Africa Faces Mounting Risks Just as Growth Gains Take Hold

IMF Blog, April 23, 2026

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Sub-Saharan Africa growth: "4.5 percent in 2025" — the region's fastest growth rate in 10 years.
Median inflation: "about 3.5 percent".
Fiscal position: "general government primary balance has been steadily improving and is now near balance."
Growth leaders: Benin, Côte d’Ivoire, Ethiopia, and Rwanda recorded growth "exceeding 6 percent."
Near-term outlook and shock impact:
- Growth is expected to slow to "4.3 percent this year", "some 0.3 percentage points below pre-war forecasts."
- Inflation is projected to rise.
- Severe downside scenario (from IMF World Economic Outlook): regional output could fall "0.6 percent below pre-war forecasts" and inflation could surge by an additional "2.4 percentage points."
External pressures from the war in the Middle East: higher global prices for oil, gas, and fertilizer; disrupted trade routes; tightened financial conditions.

Food insecurity:
- A "20 percent rise in international food prices" could push "more than 20 million people into food insecurity" and leave "2 million children under age 5 acutely malnourished."
- Fertilizer and shipping cost increases heighten vulnerability.
Climate shocks: recent floods in Mozambique and Madagascar underline exposure to weather disruptions.
Aid shock: "the unprecedented decline in foreign aid" and a "sharp structural break in aid flows" in 2025, with cuts hitting fragile states hardest and threatening essential services, especially healthcare.

Debt distress: "More than one-third of countries are at high risk of, or already in, debt distress."
Fiscal stability:
- "In 21 countries, fiscal deficits exceed the levels that are needed to stabilize debt."
- Rising interest bills and reduced concessional finance are inflating debt-service burdens and crowding out development spending.
Financial sector links: greater reliance on domestic borrowing has deepened ties between government debt and bank balance sheets, raising risks of financial instability.

Anchor inflation expectations and shield the most vulnerable from rising prices.
Avoid procyclical fiscal policies.
Oil exporters: treat windfalls as fleeting; use them to rebuild buffers and strengthen social safety nets.
Oil importers:
- Those with fiscal space: offer targeted, time-bound support.
- Those without fiscal space: focus on increasing the efficiency of spending and boosting domestic revenues.
Near-term measures should be "time-bound and targeted at the most vulnerable" while maintaining focus on medium-term development objectives.

Accelerate structural reforms to boost growth and resilience:
- Improve the business climate.
- Strengthen governance.
- Reform state-owned enterprises, especially in energy, transport, and telecommunications.
Deepen regional integration via the African Continental Free Trade Area to bolster supply-chain resilience and expand markets.
Digital transformation:
- Opportunities: AI applications in agriculture, health, and education.
- Infrastructure gaps: "Just 53 percent of the region’s population has access to electricity, and only 38 percent to the internet."
- Scaling digital innovations requires investment in electricity, internet access, digital skills, and data governance.

The international community should provide predictable financing, technical assistance, and capacity-building support, prioritizing aid "for low-income and fragile states."
IMF presence: "programs in 22 of the region’s 45 countries" and readiness to scale up support for members facing acute balance-of-payments pressures linked to the war.

—This blog is based on the April 2026 Regional Economic Outlook for sub-Saharan Africa, “Hard-Won Gains Under Pressure.”