Afreximbank forecasts Africa’s inflation will drop to 7.2% in 2025

• Published On: 08 March 2025 at 17:26

Africa's average inflation rate is expected to fall from 8.6% in 2024 to 7.2% in 2025, according to the February 2025 Afreximbank Research Monthly Developments in the African Macroeconomic Environment report.


The report emphasizes the historical relationship between inflation and interest rates, especially during times of high inflation.

According to the study, as inflationary pressures subside, central banks may have more flexibility to adjust monetary policies.

This could boost economic growth, increase consumer purchasing power, lower borrowing costs, and attract new investment.

Although 18 of the 29 monitored African economies outperformed expectations in 2024, the report predicts that only 11 will continue to grow in 2025.

The report emphasizes the fragility of economic performance, which is influenced by political instability, global economic shifts, and regional uncertainties.

Furthermore, commodity-dependent countries remain vulnerable to price volatility, highlighting the importance of strong domestic policies for long-term growth.

The report also discusses how a strong US dollar in early 2025 weighed on African currencies, fueled by concerns about trade wars and geopolitical uncertainty.

"Countries with relatively weaker macroeconomic positions, such as Nigeria, Egypt, and Ghana, have faced sharper currency depreciations, exacerbated by inflationary risks, fiscal deficits, and investor concerns," according to the analysis.

"Managing exchange rate fluctuations will require a mix of prudent monetary policies, increased foreign investments, and diversification strategies to reduce dependence on volatile external factors"

To deal with economic uncertainty, the report recommends that governments prioritize inflation control, exchange rate stability, and investment-friendly policies.

It emphasizes the importance of addressing structural weaknesses, improving governance, and implementing policies that promote long-term economic resilience.