(Bloomberg) -- The World Bank downgraded its economic growth forecast for sub-Saharan Africa as a raging civil war in Sudan stalled activity and held back the entire region.
Sub-Saharan Africa will likely grow 3% this year, somewhat lower than an April forecast of 3.4%, the Washington-based lender said in its Africa Pulse report published Monday. The region’s economy expanded 2.4% in 2023.
The slower growth rate was largely blamed on the brutal conflict in Sudan which erupted 18 months ago and has continued to escalate. The fighting has displaced around 11 million of the nation’s 48 million people, with many forced into bordering nations, according to the United Nations.
“The downgrade is partly explained by the collapse of economic activity in Sudan caused by the armed conflict, which has destroyed physical and human capital as well as state capacity, with adverse impacts on food security and greater forced displacement,” the World Bank said.
Sudan’s economy alone is expected to contract 15.1% in 2024 and stage a meager recovery the following year, when it is projected to grow 1.3%.
Excluding Sudan, the region is expected to grow at 3.5% in 2024, Andrew Dabalen, the World Bank’s chief economist for Africa, told reporters Friday ahead of the release of the report.
“So that’s how much this is knocking off the regional growth rate,” Dabalen said. “Sudan, the economy, has basically completely disappeared.”
Sub-Saharan Africa’s economic growth is forecast to pick up to an average of 4% in 2025 and 2026. The improvement will be aided by an expected boost from private consumption and investment, fostered by lower interest rates as the region’s rate of inflation slows to 4.8% this year from 7.1% in 2023.
Still, the region’s recovery remains tepid, with income per capita struggling to return to pre-pandemic levels, the World Bank cautioned.
“African governments are making strides to stabilize their finances and close budget gaps,” Dabalen said. “But high debt burdens are limiting investments in critical areas like education, health and infrastructure, which are essential for long-term, inclusive growth.”
As a result, the level of extreme poverty decreased by only 0.5 percentage points between 2022 and 2024, with 36.5% of the continent living on less than $2.15 per day this year. The ranks of the poor mounted to 464 million people in 2024 from 448 million in 2022.
“The high cost of living, corruption, and, more broadly, weak governance have triggered protests and palpable anger among the youth in Kenya, Nigeria, and Uganda — unrest that could spread throughout the region,” the World Bank warned. “Fiscal policies that tackle inequality are critical.”
In its recommendations, the lender said there needs to be more urgency in accelerating economic growth, reining in debt and addressing high borrowing costs, as well as consolidating public finances. It also recommended investing in human capital, with a particular focus on improving education.
“The most important frontier will begin to be about bringing fiscal deficits under control,” Dabalen said. “What that means is, of course, thinking about how to reduce and have efficient priorities, reforming fiscal compacts between citizens and government.”
--With assistance from Karl Maier.
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