IMF: SSA economy to grow 3.8% in 2025, 4.2% in 2026

The International Monetary Fund (IMF) has announced a revision to the growth forecast for the Sub-Saharan African economy, projecting a growth rate of 3.8 per cent in 2025 and 4.2 per cent in 2026. The downward revision is primarily attributed to turbulent global conditions, including lower external demand, subdued commodity prices, and tighter financial conditions. Abebe Selassie, Director at the IMF African Department, recently discussed the regional economic outlook with CNBC Africa to provide insights into the challenges facing the region and the IMF's recommendations for policymakers. Selassie commended governments for implementing crucial reforms in 2024, which led to economic growth exceeding expectations at 4 per cent. These reforms aimed at reducing macroeconomic imbalances, enhancing economic performance, and initiating social safety net expansion efforts. However, the IMF has adjusted the growth forecast downwards for 2025 due to shifting global financial market conditions, particularly affecting commodity prices. The current projection stands at 3.8% for the year. With uncertainties looming in the global landscape, such as trade tensions, financial market fluctuations, and economic growth revisions, the IMF emphasizes the need for Sub-Saharan African economies to focus on resilience and predictability in their policy responses. Maintaining a steady course amidst external shocks and nurturing long-term development plans are essential to navigate the current economic challenges. Selassie stresses the importance of consistency in domestic policies and assurance to investors to promote stability amid global uncertainties. He highlights the potential growth opportunities within the continent, urging countries to prioritize intra-regional trade and address barriers hindering trade expansion. Additionally, Selassie discusses Nigeria's macroeconomic conditions, acknowledging the significant reforms undertaken by the government to combat inflation, foreign exchange constraints, and subsidy inefficiencies. Despite progress in policy reforms, there is room for further improvement, particularly in enhancing transparency in the oil sector and expanding the tax base for increased government revenue. Selassie commends Nigeria's efforts in addressing macroeconomic challenges and emphasizes the need for sustained reforms to uphold a sound economic environment, attract investments, and generate employment opportunities. Moving forward, enhancing fiscal transparency, optimizing subsidy removal gains, and broadening the tax base are key areas requiring attention to support Nigeria's economic recovery and development. The IMF remains committed to supporting Sub-Saharan Africa's economic resilience and growth through strategic policy guidance and collaboration with regional stakeholders.