The economy of Sub-Saharan Africa is expected to grow by an average of 4.2% in 2025, compared to 3.8% the previous year, according to forecasts by the ratings agency Moody's Ratings. In this context, Moody's has revised its outlook on credit fundamentals in the region from negative to stable, highlighting fiscal consolidation efforts that tend to reduce debt levels

Titled “Sovereign — Sub-Saharan Africa: 2025 outlook stable as financing conditions improve; but debt costs still high”, the report states that the region's average economic growth is expected to be higher than that recorded over the past decade, which was marked by several endogenous and exog& shocks. such as the fall in commodity prices during the 2014-2016 period, the Covid-19 pandemic and the surge in inflation following the outbreak of the Russian-Ukrainian conflict

The expected increase in growth during the current year is expected to result in particular from the easing of financial conditions, increased investments in infrastructure and the energy sector, the acceleration of the pace of economic reforms and the expansion of the service sector.

Moody's analysts note that the fall in inflation and the fall in key rates operated by the world's main central banks will support a general trend of easing monetary policy in the region, which would allow for a gradual reduction in financing costs. However, these costs are expected to remain higher than in the pre-COVID-19 period. Thus, the constraints related to the availability of financing will persist for a number of states, while the high need for financing necessary to service external debt in relation to usable foreign exchange reserves will constitute another source of sovereign risk. A sustained appreciation of the dollar in 2025 could also increase the cost of servicing foreign currency debt.

The US agency further noted that South Africa and Nigeria, the two largest economies in the region, will continue to implement economic reforms that will strengthen their solvency and growth prospects.

“For South Africa, improvements will be gradual, despite a significant reduction in power cuts and power outages, while Nigeria should continue its efforts to establish a better performing foreign exchange market,” she said.

Moody's also expects significant foreign direct investment flows to countries producing the raw materials needed for the energy transition.