African countries dominate top GDP growth spots this year

Key Takeaways

The external environment for Africa presents challenges, but the potential for growth turnaround in both South Africa and Nigeria lies in crucial reforms. Nigerian President Bola Tinubu has taken aggressive measures to ease the country's foreign exchange regime and eliminate costly fuel subsidies. In South Africa, grappling with an energy crisis, there are tentative steps towards improving electricity supply, and this progress is expected to continue. However, analysts express caution about Africa's immediate economic outlook. The anticipated growth is recovering from a low base following setbacks during the pandemic, putting strain on public finances and leaving many countries burdened with heavy debt. This has already led to defaults in Ghana, Zambia, and Ethiopia, prompting warnings from the International Monetary Fund (IMF) that other nations remain at risk. Additionally, access to foreign capital markets is effectively closed for some countries in the region. Despite the challenges, the potential for growth turnaround through reforms is a key focus for economic recovery in both South Africa and Nigeria.