IMF Projects 4.5% Growth for African Economies Despite Iran War Shocks

Keypoints:

• African economies are projected to grow 4.5% in 2026.
• Development aid is expected to fall 12% this year.
• West African nations are increasing control over mineral resources.
• AI adoption could boost growth by over 4% in a decade.
• Conflict, energy disruptions and climate shocks threaten growth.

African economies have weathered the energy crisis triggered by the Iran war relatively well, but declining foreign aid and persistent conflicts are leaving the continent vulnerable to future economic shocks, the International Monetary Fund (IMF) said Thursday.

The IMF projects Africa’s economy to grow by 4.5% in 2026, slightly above its previous estimate, before reaching 5% in 2027. However, development assistance to the continent fell sharply in 2025 and is expected to decline by another 12% this year, according to Zeine Zeidane, head of the IMF’s Africa department.

Speaking at the IMF and World Bank annual meetings in Bangkok, Thailand, Zeidane warned that reduced aid leaves African countries with limited capacity to absorb further shocks. Renewed energy supply disruptions, rising global financial uncertainty and a strong El Niño weather pattern could intensify economic pressures. Persistent conflicts and insecurity also threaten food security in parts of the continent.

Despite these risks, several African countries have introduced reforms to strengthen economic resilience. Some are also benefiting from rising prices for critical minerals used in advanced technologies, including artificial intelligence (AI). The IMF has urged governments to manage these revenues effectively and adopt AI to improve productivity and competitiveness.

Guinea’s Economy, Finance and Budget Minister Mariama Cire Sylla highlighted the Simandou iron ore project as a key part of the country’s long-term economic transformation strategy. A railway connecting the mining area to the coast is expected to support the project. Despite Guinea’s substantial mineral wealth, approximately half of its population lives in poverty. The government aims to use mining revenues to diversify the economy and stimulate investment in other sectors.

Burkina Faso Finance Minister Aboubakar Nacanabo also stressed the importance of retaining more economic value from strategic resources such as gold, cobalt and copper. The country has opened its first gold refinery as its military-led government pursues greater economic sovereignty. Other West African countries, including Guinea and Ghana, have introduced restrictions on gold exports, while Mali is developing a refinery in partnership with Russia’s Yadran Group. Ivory Coast has also announced plans to open a refinery next year.

The IMF also highlighted AI as a potential driver of long-term economic growth. Zeidane said wider adoption and adaptation of AI could increase Africa’s economic growth by more than 4% over the next decade. Agriculture, education, healthcare and government services could benefit from productivity improvements, particularly in sectors where output remains below international benchmarks.

However, the IMF warned that economic risks remain tilted to the downside. Declining development assistance, geopolitical instability and climate-related disruptions could undermine the continent’s growth prospects despite ongoing reforms and opportunities in mineral exports and emerging technologies.