Africa’s economic trajectory in 2025 will depend on strategic policy decisions, says Afreximbank
With global trade tensions, shifting commodity prices, and inflationary dynamics, Afreximbank in a report said Africa’s economic trajectory in 2025 would depend on strategic policy decisions.
Afreximbank in its latest research, however, called on governments to focus on stabilizing inflation, ensuring exchange rate stability, and fostering investment-friendly environments to navigate economic uncertainties.
The key insights from the February 2025 Afreximbank Research “Monthly Developments in the African Macroeconomic Environment” report: stated that Africa economic landscape in 20225 presents a mix of opportunities and challenges.
“From growth concerns to inflation trends and currency volatility, key macroeconomic indicators highlight the factors shaping the continent’s financial stability,” the report said.
The report stated that, while 2024 saw 18 out of 29 tracked African economies outperform expectations, only 11 are projected to sustain an upward trajectory in 2025.
“Economic performance remains fragile, influenced by political instability, global economic shifts, and regional uncertainties. Countries dependent on commodity exports face additional risks due to fluctuating prices, while domestic policies will play a crucial role in shaping growth outcomes. Policymakers must address structural weaknesses, enhance governance, and foster investment-friendly environments to stimulate long-term resilience,” the report disclosed.
On inflation pressures easing, the report disclosed that, “ Africa’s inflation rate averaged 8.6per cent in 2024, reflecting persistent price pressures. However, projections for 2025 suggest a slight relief, with the average inflation rate expected to decline to 7.2per cent.
“Historically, inflation and interest rates in Africa have moved in tandem, with a strong correlation, particularly during periods of high inflation.
“As price pressures ease, central banks may have greater flexibility to adjust monetary policies, supporting economic growth while maintaining stability. Lower inflation could also improve consumer purchasing power, reduce the cost of borrowing, and attract investment.”
The research by Afreximbank on currency stated, “The performance of African currencies in early 2025 has been significantly impacted by a strong US dollar, fueled by concerns over trade wars and geopolitical uncertainty.
“Many African economies, heavily reliant on imports and external debt, are experiencing increased costs of goods and rising debt burdens. However, some nations, such as Angola and Morocco, have demonstrated resilience due to improved economic fundamentals, better foreign exchange reserves, and sound policy measures.
“Countries with relatively weaker macroeconomic positions, such as Nigeria, Egypt, and Ghana, have faced sharper currency depreciations, exacerbated by inflationary risks, fiscal deficits, and investor concerns.
“Managing exchange rate fluctuations will require a mix of prudent monetary policies, increased foreign investments, and diversification strategies to reduce dependence on volatile external factors.”
