Africa's Growth Slows: World Bank Forecasts Lowered

The World Bank has revised its growth forecast for Sub-Saharan Africa downwards, projecting it to edge down to 4.0% in 2026. Real per capita GDP growth is expected to remain at 1.6% in 2026, which is insufficient to substantially decrease extreme poverty.

The global economic outlook indicates that higher energy prices will positively impact oil-exporting nations such as Angola and Nigeria. Conversely, non-oil-exporting economies will grapple with elevated fuel, fertilizer, and transport costs, exacerbating inflation, particularly for food.

A significant challenge highlighted is the rise in government debt, which leads to increased interest rates and debt-service payments, heightening the risk of debt distress. This is reflected in higher bond yields for affected economies.

The forecast has been lowered by 0.3 percentage points for 2026 since January. The conflict in the Middle East is expected to negatively impact growth through higher commodity prices and weaker external demand, outweighing positive influences like structural reforms.

Monetary policy is anticipated to remain restrictive due to persistent inflation concerns, with limited room to absorb price shocks. Additionally, reduced concessional financing and declining Official Development Assistance (ODA) are creating fiscal challenges, especially for countries with slower policy framework improvements.

Despite these headwinds, structural reforms in countries like South Africa, Ethiopia, and Nigeria aim to bolster growth. However, downward revisions for Nigeria and South Africa are noted due to continued structural constraints and the impact of global events.

Food insecurity is projected to worsen in fragile and conflict-affected situations, and food insecurity is expected to increase in other SSA economies. The decline in ODA could also negatively affect living standards and exacerbate humanitarian crises.