According to a report presented by the United Nations Economic Commission for Africa (UNECA) on Wednesday, Africa’s economy is expected to grow 3.9% in 2023 from 3.6% in 2022. Despite the GDP growth declining from 4.6% in 2021 to 3.6% in 2022, the report indicates that growth will rebound next year. UNECA’s Macroeconomics and Governance Division Director, Adam Elhiraika, cited climate change, worsening international economic and financial conditions, high prices due to the Ukrainian conflict, and the global economic slowdown as reasons for the growth deceleration.
While East and South Asia recorded the fastest growth at 4.5%, Africa followed closely as the fastest-growing region in the developing world. The report stated that the growth forecast for 2023 is mainly driven by growth in the continent’s east, north, and west Africa sub-regions. Elhiraika expressed concern that the anticipated 3.9% growth rate for this year remains low compared to pre-pandemic levels, and emphasised the need to create jobs and reduce poverty.
The report also projected an improvement in fiscal deficits and debt levels in 2023, with Central and Southern Africa experiencing significant improvements. Although inflation is expected to decline from 12.8% in 2022 to 12% in 2023, the report noted that rising borrowing costs and debt service burdens pose a significant challenge going forward. Elhiraika warned that Africa’s debt-to-GDP ratio is estimated to reach 61.9% in 2023, despite narrowing economic deficits.
Finally, the report highlighted currency depreciation as a major issue, with countries that have flexible exchange rate regimes and those that export commodities experiencing more pronounced currency depreciation. Countries with fixed exchange rates, particularly those within the Economic and Monetary Community of Central Africa and West African Economic and Monetary Union, experienced an average depreciation of 10% against the US dollar in 2022.
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