Africa’s economic growth slows in 2026 but projected to rebound

Despite a slight slowdown in economic growth this year due to the war in Iran, Africa’s economic outlook remains strong, the African Development Bank said in its annual report released on Tuesday.

Africa’s economic growth will slow this year to 4.2 percent – down from 4.4 percent last year – as geopolitical tensions roil supply chains, the African Development Bank (AfDB) said on Wednesday.

But the continent’s growth is holding firm, the Bank said, outstripping Europe and Latin America, and is projected to rebound to 4.4 percent in 2027.

For now, rising energy and import costs are taking a toll. East Africa – the continent’s fastest-growing region – is projected to ease to 5.9 percent growth, down from 6.6 percent in 2025. A rebound to 6.4 is expected next year.

Central Africa is one of the few regions expected to improve – up to 3.8 percent from 3.6 last year.

Southern Africa remains subdued at 2.1 percent – compared to 2.3 in 2025 – weighed down by high energy costs and weakened mining and agricultural output.

And risks remain significant, the AfDB warned, including 10.4 percent inflation this year.

Supply and energy chain disruptions due to the Strait of Hormuz blockade could weigh on fiscal and external balances. Market volatility and exchange rate deprecation could also see debt increase.

Global political divisions could see pressures on external financing flows increase, including official development assistance.