Economy in Africa in 2023: Things to watch out for. Africa’s economic recovery has been disrupted in 2022 by a range of internal and external shocks—including adverse weather conditions, rapidly rising rates of inflation, higher borrowing costs and softer demand in major export markets. Some of these factors will subdue growth prospects in the year ahead, but the region overall is expected to hold steady rather than suffer a major downturn in economic growth—both North Africa and Sub-Saharan Africa are forecast to grow by 3.2% in 2023. We expect almost all countries in Africa to continue to grow, although real GDP growth rates will vary considerably across the region and some states will stagnate and teeter on the brink of recession.

Economy in Africa in 2023: Things to watch out for

African economies will face turbulent times in 2023 as a range of internal and external shocks undermine the region’s growth prospects and threaten stability, but most of the region will weather the storm and continue to grow.

Resource-intensive economies and major commodity exporters will face challenging market conditions amid a global economic slowdown, but the outlook is far from gloomy as export prices remain reasonably high and competition remains intense for Africa’s resources.

Domestic price pressures will remain elevated—although inflation will ease back from the highs of 2022—and monetary policy will tighten across much of Africa, while the cost of international capital will rise substantially for some economies.

Major concerns surround the heavy burden of debt servicing, instability created by election cycles, geopolitics and war, as well as the lingering threat of food insecurity caused by conflict and adverse weather conditions.

Heavyweights remain stuck in slow-growth mode.

Crucially, regional heavyweights will remain stuck in slow-growth mode, amid more challenging domestic and external economic conditions.

South Africa will grow by just 1.5% in 2023 as higher interest rates, power supply issues and weak demand weigh on domestic and export-oriented business activity.

The country could easily enter a technical recession—two consecutive quarters of negative real GDP growth—in 2023. Similar conditions will hamper
growth in Nigeria, although the economy will benefit from resilient commodities trade and dynamic consumer goods and services markets in major cities, pushing growth to 3.1% in 2023.

Egypt will post growth of just under 3%, which will be less than half of that recorded in 2022,
with the economy propped up as interest rates rise by a positive external contribution as real
exports are supported by devaluation of the pound and liquefied natural gas (LNG) sales to
energy-strapped Europe. Kenya is recovering from the uncertainties of national elections held
in August 2022 and will be the fastest-growing major economy in Africa during 2023, posting
real GDP growth in the region of 5%.

Keyword: Africa, 2023, economy, digital, conflict.