Sub-Saharan Africa delivered its strongest economic performance in over a decade in 2025, only for the momentum to be immediately disrupted by the Middle East conflict, which the International Monetary Fund (IMF) warns has placed hard-won stabilization gains under significant pressure heading into 2026.
- •Regional GDP growth accelerated to 4.5% in 2025 from 4.2% in 2024, the fastest pace in ten years, with the expansion broad-based across resource-intensive, non-resource-intensive, fragile states, and low-income country groups.
- •Growth exceeded 6% in ten economies, with Benin, Côte d'Ivoire, Ethiopia, Rwanda, and Uganda among the fastest-growing globally. Median inflation fell sharply to 3.4% at end-2025 from 4.8% at end-2024, the median fiscal deficit narrowed to 3.0% of GDP from 3.4%, median public debt fell to 53.1% of GDP from 57.2%, and the current account deficit narrowed to 3.8% of GDP from 4.2%.
- •Eurobond issuances reached US$ 14 billion in 2025, with a further US$ 5.5 billion in the first two months of 2026; Ethiopia, Ghana, and Zambia made significant progress on sovereign debt restructuring over the course of the year.
The war in the Middle East has now clouded the outlook with oil, gas, and fertilizer prices rising sharply, shipping costs increasing, and trade being disrupted. Fuel availability has tightened in Ethiopia, Kenya, the Democratic Republic of Congo, Malawi, Sierra Leone, and Zambia, with pump price increases recorded in Kenya, Mali, Malawi, Nigeria, and Zimbabwe. In some economies, fuel supply disruptions are already affecting electricity generation, transport, and mining.
Tourism has weakened in Rwanda and Seychelles, while remittances face pressure in countries with large diaspora populations in the Gulf. Financial conditions have tightened, with higher risk premia and rising sovereign yields concentrated among fuel importers, intensifying exchange rate pressures in Ghana, Mozambique, and South Africa.
Regional growth is now projected at 4.3% in 2026, 0.3 percentage points below the pre-war forecast, with median inflation expected to rise to 5.0% by end-2026 from 3.4% at end-2025. Non-resource-intensive oil-importing economies face the sharpest deterioration, with current account deficits projected to worsen by approximately 1.4 percentage points of GDP. Oil exporters will benefit from stronger export revenues but remain exposed to volatility and procyclical policy risks. The median fiscal deficit is projected to widen to 3.2% of GDP in 2026 from 3.0% in 2025.
The IMF's severe downside scenario, which assumes a prolonged conflict and a risk-off episode, points to significantly worse outcomes. Regional output could decline by 0.6% in 2026 relative to the pre-war baseline, with oil-importing economies facing a 1.5 percentage point hit to real output in 2026 and a 2.8 percentage point contraction in 2027.
Regional inflation could jump by as much as 2.4 percentage points in 2026. A 20% increase in international food prices could push more than 20 million people into moderate or severe food insecurity, with two million children under five at risk of acute malnutrition at peak pass-through levels. Under this scenario, global growth would be reduced by 1.3 percentage points in 2026, a close call for a global recession, which has occurred only four times since 1980.
Kenya sits squarely in the most exposed category with the IMF cutting Kenya's 2026 growth forecast to 4.5% from 4.9% and revising inflation up to 5.9% from 5.2%, citing higher energy costs, remittance risks, and export disruptions.
Government debt is also projected to rise to 71.6% of GDP in 2026, well above the statutory debt anchor of 55% set under the Public Finance Management Amendment Act 2023, with the fiscal deficit projected at 6.4% of GDP. The government has until 2028 to return to the 55% threshold, a target that the IMF's projections suggest is increasingly out of reach.
The IMF has urged central banks to keep inflation expectations anchored and avoid premature easing, while recommending targeted, time-bound fiscal support for vulnerable populations.
On the medium term, the Fund has called for accelerated reforms to shift the region toward private sector-led growth, noting that closing half the structural gap with emerging markets in governance, business regulation, and external sector reform could raise regional output by up to 20% over five to ten years.
