Economic growth in Tunisia is expected to slow from 1.5% in 2023 to 1.8% in 2024, according to the World Economic Situation and Prospects 2024 report, published on Thursday by the United Nations Department of Economic and Social Affairs.
Inflation is also set to fall from 9.4% in 2023 to 8.9% in 2024, according to the report.
Economic growth in Africa is projected to remain weak, increasing from an average of 3.3 per cent in 2023 to 3.5 per cent in 2024.
The global economic slowdown, tighter monetary and fiscal conditions, and high debt sustainability risks will remain a drag on the region’s growth prospects.
Economic growth in Africa is projected to remain modest, buffeted by the global economic slowdown, tighter monetary and fiscal conditions, and a worsening debt sustainability situation, reaching 3.5 per cent in 2024, a slight improvement from 3.3 per cent in 2023.
According to the report, many African economies faced significant inflationary pressures in 2023, largely because of high fuel and food prices.
Several African currencies, except for the institutionally pegged CFA Franc, faced depreciation pressures due to weak export earnings and limited external financing inflows.
These challenges notwithstanding, the continent’s economy is forecast to grow by 4.2 per cent in 2025.
High debt burden and exorbitant borrowing costs limit space for investment and growth
Debt sustainability challenges pose a significant headwind to Africa’s growth prospects.
According to the latest estimates, 18 countries in Africa recorded a debt-to-GDP ratio of over 70 per cent in 2023, with many of them facing debt distress. Access to, and high cost of, development financing remains a daunting challenge, with debt overhangs preventing many African countries from accessing funds at affordable rates from international capital markets.
Borrowing costs remain elevated, with estimates showing that borrowing costs for the African countries are approximately 4 times higher than that of the developed countries.
Weak trade performance, climate change impacts and geopolitical instability cloud outlook
The overall weak trade performance globally has also weighed down on African growth, due to a subdued demand from key export markets and commodity prices levelling off, the UN said.
The Africa Continental Free Trade Agreement (AfCFTA) is still being rolled out and its impact is yet to materialize.
The geopolitical instability will continue to adversely impact several subregions in Africa, notably the Sahel and North Africa.
The effects of climate change continue to pose significant downward risks for Africa’s economy.
The continent is losing out on its economic potential due to the rising frequency and impacts of climate-induced events and natural disasters.
Although several countries have become increasingly active in investing in the green transition, climate financing flows to Africa fall far short of its needs – the estimated annual financing gap is about US$120 billion, and the continent receives only 2 per cent of global clean energy finance flows.
The Loss and Damage Fund, formally adopted at the COP28 Climate Summit, is expected to redress some of the climate finance gaps in Africa.
