Market research and intelligence company BMI has lowered its forecast headline growth rate for sub-Saharan Africa for this year to 3.7%, from its earlier projection of 3.8%, but points out that headline growth will still be an acceleration from the 3.4% growth recorded in 2024.

As part of its 'Sub-Saharan Africa Key Themes For 2025: Mid-Year Review', it noted that the outlook for other resource-based markets had also dimmed slightly, with aggregate growth now forecast at 3.4%, down from 3.5% in November 2024, while the average growth outlook for non-resource-intensive markets had improved to 5.1% from 4.7%.

During the revision, BMI also cut the forecast growth for traditional oil exporting countries by about 0.2 percentage points, largely owing to downward oil price revisions.

“Available data for the first quarter of 2025 supports our view that non-resource intensive markets are performing well this year, with strong growth prints in Côte d'Ivoire, Rwanda and Uganda.”

Further, non-oil resource intensive markets have had a mixed start to the year, with political tensions in Mozambique and diamond market malaise in Botswana contributing to contractions in these markets in first quarter of the year. Additionally, Angola’s first-quarter growth came in above expectations at 3.5%.

However, the BMI team still expected full-year growth to slow to 1.5% this year from 4.4% in 2024 as oil output declined, it noted.

“At the beginning of the year, we said we expect non-resource intensive markets in the region to outperform their peers, especially traditional oil producers, in 2025.

“Additionally, we had forecast that lower oil prices will support private consumption and fixed investment for net oil importers, while producers of commodities deemed critical for the global energy transition, such as copper and cobalt, will benefit from increasing global demand during the year,” said BMI sub-Saharan Africa country risk analyst Andreu Paddack.

“So far, this outlook is playing out and is expected to persist despite global economic volatility,” he said during a webinar briefing on July 22.

Meanwhile, early signs indicate that its forecast that structural constraints will keep fiscal improvement efforts slow this year is unfolding as expected.

Several governments that ran sizeable fiscal deficits last year have shifted toward greater fiscal restraint. In Ghana, the unwinding of election-related spending has contributed to the budget deficit narrowing to 1% of GDP in the first quarter of this year, down from 2.2% a year earlier.

Additionally, the Senegalese authorities have pledged stronger fiscal discipline, following the Court of Auditors’ revelations of widespread under-reporting of expenditure and public debt, and the subsequent suspension of the country’s International Monetary Fund programme.

Similarly, in Tanzania, the new 2025/26 fiscal year budget outlined a renewed fiscal tightening drive, centred on tax reform, new levies and improvements in revenue collection, Paddack said.

However, fiscal consolidation progress across sub-Saharan Africa remained sluggish and constrained by political headwinds, he added.

“In South Africa, we now project the budget deficit to widen in its 2025/26 fiscal year, owing to the withdrawal of a planned value-added-tax increase, after opposition forced revisions to the initial budget.

“In Kenya, the authorities did not include tax hikes in the 2025/26 budget, signalling slow progress towards narrowing the deficit.

“Meanwhile, Nigeria’s fiscal consolidation efforts appear to have stalled at the beginning of the year, as weaker oil prices and limited gains in non-oil revenue weighed on federal intakes,” Paddack said.

MULTI-POLAR ENGAGEMENT
BMI added that its forecast that superpowers would lose ground and sub-Saharan Africa would see more multi-polar engagement is so far playing out as expected, he said.

The effective shutdown of the US Agency for International Development would accelerate the decline of US influence in the region, as aid had been a key source of soft power. This decline would be exacerbated by punitive tariff policies and blanket travel bans targeted at many sub-Saharan African markets, he added.

Additionally, while China will remain a key player in the region, its influence is being tested as African markets look to reduce reliance on a single economic power.

Further, structurally slower growth in China will encourage sub-Saharan African countries to diversify and, as expected, other markets have stepped in.

The United Arab Emirates has offered loans to Kenya, built hospitals in South Sudan and allegedly continued supplying the Rapid Support Forces in Sudan.

Meanwhile, Indian PM Narendra Modi has already visited Mauritius, Ghana and Namibia in 2025, while he only visited the region twice from 2022 to 2024.

Additionally, Türkiye continued to deepen its engagement, selling drones to Kenya, investing in Ugandan ports and mediating, albeit with limited success, in the Horn of Africa, said Paddack.

SOUTH AFRICA
Meanwhile, the BMI team said it expected South Africa to record 1.1% real GDP growth this year, down from the 1.3% forecast at the beginning of the year.

This revision also reflected the print of 0.1% growth during the first quarter of the year and the downward revision to historical growth data by Statistics South Africa, said BMI sub-Saharan Africa country risk analyst Lara Wolfe.

“Growth remains below pre-pandemic levels, weighted by high unemployment and persistent structural challenges,” she said.

Household spending should see some benefit from lower inflation and monetary easing by the South African Reserve Bank, but the country’s high unemployment rate of above 30% would continue to cap consumption gains, she said.

However, the team expected growth to pick up slightly to 1.6% in 2026 owing to ongoing private investment as well as energy and transport gains gradually yielding improvements in the business environment, said Wolfe.

While monetary easing would support domestic growth, growth would still lag other emerging markets, with significant downside risks, including risks to inflation and monetary policy outlooks if global or domestic shocks drove prices higher, she added.

Further, while the August 1 deadline for higher tariffs on South African imports to the US may be extended, if high tariffs were implemented, South Africa would likely see a decline in export volumes, particularly given that there were limited alternative markets, especially for its manufactured and agricultural goods, she said.

South Africa's primary exports of critical minerals to the US were largely exempt from tariffs, and the automotive sector was already subjected to about 25% tariffs, which helped to limit the impact of new US tariffs on the South African industry's competitiveness, said Wolfe.

“In contrast, we expect to see a larger disruption in the agricultural sectors from the higher US tariffs, particularly affecting citrus, wine and macadamia nuts.

“While the US tariffs on agricultural goods for regions competing with South Africa have not yet been finalised, including for Latin America, European countries, New Zealand and Australia, those countries received much lower tariffs during the April announcements.

“This creates a substantial competitiveness risk for South Africa's agricultural producers,” she said.