Africa’s economic momentum is showing signs of strain amid rising global trade tensions, persistent inflationary pressures, and heightened policy uncertainty, according to the African Export-Import Bank’s ( Afreximbank) latest macroeconomic report for July 2025.
The report points to a fragile global recovery with slowing merchandise trade growth, elevated U.S. tariffs, and monetary policy divergence, all of which are raising the cost of capital and depressing external demand for African exports.
“Global trade growth is projected to slow substantially in 2025, with merchandise trade to plunge due to new tariffs and heightened policy uncertainty,” the report noted. While global Purchasing Managers’ Index (PMI) indicators show modest manufacturing recovery, trade activity remains subdued, with the Global Export Orders Index still below the neutral threshold.
In Africa, GDP growth for 2025 has been revised downward to 3.9%, a modest drop from earlier projections, reflecting external headwinds and internal vulnerabilities. Despite this, 21 African countries are still forecast to grow above 5%, buoyed by economic reforms, diversification, and improved macroeconomic management.
Disinflation Gains Ground, but Price Pressures Persist in Pockets
The continent’s inflation is projected to ease to 13.8% in 2025 and reach single digits by 2026 for the first time since the pandemic. This is largely attributed to improved food supply conditions following better weather in drought-affected regions.
However, inflationary risks remain uneven. Ghana, for instance, saw inflation decline to 13.7% in June, its lowest in three years, helped by food price drops and a strengthening cedi. In contrast, countries like Ethiopia and Nigeria continue to experience double-digit inflation rates, driven by currency weakness and structural constraints.
Currency Trends Diverge as Dollar Strengthens
Nearly half of African currencies recorded depreciation against the U.S. dollar in June 2025, reflecting capital outflows and policy divergence. However, Ghana, South Africa, and Rwanda were among the few that appreciated modestly, supported by monetary tightening and improving investor sentiment.
The Ghana cedi rose by 1% month-on-month, while the Bank of Ghana implemented a surprise 300 basis-point policy rate cut, down to 25%, citing anchored inflation expectations and stronger-than-expected fiscal performance.
Trade Performance Robust, But External Risks Loom
Africa’s total trade rose to $130 billion in March 2025, up from $115.3 billion in February. Intra-African trade also expanded by 7.7% year-on-year, underlining the continent’s resilience amid global shocks. However, Afreximbank warns that falling commodity prices and weak external demand could widen current account deficits, particularly for commodity-dependent economies.
“Africa’s average current account deficit is projected to widen from 1.8% of GDP in 2024 to 2.6% in 2025–26,” the report noted.
Credit Ratings Recover, But Access to Capital Remains Uneven
Some African countries, including Ghana, Nigeria, Zambia, and Togo, have secured credit rating upgrades or improved outlooks, enhancing market confidence. Ghana, previously rated ‘Selective Default’, has been upgraded to ‘CCC+’ with a stable outlook. Market access has improved, with Benin, Côte d’Ivoire, Egypt, and Gabon among those issuing new Eurobonds.
Still, access to capital remains limited for several economies, as tighter global financial conditions constrain borrowing and increase debt servicing burdens.
Regional Outlooks Diverge
- West Africa: Strong performers like Senegal and Côte d’Ivoire contrast with Nigeria and Ghana, which face exchange rate instability and inflation.
- East Africa: Uganda, Rwanda, and Tanzania continue to register robust growth, but inflation and fiscal vulnerabilities persist.
- Southern Africa: Zimbabwe is rebounding with a projected 6% GDP growth, while South Africa’s economic recovery remains sluggish, despite a rate cut by the SARB.
- Central Africa: Mixed outlook with Cameroon and Congo showing stability, while Chad and CAR remain fragile.
- North Africa: Morocco and Algeria benefit from investment inflows, while Egypt continues to manage high inflation and currency volatility.
Afreximbank concludes that Africa’s macroeconomic trajectory in 2025 remains cautiously optimistic, but uneven. Fiscal and monetary policy coordination, structural reforms, and regional trade integration under the AfCFTA are essential to shield economies from external shocks and to foster sustainable growth.
Africa’s growth narrative is resilient but not immune. Strategic responses must now center on competitiveness, diversified exports, and a stronger continental market.
