The Economic Community of West African States (ECOWAS) is slowing and is projected to see regional GDP growth of 5.0% in 2025, following a succession of nice results in the prior year.
The West Africa Development Bank reported this slowdown in growth, accompanied by tensions in trade and shifts in political circumstances that have readjusted the economic outlook for the region as a whole and each of the 15 members of the bloc.
Regional Growth in Context
The ECOWAS region, has historically one of the faster-growing economic zones in Africa, had recently seen outstanding numbers, with early indications suggesting even stronger growth. For example, the Central Bank of West African States (BCEAO) forecasted that the Union Économique et Monétaire Ouest Africaine (UEMOA), which is part of ECOWAS, would see growth of 6.3% in 2025. This upbeat outlook was supported by dynamics in the extractive industries, manufacturing and agriculture, strong increases in bank credit and an overall downward trend in inflation.
However, for the overall ECOWAS region, recent figures suggest that internal disruptions and external pressures are softening that growth.
Underlying Causes for the Stagnation
1. Tensions in trade and policy misalignment
Despite the region’s strong trade statistics, West Africa has faced challenges that limit it from fully exploiting this trading power. The slow progress in cross-border agreements and trade policy harmonization has failed to keep pace with the aspirations of the bloc and has hampered longer-term growth. Various analysts from the World Economic Forum have noted that gaps in implementation and regulatory barriers remain important factors, especially as the region considers broader continental markets moving forward.
2. The results of political transitions and security challenges
The past few years have produced a series of political transitions among ECOWAS member countries, particularly in Burkina Faso, Mali, and Niger; as well as extensive security challenges in the Sahel, which have created additional economic uncertainty, affected or deterred foreign direct investment, and complicated regional policy cooperation.
3. External Influences and Commodity Price Volatility Everywhere
The ECOWAS economies are still highly vulnerable to shocks in the global commodity price level, especially in oil in Nigeria, and cocoa in Ghana and Côte d’Ivoire. Any decline in price or reduction in supply may quickly transmit through the region and magnify their fiscal and current account constraints. Burkina Faso continues to be affected by insecurity and climate shocks, when there were notable improvements towards agricultural and mining-led growth.
4. Inflation and Financial Stability
While inflation appeared to be easing in late 2024, persistent price pressure is still evident, especially in food and energy with extreme sensitivity to global trend lines. The BCEAO anticipates inflation in the region will stabilize at around 2.7, providing some relief to consumers but also are cautioning that risks, including external shocks in ag commodities and climate change, are high.
Outlook: Pessimism fused with Optimism, Resilience Tested
Although a projection of 5.0% growth reflects a small slowdown, it stands above the 2023 continental average forecast for Africa and reflects the ECOWAS region’s resilience to shocks. With the right reforms, and improved trade integration and investment in both infrastructure and human capital, a renewed growth path could see West Africa reduce its exposure and vulnerability to external shocks.
