By Dr Apanisile Temitope Samuel, PhD*
The global economy in 2024 experienced a challenging yet transitional year. Growth moderated in advanced economies as central banks maintained tight monetary policies to combat lingering inflation. Supply chain disruptions eased, but geopolitical tensions, including the ongoing Russia-Ukraine conflict, kept energy prices volatile. Emerging markets displayed resilience, buoyed by rising commodity prices and domestic reforms, though external debt pressures remained a concern.
2024 Africa Economic Recap
Africa faced a mixed economic performance in 2024. High inflation and currency depreciation affected several countries, but structural reforms and digital innovation spurred growth in key sectors. Commodity exporters benefited from elevated prices, while regional integration initiatives, such as the African Continental Free Trade Area (AfCFTA), began to yield incremental benefits. The strengthening of the Cefa currency against the Naira highlighted shifting regional economic dynamics, particularly in West Africa.
Global Economic Outlook for 2025
Overview
The global economy in 2025 is poised to navigate a complex landscape marked by divergent growth trajectories, inflationary pressures, geopolitical tensions, and transformative structural changes such as digitalization and green transitions. While growth is expected to moderate in advanced economies, emerging markets are likely to outpace their developed counterparts, driven by technological adoption, infrastructure investments, and demographic dynamics.
Regional Analysis
United States
Economic Outlook: The U.S. economy is expected to experience moderate growth of 1.8%-2.2%, primarily driven by consumer spending and investment in technology sectors. The Federal Reserve’s stance on interest rates will be critical as inflation, though easing, remains above the 2% target.
Asset Classes to Watch:
- Equities: Focus on technology, clean energy, and healthcare sectors due to structural shifts.
- Fixed Income: High-quality corporate bonds and inflation-protected securities (TIPS) will gain traction amidst a moderating rate cycle.
- Real Estate: Industrial and logistics properties driven by e-commerce growth.
United Kingdom
Economic Outlook: Growth in the UK is forecast at 0.8%-1.3%, constrained by Brexit-related trade disruptions and subdued investment sentiment. Inflationary pressures will persist, though easing marginally.
Asset Classes to Watch:
- Equities: Defensive sectors such as utilities and healthcare.
- Fixed Income: Short-duration bonds as the Bank of England maintains a cautious approach.
- Commodities: Precious metals like gold, as a hedge against currency volatility.
Euro Area
Economic Outlook: The Eurozone is projected to grow at 0.7%-1.2%, hampered by weak demand, an aging population, and energy transition costs. Fiscal policy coordination will be crucial for recovery.
Asset Classes to Watch:
- Equities: Companies leading in green energy and industrial automation.
- Fixed Income: Sovereign bonds of fiscally strong nations like Germany and the Netherlands.
- Green Bonds: Investments aligned with the European Green Deal initiatives.
China
Economic Outlook: China’s economy is expected to grow at 4.5%-5.2%, bolstered by domestic consumption, high-tech manufacturing, and policy support for strategic industries. However, real estate overhangs and geopolitical tensions may dampen sentiment.
Asset Classes to Watch:
- Equities: High-tech and consumer discretionary sectors.
- Fixed Income: Local government bonds tied to infrastructure development.
- Commodities: Industrial metals like copper and rare earths, critical for technology manufacturing.
Japan
Economic Outlook: Japan is forecast to grow modestly at 0.8%-1.1%, driven by exports and policy measures to stimulate wage growth. Structural reforms will remain pivotal.
Asset Classes to Watch:
- Equities: Robotics, AI, and automation leaders.
- Fixed Income: Government bonds, particularly for yield-seeking investors.
- Currency: Yen as a safe-haven asset amid global uncertainty.
India
Economic Outlook: India is set to expand at 6.5%-7.0%, underpinned by robust domestic consumption, infrastructure investment, and a burgeoning digital economy. Reforms in labor and land markets will further boost growth potential.
Asset Classes to Watch:
- Equities: IT, financials, and infrastructure sectors.
- Fixed Income: Sovereign and corporate bonds for high real yields.
- Commodities: Agricultural commodities benefiting from policy support.
Russia
Economic Outlook: Russia’s growth prospects are muted at 0.5%-1.0%, hindered by sanctions, geopolitical isolation, and declining energy export revenues. Domestic resilience in agriculture and technology sectors will partially offset these challenges.
Asset Classes to Watch:
- Equities: Agriculture and technology sectors.
- Fixed Income: Ruble-denominated bonds for domestic investors.
- Commodities: Energy commodities as Russia seeks alternative markets.
Projected Economic Growth Rates for Global Regions in 2025
Africa Regional Analysis
Economic Outlook: Africa’s economic growth in 2025 is projected to average 3.5%-4.0%, supported by rising commodity prices, urbanization, and digital innovation. Challenges include debt vulnerabilities, climate-related risks, and geopolitical tensions.
Key Countries:
Nigeria
Economic Outlook: Nigeria’s growth is expected to reach 2.5%-3.0%, driven by non-oil sectors such as agriculture, technology, and manufacturing. Persistent inflation and currency pressures remain key concerns.
Asset Classes to Watch:
- Equities: Technology and consumer goods sectors.
- Fixed Income: Government securities offering high yields.
- Commodities: Oil and gas, though diversification is increasing.
South Africa
Economic Outlook: Growth is forecast at 1.0%-1.5%, constrained by structural issues such as energy shortages and high unemployment. Policy reforms will be critical.
Asset Classes to Watch:
- Equities: Mining and financial sectors.
- Fixed Income: Sovereign bonds with attractive yields.
- Real Estate: Opportunities in urban commercial spaces.
Egypt
Economic Outlook: Egypt’s economy is projected to grow at 4.5%-5.0%, supported by infrastructure investments and a resilient tourism sector.
Asset Classes to Watch:
- Equities: Construction and consumer sectors.
- Fixed Income: Treasury bills benefiting from monetary tightening.
- Commodities: Energy and agricultural exports.
Ghana
Economic Outlook: Ghana is expected to grow at 4.0%-4.5%, driven by gold production, cocoa exports, and fintech innovation.
Asset Classes to Watch:
- Equities: Banking and technology sectors.
- Fixed Income: Local currency bonds.
- Commodities: Gold and cocoa.
Kenya
Economic Outlook: Kenya’s growth is forecast at 5.0%-5.5%, underpinned by robust agricultural output and digital economy expansion.
Asset Classes to Watch:
- Equities: Agricultural and fintech sectors.
- Fixed Income: Infrastructure bonds.
- Commodities: Coffee and tea exports.
Benin Republic
Economic Outlook: Benin is projected to grow at 6.0%-6.5%, supported by trade, agriculture, and a stronger Cefa currency. The appreciation of the Cefa against the Naira in 2024 has made the region attractive for cross-border investments.
Asset Classes to Watch:
- Equities: Export-oriented industries.
- Fixed Income: Regional bonds with stable yields.
- Commodities: Cotton and cashew nuts.
Africa’s Asset Class Implications
Equities
Africa’s equity markets will benefit from structural reforms, urbanization, and sector-specific growth. Technology, agriculture, and consumer goods are key areas.
Fixed Income
High-yielding sovereign and corporate bonds remain attractive, especially in countries with stable macroeconomic environments like Ghana, Kenya, and Benin.
Commodities
Natural resources such as gold, oil, cocoa, and agricultural products will continue to drive Africa’s export revenues.
Real Estate
Urbanization and infrastructure development present opportunities, particularly in commercial and residential properties in fast-growing cities.
Projected Economic Growth Rates for African Countries in 2025.
Strategic Recommendations for Africa
- Localized Investments: Leverage regional knowledge to navigate regulatory and market-specific risks.
- Thematic Focus: Invest in sectors aligned with Africa’s structural trends like fintech, agriculture, and green energy.
- Risk Mitigation: Use diversification and currency hedges to manage volatility.
- Private Equity: Explore opportunities in startups and SMEs driving innovation in high-growth sectors.
Conclusion
The global economy in 2025 presents a landscape of cautious optimism, with opportunities emerging amidst challenges. Africa, in particular, offers unique growth avenues, driven by demographic and structural trends. Investors must adopt a dynamic, data-driven approach to navigate this environment, balancing risk and reward to achieve sustainable growth.
Expert Guidance for Navigating the Global & Local Economy
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* Dr Apanisile Temitope Samuel, PhD, Head- Investment Advisory, REKIT Financial Advisors
More information : rekitonline.com
