Pedestrians shop in a roadside market in Lagos, Nigeria. AP Photo.
The revision was outlined in the AfDB’s 2023 Africa’s Macroeconomic Performance and Outlook (MEO) update.
The report cited the ongoing long-term effects of COVID-19, geopolitical tensions and conflicts, climate shocks, and a global economic slowdown as challenges in the way of Africa’s growth.
The report, released on 28 November, also attributed its unoptimistic view to the African central banks’ limited capacity to raise interest rates further to contain inflation without compromising economic recovery.
Additionally, AfDB raised its average inflation projections for the continent for 2023 and 2024 to 18.5 percent and 17.1 percent, respectively, from 15.1 percent and 9.4 percent.
“The entrenched inflationary pressures threaten to reverse all the macroeconomic gains made since the easing of pandemic risks while the continued depreciation of domestic currencies in many countries has exacerbated debt service costs,” said AfDB Chief Economist and Vice President, Kevin Urama.
The AfDB report urged the African countries to continue implementing restrictive monetary policies to contain inflation while implementing fiscal policies that promote economic diversification and remove supply-side constraints.
According to the report, removing supply-side constraints involves addressing issues that hinder the production and supply of goods and services.
This includes improving infrastructure, reducing bureaucratic hurdles, or investing in education and technology.