AfDB lowers Africa’s economic growth forecast amid global tariff tensions

Africa’s economic growth is expected to increase from 3.3 per cent in 2024 to 3.9 per cent in 2025, going up to 4.0 per cent in 2026, according to the African Development Bank’s (AfDB) African Economic Outlook 2025 released on Tuesday, May 27. However, these projections represent downward revisions of 0.2 and 0.4 percentage points from the Bank’s earlier 2025 Macroeconomic Outlook (MEO). “Since January 2025, the world has experienced additional shocks, exacerbating an already complex global macroeconomic landscape. These shocks include a plethora of new tariffs imposed by the United States and retaliatory measures announced and implemented by its trading partners,” the report reads. ALSO READ: US tariff hikes raise tensions at WTO The downward revision “is largely due to the impact of subdued global economic activity, which is expected to affect African exports, even after accounting for the tariff shock and the induced uncertainty.” Despite the challenges, 21 African countries are forecast to record real GDP growth above 5 per cent in 2025. Ethiopia, Niger, Rwanda, and Senegal are expected to achieve or surpass the 7 percent growth threshold necessary to reduce poverty and promote inclusive growth. In terms of individual income growth, the continent’s real GDP per capita is projected to rise from 0.9 per cent in 2024 to 1.5 per cent in 2025, potentially reaching 1.7 per cent in 2026. However, these figures have also been revised down from earlier forecasts of 1.8 per cent in 2025 and 2.2 per cent in 2026. “The outlook for GDP per capita growth will also evolve in line with the severity of the unfolding shocks. “Achieving high and resilient economic growth rates should thus remain a key policy priority of African countries to engender stronger economic growth and accelerated poverty reduction.” According to the report, the impact of the current tariff shock is expected to vary across countries and regions. “The tariff shock and its attendant uncertainty could have asymmetric impacts on countries and regions, depending on the strength of existing macroeconomic buffers and degree of integration into global trade,” the report says. ALSO READ: Tariff crisis an opportunity for boosting intra-African trade, says AfCFTA’s Mene East Africa is expected to lead the continent’s growth, with the region’s GDP forecast to accelerate from 4.3 per cent in 2024 to 5.9 per cent in both 2025 and 2026. Central Africa is likely to experience a slowdown, with growth decreasing from 4.4 per cent in 2023 to 4.0 per cent in 2024 and 3.2 per cent in 2025. In North Africa, GDP growth is forecast at 2.6 per cent in 2024, followed by slight increases to 3.6 per cent in 2025 and 3.9 per cent in 2026. Southern Africa’s growth is estimated at 1.9 per cent in 2024, with 2.2 per cent in 2025 and 2.5 per cent in 2026.

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AfDB lowers Africa’s economic growth forecast amid global tariff tensions