Africa’s growth could outpace Asia’s this year

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Call it a statistical quirk if you must. But this year, with a bit of luck, Africa will grow faster than Asia. If the 54 African economies manage to outpace their Asian counterparts, it would be the first time in modern history that this has happened.

To achieve it, African economies will need to grow marginally faster on average than they did last year. In 2025, despite war in Sudan, insurgency in the Sahel and coups in Madagascar and Guinea Bissau, sub-Saharan Africa is expected to have mustered growth of about 4.1 per cent. The IMF expects this to notch up to 4.4 per cent as economies continue to reap the benefits of a weak dollar — good for cutting debt-service payments and easing inflationary pressure — and of high commodity prices, including for gold and copper.

At the same time, the IMF is predicting that, as the Chinese motor whirrs more slowly, the combined economies of Asia will slow in 2026 to around 4.1 per cent.

That sets up the intriguing possibility of the two continents — one associated with miraculous economic acceleration, the other with endemic poverty — crossing over in growth terms. Even if it doesn’t happen in 2026, contrasting demographics and different stages of development make it a likely outcome in the years ahead.

This should not come as a surprise. It is far easier for poor countries to grow quickly than richer ones. China, once-impoverished, has been expanding at breakneck speed in the more than four decades since Deng Xiaoping, the architect of reform, let the capitalist cat out of the communist bag.

With annual growth averaging nearly 10 per cent for much of that time, China’s economy — the biggest driver of Asia’s growth and hence now the biggest contributor to its slowdown — has grown from $150bn in 1978 to around $20tn. Today its economy is seven times the size of Africa’s with roughly the same number of people. But as it closes in on upper income status (and as its workforce begins to age and shrink) growth at those heady rates is no longer possible.

It would be nice to say that Africa is going in the opposite, more positive, direction. But the continent is treading water. It was growing faster at the turn of the century, when China’s ravenous appetite for commodities — and its investments in African infrastructure — catalysed growth of 5 per cent. That engendered the overexcited Africa Rising narrative. Like a boat on a rising tide, Africa Floating would have been more realistic.

Since then, high indebtedness, bad policies, corruption, conflict and global shocks have taken their toll. Savings rates remain low and the amount of capital flowing into Africa is insufficient to spur transformative growth. Foreign investors have been put off by exaggerated perceptions of African risk and a reasonable assessment of lack of scale, given its $3tn economy is carved into 54 pieces.

Still, averages obscure. Some countries have made steady, even remarkable, progress. Ivory Coast has been growing at between 6 and 7 per cent for the past 15 years as it recovers from civil war and diversifies economically. The country may have what it takes to use new revenues from oil and gas to reach its goal of upper-middle income status by 2035.

Other countries that have racked up years of strong growth include Ethiopia, Ghana, Mauritius, Rwanda and Senegal. Some have done so despite civil war, political crises and debt default. Next year, at least half of the top 20 fastest-growing economies will be African, according to the IMF. Though neither Egypt nor Nigeria, two of Africa’s biggest economies, will make that list, both should approximate the continental average. Only South Africa, the other big economy, continues to lag.

Growth of 4 or 5 per cent is not much to brag about. More than 2 per cent of that can be explained by population expansion, leaving just 2-3 per cent for per capita growth — which is not enough to replicate Asian-style transformation. Sustained growth of at least 7 per cent is required for that.

There are reasons to hope that this can happen as the continent gains momentum. There are also reasons to fear that it can’t. Many African economies lack the basics needed for industrial take-off: power, infrastructure and an adequately literate population. Nor, in the age of automation and AI, is it a given that the path to development via intensive manufacturing is still open.

The world should be hoping for Africa’s success. By 2050, more than one in four people will be African. The continent will have a larger working-age population than China and India combined. If Africa is not on a better trajectory, we will all know about it.