Africa is poised to redefine its economic narrative despite mounting global economic turbulence and rising geopolitical tensions. The continent is expected to maintain a steady growth trajectory, with real Gross Domestic Product (GDP) projected to rise from 4.0% in 2025 to 4.2% by 2027, according to the newly released 2025 African Trade and Economic Outlook (ATEO) by the African Export-Import Bank (Afreximbank).
The report presents a cautiously optimistic outlook, positioning Africa as a region of increasing economic prominence. Notably, 41% of African economies are forecasted to grow at 5% or more, nearly double the global average of 21%. This, the report suggests, marks a potential shift in the global economic order, as Africa moves from the periphery to a more central role.
Drivers of Growth
Afreximbank attributes the projected growth to several key factors:
- Rising global demand for African exports
- Easing inflation in key African markets
- Structural reforms aimed at reducing commodity dependency
These developments are creating a foundation for more resilient, diversified economies, as African nations begin to embrace broader economic models beyond natural resource extraction.
Risks and Challenges
However, the report tempers its optimism with a sober assessment of persistent risks. Among them:
- Internal conflicts and political instability
- Debt overhangs, with some nations spending over 50% of revenue on debt servicing
- Climate change, which threatens agriculture, infrastructure, and livelihoods
- External economic slowdowns, particularly in the U.S. and China, which may reduce demand for African exports and tighten global financial conditions
“Internal conflicts and climate change threaten stability and growth,” the report cautions.
“The economic slowdown in the United States and China may also impact international financial conditions and the demand for African resources.”
The issue of debt sustainability is particularly alarming. The report urges African governments to prioritize efficient public spending and direct funds toward growth-oriented, high-impact projects to avoid long-term economic stagnation.
Strategic Opportunities: AfCFTA and Beyond
A key lever for transformation highlighted in the report is the African Continental Free Trade Area (AfCFTA), which it describes as a “game changer” capable of reshaping intra-African trade and industrialisation. The report also anticipates a decline in global interest rates starting in 2025, assuming geopolitical stability—potentially lowering the cost of capital and boosting infrastructure development.
To leverage these opportunities, the ATEO recommends a set of short- and medium-term strategies:
- Proactive monetary policies
- Climate and conflict resilience mechanisms
- Stimulation of domestic demand and services-led growth
- Investments in science, technology, and human capital
“Strengthening training in sciences and technology facilitates skill development and talent allocation, which is essential for successful structural transformation,” the report notes.
Addressing Social Disparities
While economic growth is vital, Afreximbank emphasizes the need to address weak social outcomes, including slow poverty reduction. The report urges governments to improve basic infrastructure and social services, such as education, healthcare, and financial inclusion, to ensure more equitable and sustainable development.
Environmental Sustainability
On the environmental front, the ATEO highlights escalating climate risks and calls for green growth strategies aligned with comprehensive climate policy frameworks. These, it says, are crucial to ensuring that long-term development remains both inclusive and sustainable.
The 2025 ATEO outlines a complex but hopeful picture of a continent on the verge of economic transformation. With the right blend of strategic investment, structural reforms, and regional cooperation, Africa has the potential not only to withstand global headwinds but to emerge stronger, more resilient, and more central to the world economy.
As the report concludes, Africa’s economic future is not just a possibility—it’s already taking shape.