World Bank Revises Africa Growth Forecast As Global Instability And Debt Pressures Mount

Source: Reuters. Andrew Dabalen, chief economist, Africa region, World Bank, speaks during the World Bank Group and the International Monetary Fund annual meetings in Washington, DC, US, 18 October, 2025.

The lender now expects growth of 4.1% in 2026, unchanged from 2025 but down from the 4.4% the World Bank forecast in October. Numbers were revised down since the war in the Middle East broke out in late February, pushing up fuel and fertilizer costs and threatening investment flows while heavy debt burdens already were a drag on growth, the bank said.

The warning comes as Washington and Tehran agreed to a two-week ceasefire, though the US Energy Information Administration cautioned on Tuesday that fuel prices could continue to rise for months even after a reopening of the Strait of Hormuz, through which about one-fifth of global oil shipments pass.

Andrew Dabalen, World Bank chief economist for Africa, said the downgrade reflected a much tougher external environment than policymakers had expected late last year.

"Since then, we have had the Middle East war that is ongoing, and both energy and fertilizer prices have risen sharply," he said during a news briefing, adding the length and scale of the disruption was as yet uncertain.

At the same time, uncertainty was growing around investment from Gulf countries, which have become major investors in Africa, especially in East Africa, in sectors including mining, renewable energy, real estate and ICT. Remittance flows could also come under pressure if prolonged conflict weakens labour demand in the Middle East, where many African migrants work.

The shock is landing as many governments have little room to respond. Dabalen said debt-servicing costs had doubled from 9% of revenues in 2017 to about 18% in 2025, while about half of African countries were either at high risk of or already in debt distress.

"There is very little scope actually for these countries to deal with this crisis because they just don't have a lot of fiscal space," he said.

Data for eastern and southern Africa showed the strain was concentrated in oil-importing and financially vulnerable economies with limited policy room, including Burundi, Malawi, Ethiopia, Kenya and Mozambique. Kenya could face a sharp inflation shock under severe scenarios, while Ethiopia had about 750,000 workers in Saudi Arabia alone.

Dabalen was more cautious about the West Africa outlook, saying the fertilizer data there were still incomplete and could be updated.

"You shouldn't take this to mean that, in fact, West Africa is probably going to be okay when it comes to fertilizing," he said.