The African Development Bank has reviewed downward its short-to medium-term macroeconomic forecast for Africa for 2023 and 2024.
The bank in a statement said it reviewed the forecast to 3.4 and 3.8 per cent from 4.0 per cent and 4.3 per cent, respectively.
According to the statement, the updated data has been published in the 2023 Africa’s Macroeconomic Performance and Outlook update, a follow-up to the bank’s 2023 Africa Economic Outlook released in May.
He said, “The slightly lower figures reflect the persistent long-term effects of COVID-19, geo-political tensions, and conflicts. It also reflects the effects of climate shocks, a global economic slowdown, and limited fiscal space for African governments to adequately respond to shocks and sustain post-pandemic economic recovery gains. While inflationary pressures are receding globally, they are persistent in Africa and continue to weigh heavily on the continent’s short-to-medium-term economic performance.’’
According to the update, Africa’s inflation is projected to average 18.5 per cent and 17.1 per cent in 2023 and 2024, respectively.
In the short term, it said the MEO update urged countries to continue implementing restrictive monetary policies to contain inflation.
It said this should be supported by fiscal policies that promote economic diversification and remove supply-side constraints.
“Over the medium- to long-term, it calls on governments to scale up efficient investment in human capital and physical infrastructure. To boost productivity, regain momentum in economic growth, and create opportunities for more inclusive and sustainable development.
“The revised inflation rates represent an acceleration of 3.4 and 7.6 percentage points respectively from the earlier projection. Ongoing inflationary pressure has largely been fuelled by supply shocks in agriculture, stronger imported inflation due to weaker local currencies, relatively high commodity prices, and the persistence of fiscal dominance in several African countries,” it said.
According to the statement, the elevation of cost-of-living pressures has eroded Africans’ purchasing power, stoking the risk of further increases in the incidence of poverty.
