Key economic insights for 2025
We share key findings from Standard Chartered's Global Focus – Economic Outlook 2025 report that provide insights into the global economy and Africa's economic future.
The Africa section highlights resilience and growth opportunities driven by proactive fiscal policies, sectoral recovery, and enhanced regional cooperation. Below are the key takeaways for Africa, South Africa, and Kenya.
Key economic insights for 2025 in Africa:
- The EU remains the largest trading partner for Sub-Saharan Africa, followed by China.
- Sub-Saharan Africa trade dependency on the U.S. has decreased, largely due to the U.S.'s enhanced energy self-sufficiency.
- Strong reform momentum in South Africa and Nigeria may help buffer against global uncertainties.
- Nigeria is implementing contentious fuel subsidy and foreign exchange liberalization reforms, leading to higher inflation. Expected improvements in FX and price stability by 2025 may attract offshore investor interest in local-currency debt
- Economies that have recently undergone debt restructuring, such as Zambia and Ghana, are expected to stabilize economically.
- Zambia is likely to experience growth gains post-drought; Ghana's inflation is expected to stabilize after the December 2024 elections.
Key economic insights for 2025 in South Africa:
· Growth in 2025 is expected to be supported by improved electricity supply, two-pot pension withdrawals, and the South African Reserve Bank's (SARB) planned policy easing due to improved inflation.
- We forecast 2.0% growth in 2025, the first full year of South Africa’s Government of National Unity (GNU). The repo rate is expected to drop to 7.0% until inflation decreases. CPI inflation is projected at 3.5% in 2025 (3.9%) due to recent food and fuel price declines and modest services inflation. Focus will be on renewable energy initiatives and economic reforms to address structural challenges.
- The 'two-pot pension' are expected to increase consumption: in the first ten weeks of the scheme, starting September 2024, withdrawal applications totalled USD 1.94bn.
- Policy announcements on a formal fiscal rule and a lower inflation target will be the primary focus in 2025. We raised fiscal deficit forecasts to 4.7% (4.2% prior) for FY25 (ending March 2025) and to 4.0% (3.6%) for FY26 on weaker growth and higher spending. S&P upgraded South Africa's BB- rating to positive, forecasting 2.0% growth.
- Escalating global trade tensions remain a risk. The US—South Africa's second-largest trading partner—accounted for 7.52% of 2023 exports (USD 8.31bn), of which one-third have duty- and quota-free access under the Africa Growth and Opportunity Act (AGOA). This will be at risk if AGOA is discontinued. AGOA preferences—to be renewed in 2025—were previously opposed by Trump.
- South Africa is considering a fiscal rule by 2025 and aims to regain investment-grade status, with a focus on growth to stabilize debt.
Key economic insights for 2025 in Kenya:
- Kenya aims to leverage its position as East Africa’s innovation hub, capitalising on infrastructure and digital technology growth. Ongoing investments in transport and energy will enhance regional connectivity and drive growth. However, after the 2024 protests, the government may face political challenges to new revenue measures.
- Kenya faces fiscal consolidation hurdles as its IMF programme ends in April 2025. We forecast weaker growth (4.7%) in 2025. High debt burden (72.4% of GDP) requires primary fiscal surpluses. Fiscal deficit projections exceed government targets.
- We expect a 4.8% GDP deficit in FY25 (ends 30 June 2025), versus the government’s 4.3%; in FY26, we see 4.6% vs 3.8%. Legacy ‘pending bills’ (unpaid official arrears) remain unresolved.
- Inflation management has improved, supported by KES stability and lower oil prices, allowing for potential monetary policy easing in 2025-26. We see 4.7% average inflation in 2025 (5.6%), reflecting a lower starting point, rising to 5.4% in 2026 (4.7%).
- Improved external position, with current account deficits expected to shrink to 4.1% and 4.0% of GDP in 2025 and 2026, aided by lower oil prices and moderate domestic demand. Kenya is advancing its domestic borrowing and considering a potential USD 1.5bn support loan from the UAE, which could cause market yields to decline faster than our current policy rate projections.
- Kenya is increasingly dependent on International Financial Institutions (IFIs) for liquidity support and aims to attract private investments through public-private partnerships.
Standard Chartered remains optimistic about the long-term potential of both nations, emphasising sustainable reforms and investment strategies to navigate global and domestic challenges in 2025.