AfDB says Africa’s growth risks were tilted to downside even before Iran conflict

JOHANNESBURG: The risks to Africa’s economic growth outlook were skewed to the downside even before the Iran conflict began, the African Development Bank (AfDB) said in a half-yearly report on Monday, as regional instability and global pressures cast a shadow over the continent.

In the report, compiled with data up to January, the continent’s largest multilateral development finance institution projected that the pace of Africa’s economic growth would quicken to 4.3% this year, and 4.5% in 2027, but warned that mounting debt and fiscal pressures represent significant headwinds.

“High debt-service costs continue to erode fiscal space and limit public investment,” the report states, warning that this undermines long-term development.

The growth forecast, up from real gross domestic product growth of 3.5% in 2024 and 4.2% in 2025, did not incorporate the impact of the war in Iran, which has spiked energy prices higher and led some investors to pull money from emerging markets.

The AfDB said that continent-wide, debt-service obligations were consuming more than 31% of government revenues, crowding out investments in health, education, and infrastructure. Total African public debt reached $1.9 trillion in 2024, with seven countries in debt distress and 13 others at high risk.