The World Bank downgraded today the economic growth forecasts for all Portuguese-speaking African countries (PALOP) due to the ongoing conflict in the Middle East. It also shaved 0.3 percentage points off the overall growth estimate for Sub-Saharan Africa, which is now expected to expand by 4%.
In its Global Economic Prospects report published in Washington, the World Bank projects Angola to grow at 2.4%, representing a 0.2 percentage point cut from January. Meanwhile, the island nation of Cape Verde saw its economic outlook reduced by 0.4 percentage points, falling from 5.2% down to 4.8% for this year.
Facing a much sharper decline, Equatorial Guinea is expected to return to an economic recession this year with a contraction of 3.5%. This follows a massive 3.9 percentage point downward revision by the World Bank. Guinea-Bissau is now projected to grow by just 4.8%, a 0.4 point drop from its previous estimate.
Mozambique, which suffered a recession last year from post-election violence in late 2024, is forecast to expand by a mere 0.9% after economists slashed its outlook by 1.9 points. Lastly, São Tomé and Príncipe is expected to grow by 2.9%, a 1.1 point decrease from January.
Read more: Only Guinea-Bissau escapes World Bank downgrades for PALOP
For the Sub-Saharan region as a whole, the World Bank expects a 4% expansion, down from the 4.3% projected at the start of the year. Growth in the area is forecast to accelerate slightly to 4.4% in 2027 and 4.5% in 2028, compared to the 4.1% recorded last year.
The international organization explicitly warned of a likely worsening of food insecurity and reduced agricultural yields caused by lower fertilizer use. This structural deficit could easily result in severe food shortages during the second half of 2026 and throughout 2027.
World Bank economists noted that regional governments have faced much tighter policy constraints compared to other developing areas around the globe. Preliminary data indicates that the broader disinflation process may have stalled, as the annual global headline inflation rate accelerated once again in April.
This trend persists despite government measures to protect vulnerable groups, such as Angola delaying its planned subsidy reforms. The negative fallout from the Middle East conflict is expected to completely outweigh current growth drivers, including structural reforms and recent trade agreements.
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While oil-exporting nations like Angola and Nigeria might see short-term revenue improvements, most African countries face highly challenging macroeconomic conditions.
These headwinds include soaring prices and elevated input costs across various production sectors. With public finances already severely strained, the report predicts a harsh impact on recent fiscal consolidation efforts, which will inevitably widen deficits and increase public debt. Furthermore, a projected per capita GDP growth rate of 1.6% remains entirely insufficient to bring about any substantial reductions in regional extreme poverty.
On a global scale, the World Bank expects overall economic growth to slow to 2.5% this year as a direct consequence of the Middle East conflict. The war continues to drive up international energy prices, fuel inflation, and increase borrowing costs across worldwide markets.
If these bleak projections materialize, the global economy will experience its weakest growth rate since the onset of the COVID-19 pandemic. The institution concluded that stabilizing the geopolitical environment is paramount to ensuring any meaningful recovery for developing nations over the next few years.
