The Brookings Institution has projected that Africa’s economy will experience robust growth in 2025, with GDP expected to reach 4.2 percent. This positive outlook follows a challenging period marked by inflation, limited access to financing, and the lingering effects of the COVID-19 pandemic.
Key drivers of this projected growth include increased investments in infrastructure, ongoing economic reforms across the continent, and a surge in domestic demand fueled by rapid urbanization and a growing young population. The report also highlights the growing importance of the services sector, which is expected to contribute between 55 and 60 percent of the rebased GDP, reflecting the rapid economic transformation taking place across the continent.
However, the report also acknowledges significant challenges. High levels of external debt, coupled with potential global economic shocks and political instability, pose risks to sustained growth. Climate change continues to pose a significant threat, with extreme weather events impacting agricultural production and threatening food security in many regions.
Despite these challenges, Africa presents significant economic opportunities. The continent is experiencing a technological revolution, with a thriving tech startup ecosystem and increasing internet and mobile phone penetration. Fostering innovation ecosystems and ensuring regulatory frameworks that support technology adoption will be crucial for Africa to capitalize on its digital potential.
The Brookings Institution emphasizes the need for African countries to address these challenges by diversifying their economies, strengthening domestic resource mobilization, and investing in human capital development. By harnessing its diverse potential and implementing sound economic policies, Africa can achieve sustainable and inclusive economic growth
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