Six of the top-performing global economies in 2024 will be from Sub-Saharan Africa, predicts the International Monetary Fund (IMF). Despite the limited scale of these economies, they’re contributing positively to a region plagued by poverty and inequality.

The economic growth of this region is set to rise from 3.3% in 2023 to 4% in 2024, with standout performances from Ivory Coast and Tanzania, expected to grow by 6.6% and 6.1% respectively, due to successful economic diversification and foreign investment attraction.

Sub-Saharan Africa’s growth prospects are brightening, noted Bloomberg Africa Economist Yvonne Mhango. Eight of the region’s top 10 biggest economies – which together account for another 40% of regional GDP – will grow by a strong 5% on average.

However, South Africa and Nigeria, which jointly represent two-fifths of Africa’s US$2 trillion economy, are not expected to match this growth pace in the near term. Despite this, both countries are implementing reforms that may yield future benefits. T

hese reforms include Nigeria’s aggressive measures to liberalise its foreign exchange regime and eliminate costly fuel subsidies, while South Africa is seen to be making progress in enhancing its electricity supply.

Big picture Africa, the external environment is challenging, observed Razia Khan, Chief Economist for Africa and the Middle East at Standard Chartered Bank. But reforms matter, and this will be the crux of the growth turnaround that we expect in both South Africa and Nigeria.

Despite the optimism, analysts remain circumspect about Africa’s near-term economic outlook. The recovery is starting from a low base following the economic setbacks suffered during the Covid-19 pandemic. The aftermath of these setbacks has strained public finances and left many African countries grappling with substantial debt burdens.

Moody’s Investors Service holds a negative outlook on the credit of African sovereigns due to heightened debt-refinancing risks and potential slower growth in China reducing demand for the region’s commodity exports.

Debt-to-GDP Ratio

Aurelien Mali, Senior Credit Officer at Moody’s Sovereign Risk Group, highlighted that Africa’s debt-to-GDP ratio has surged to an average of 60%, mirroring the crisis levels of the early 2000s.

A lot of these countries, despite the recent rally, are still locked out of the market. They’re having to find new ways, as their debt comes due, to roll that over to make good on their obligations, said Patrick Curran, Senior Economist at Tellimer Ltd. Countries, especially in Africa but in frontier markets generally, are going to be particularly vulnerable as long as interest rates stay near current levels, reported Bangkok Post.