Sub-Saharan Africa Macro Poverty Outlook Country-by-country Analysis and Projections for the Developing World Spring Meetings 2024 © 2024 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclu- sions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. All queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Sub-Saharan Africa Angola Côte d'Ivoire Liberia Senegal Benin Equatorial Guinea Madagascar Seychelles Botswana Eritrea Malawi Sierra Leone Burkina Faso Eswatini Mali Somalia Burundi Ethiopia Mauritania South Africa Cabo Verde Gabon Mauritius South Sudan Cameroon Gambia, The Mozambique Sudan Central African Republic Ghana Namibia Tanzania Chad Guinea Niger Togo Comoros Guinea-Bissau Nigeria Uganda Congo, Dem. Republic Kenya Rwanda Zambia Congo, Republic Lesotho São Tomé and Príncipe Zimbabwe MPO 1 Apr 24 Angola’s poverty rates stand above what would be expected for a country with its ANGOLA Key conditions and GDP level: as of 2018, a third lived on less than $2.15 per day. Building human capital challenges is a key priority for reducing poverty and boosting growth. Limited access to health Table 1 2023 Angola’s economy remains overly de- and education reduces the productivity of Population, million 36.1 pendent on the oil sector, which ac- an Angolan child to a third of his or her po- GDP, current US$ billion 92.2 counts for a quarter of GDP, 60 per- tential. Important progress is being made GDP per capita, current US$ 2549.9 cent of tax revenues, and 95 percent in building a social safety net, including a 31.1 International poverty rate ($2.15) of exports. Oil production is in struc- the flagship cash transfer program Kwen- a 52.9 tural decline due to oil depletion and da that has registered 1.5 million rural Lower middle-income poverty rate ($3.65) a 78.0 lack of investment, falling from 2 mil- households and initiated payments to 1.03 Upper middle-income poverty rate ($6.85) Gini index a 51.3 lion to 1.1 million barrels per day be- million beneficiaries. Yet, urban house- School enrollment, primary (% gross) b 88.6 tween 2010 and 2023. The reliance on holds remain uncovered and vulnerable to b 61.6 oil has led to high vulnerability to ex- food price shocks. Life expectancy at birth, years ternal shocks, undermining macroeco- Total GHG emissions (mtCO2e) 110.5 nomic stability, and stunted the non- Source: WDI, Macro Poverty Outlook, and official data. oil economy through strong real ex- a/ Most recent value (2018), 2017 PPPs. b/ Most recent WDI value (2021). change rate appreciation, limiting eco- Recent developments nomic diversification and job creation. Among those employed, 80 percent are The 2023 real GDP growth has been re- informal, and half are either self-em- vised downward from 1.3 to 0.8 percent ployed with no employees or unpaid since the previous MPO. Oil production workers of family enterprises. Women in 2023 (1.11 million b/d) fell short of In 2023, lower oil production and an ex- face higher unemployment and are the government’s expectations (1.18 mil- change rate shock led to economic stagna- more likely to be informal (89 percent lion b/d) due to a longer-than-expect- tion. The May-June currency slide con- compared to 72 percent for men). ed maintenance shutdown at a major oil Progress has been made in enhancing field. The non-oil sector slowed down tinues to fuel inflationary pressures. Low- macro-fiscal stability through exchange due to a cost-push shock to key inputs er tax revenues, larger interest payments rate liberalization, central bank autono- from a one-off adjustment in gasoline and higher fuel subsidies led the govern- my, and fiscal consolidation. However, prices and a sharp currency depreciation. ment to cut other expenses. The non-oil while these efforts should be accelerated, The economic stagnation reduced gov- sector would drive growth since 2024, greater economic diversification is need- ernment revenues, especially those from ed to boost economic growth and reduce the non-oil sector. but risks to the outlook remain high due poverty, particularly in the context of the The value of oil exports fell by 27 percent to over-reliance on oil. Poverty is project- global energy transition. Between 2015 in 2023 due to lower oil prices and pro- ed to grow marginally to 36.1 percent. and 2022, real GDP per capita fell by 28 duction. This, together with large debt percent, reinforcing the need for a more service payments, reduced the supply of diversified and inclusive growth strategy. foreign currency, which triggered a FIGURE 1 Angola / Real GDP growth and contributions to FIGURE 2 Angola / Actual and projected poverty rates and real GDP growth real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 6 90 70000 4 80 60000 70 2 50000 60 0 40000 50 -2 40 30000 -4 30 20000 20 -6 10000 10 -8 0 0 2020 2021 2022 2023e 2024f 2025f 2026f 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Agriculture Oil industry Non-oil industry International poverty rate Lower middle-income pov. rate Services GDP Upper middle-income pov. rate Real GDP pc Sources: Angola National Institute of Statistics and World Bank. Source: World Bank. Notes: see Table 2. MPO 2 Apr 24 40 percent depreciation in May-June 2023 Food inflation, combined with a weak- and widened the gap between the official ening labor market and a decline in per and the parallel exchange rates. The slide Outlook capita growth, suggests that poverty may in the kwanza resulted in higher-than-ex- increase to 36.1 percent in 2024, which pected interest payments and fossil fuel Growth is expected to rebound to 2.8 per- corresponds to almost 13.5 million An- subsidies, to which the government re- cent in 2024 and then remain at similar golans living on less than $2.15/day. sponded with cuts in other expenses. The rates. Non-oil sectors would drive this re- The economic outlook faces several depreciation has also fueled inflationary covery, as oil production is projected to downside risks, primarily driven by low- pressures as year-on-year inflation soared fall by 2.5 percent in 2024 and then stag- er-than-expected oil prices and produc- from 11.5 percent in February 2023 to 24 nate due to oil depletion and lack of in- tion. Lower oil revenues could lead to percent in February 2024. The increase in vestment. Hence, on the demand side, ex- additional public spending cuts, impact- gasoline prices in June 2023 further fueled ports are expected to stall, while both final ing economic growth, and greater infla- inflation. The National Bank of Angola consumption and gross fixed capital for- tionary pressures resulting from a weak- raised its policy rate by 100 basis points mation drive growth. Achieving higher er currency. Further monetary tightening to 18 percent in November and then to growth rates will depend on the efforts to to combat inflation would also delay the 19 percent in March. diversify the economy. economic recovery. Increasing efforts to The economy is not generating enough jobs Year-on-year inflation is projected to diversify the economy has become es- to keep up with Angola’s growing working reach around 28 percent by mid-2024 and sential to reduce the impact of oil price age population. Between Q4 2022 and Q4 then decline to around 12 percent by volatility on public finances, economic 2023, over 550,000 new workers joined the end-2026. Monetary policy tightening, to- performance, and poverty reduction. In labor force, but only 10,000 jobs were added. gether with a conservative fiscal stance, the near term, it will also be important to Urban and youth unemployment surged to is expected to contain inflationary pres- address food insecurity, tackle high un- 42 and 58 percent in Q4 2023, respectively, sures. In addition, the stock of interna- employment, especially among the urban up from 39 and 53 percent a year earlier. tional reserves (7 months of imports), and poor, and protect against human capi- While the share of jobs in the primary sec- the imminent monetary loosening in the tal deterioration by ensuring that all An- tor grew by 1.1 percentage points, jobs in US would reduce downward pressures golan children have access to adequate commerce fell by 2.5 percent. on the kwanza and, thus, on inflation. nutrition, medical care, and education. TABLE 2 Angola / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 1.2 3.0 0.8 2.8 2.7 2.4 Private consumption 4.0 5.4 2.3 4.6 4.0 3.0 Government consumption -2.9 3.6 -15.3 5.1 2.7 2.4 Gross fixed capital investment 7.4 8.1 4.6 1.4 2.7 2.8 Exports, goods and services -8.6 3.3 -2.8 -2.5 0.0 0.0 Imports, goods and services -3.8 26.1 -7.3 -3.3 2.2 1.3 Real GDP growth, at constant factor prices -0.1 3.1 0.8 2.6 2.6 2.3 Agriculture 17.2 3.9 0.6 6.3 4.8 4.8 Industry -8.3 1.8 -1.3 0.1 1.0 1.2 Services 6.2 4.2 2.8 4.2 3.6 2.7 Inflation (consumer price index) 25.8 21.4 13.6 24.7 15.4 11.4 Current account balance (% of GDP) 11.8 10.4 4.2 3.4 1.1 -0.2 Net foreign direct investment inflow (% of GDP) 4.6 5.9 2.3 2.1 1.3 1.0 Fiscal balance (% of GDP) 4.0 1.0 -1.7 -2.8 -2.4 -3.2 Revenues (% of GDP) 24.7 25.6 20.0 18.7 17.5 16.8 Debt (% of GDP) 87.9 69.5 87.2 74.5 69.2 67.0 Primary balance (% of GDP) 9.5 5.4 3.5 3.0 2.9 2.4 a,b International poverty rate ($2.15 in 2017 PPP) 35.2 35.2 36.0 36.1 35.2 34.3 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 57.6 57.7 58.3 58.4 57.6 56.9 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 81.2 81.3 81.7 81.8 81.2 80.7 GHG emissions growth (mtCO2e) -1.9 -0.8 -0.4 -0.2 0.0 0.0 Energy related GHG emissions (% of total) 12.6 12.2 12.0 11.8 11.8 11.8 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2018-IDREA. Projection using neutral distribution (2018) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU. b/ Actual data: 2018. Nowcast: 2019-2023. Forecasts are from 2024 to 2026. MPO 3 Apr 24 in 2015-22) led to rising debt levels, from 30.9 percent of GDP in 2015 to 54.2 percent BENIN Key conditions and in 2022. Accordingly, boosting revenues is critical to sustainably finance increasing challenges development needs. As fiscal space is lim- ited, private sector mobilization is central Table 1 2023 Despite achieving high GDP growth rates for infrastructure investment. Population, million 13.7 averaging 4.8 percent over 2010-2019, pre- GDP, current US$ billion 19.6 COVID GDP per capita grew at a modest GDP per capita, current US$ 1429.4 rate of 1.8 percent. Although experiencing International poverty rate ($2.15) a 12.7 a post-2020 growth recovery of 3.8 percent Recent developments a 43.4 over 2021-22, this delivered few private Lower middle-income poverty rate ($3.65) a 81.4 wage jobs and limited poverty reduction. Growth slowed to 5.8 percent in 2023 (3.0 Upper middle-income poverty rate ($6.85) Gini index a 34.4 Vulnerable employment (including con- percent per capita terms), from 6.3 percent School enrollment, primary (% gross) b 113.0 tributing family workers and own-account in 2022, due to climate shocks undermin- b 59.8 workers) declined by only 0.3 ppt over ing the agriculture sector (notably cotton), Life expectancy at birth, years 2010-2021, from 88.7 percent of total em- and uncertainties in neighboring countries Total GHG emissions (mtCO2e) 26.4 ployment to 88.4 percent, in contrast to 8.1 disrupting transit trade. The service sector Source: WDI, Macro Poverty Outlook, and official data. ppt and 3.8 ppt for structural and aspira- was impacted by the Niger border closure a/ Most recent value (2021), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy tional peers. This vulnerability reflects the and diminished demand from Nigeria. The (2021). structure of Benin’s economy, with a large expansion of the Glo-Djigbé Industrial Zone share of agriculture and prevalent infor- (GDIZ) and construction supported robust mality. The closure of the Niger border fol- growth of the secondary sector. Growth in lowing the July 2023 coup and the inse- agriculture combined with relatively low The 2023 Niger border closure, policy curity risks in the north of Benin dispro- inflation reduced the international poverty portionately impacted poor and vulnera- rate ($2.15 a day, 2017 PPP) from 12.3 per- changes in Nigeria and climate shocks ble households, slowing poverty reduc- cent in 2022 to 11.7 percent in 2023. moderated growth to 5.8 percent. The in- tion, and increasing fragility. Extreme cli- Headline inflation doubled to 2.8 percent ternational poverty measure fell to 11.7 mate events such as floods led to the dec- in 2023 with the end of the gasoline sub- percent. A revenue based fiscal consolida- laration of a state of emergency in 32 mu- sidy in Nigeria, resulting in a 60 percent nicipalities, displacing 182,803 people and increase in the price of smuggled gaso- tion decreased the fiscal deficit to 4.5 per- reversing poverty reduction. line, used by 80 percent of the popu- cent of GDP, although public debt in- The private sector is constrained by lim- lation. To counter inflation across WAE- creased slightly to 55 percent. Growth ited access to credit and lack of infra- MU countries, the Central Bank of West will settle at 6 percent potential from structure, impeding productivity growth African States (BCEAO) raised policy in- 2024, but risks are rising, including from and job creation. Government action plans terest rates by a cumulative 150 basis have reduced the infrastructure gap, points since mid-2022 to 3.5 percent for transit trade and insecurity. liquidity calls and 5.5 percent for the mar- though large investment projects and pressing expenditure needs combined ginal lending facility. However, inflation with low tax revenue (10.5 percent of GDP in the region (3.7 percent in 2023) was FIGURE 1 Benin / Key macroeconomic balances FIGURE 2 Benin / Actual and projected poverty rates and real GDP per capita Percent of GDP Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 60 0 100 900000 90 800000 50 -1 80 700000 -2 70 40 600000 -3 60 500000 30 50 -4 400000 40 20 300000 -5 30 20 200000 10 -6 10 100000 0 -7 0 0 2018 2019 2020 2021 2022 2023e 2024f 2025f 2026f 2011 2013 2015 2017 2019 2021 2023 2025 Debt Fiscal balance (rhs) International poverty rate Lower middle-income pov. rate Current account balance (rhs) Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see Table 2. MPO 4 Apr 24 still above the 1-3 percent target range control regionally and in the context of and foreign exchange reserves have been rising uncertainties over the withdrawal on a downward trend, estimated at 3.5 Outlook of Niger, Mali, and Burkina Faso from months of imports at end-2023, down ECOWAS and potential spillovers to from 4.3 months at end-2022. Growth is projected to stabilize at 6.0 WAEMU. These uncertainties are likely to The fiscal deficit declined to 4.5 percent of percent between 2024 and 2026 (average increase investors’ risk perceptions lead- GDP driven by a 0.6 ppt increase in tax 3.2 percent per capita terms), driven by ing to tighter financing conditions and revenue and spending rationalization of investment and the GDIZ expansion. As putting additional strain on already low 1.2 ppt of GDP. Despite the increase in the inflation is expected to moderate to an foreign exchange reserves. public wage bill and security spending, the average of 2 percent, consumption con- Through the 2023 Medium-term Revenue fiscal consolidation is on track with an in- tributions to growth are set to increase. Strategy, the government has committed crease in tax revenues and decline in cap- Reforms to boost agriculture productivity to mobilize additional revenue of 0.5 per- ital expenditures. Although public debt should increase output, while growth in cent of GDP annually to support its fiscal slightly increased to 55.0 percent of GDP the secondary sector will be supported consolidation drive and reach the WAEMU (from 54.2 percent in 2022), the debt ac- by ongoing and new infrastructure in- fiscal deficit target of 3 percent of GDP. cumulation slowed down to 1.4 percent in vestment under the PAG2 (Government Lower debt accumulation will likely sus- 2023 in comparison to 9.6 percent in Action Program). The service sector tain public debt on a downward path to 2020-22. The current account deficit (CAD) would benefit from the dynamism of reach 52.1 percent by 2026. The CAD will declined to 5.8 percent of GDP in 2023, dri- tourism, and the resumption of transit gradually decline to 4.8 percent by 2026, ven by service exports (tourism), robust trade with neighboring States. Poverty due to higher exports from the GDIZ, fi- export performance of industrial crops rates are expected to trend downward, nanced by debt such as the US$ 750 million (cashew, soybeans, and palm oil), and re- with the headcount rate ($2.15 a day, Eurobond issued in 2024. Despite past re- duced imports, offsetting a sharp decline 2017 PPP) declining from 11.7 percent in silience, downside risks remain. Head- in cotton exports (62.8 percent of goods ex- 2023 to 10.0 percent by 2025, supported winds may include prolonged transit trade ports in 2021-22). The financing of the by robust economic growth. disruptions and climate-related shocks. CAD was supported by debt, and FDI in- The BCEAO may need to continue tight- Worsening security risks are also a major flow to the Special Economic Zone. ening in 2024 to bring inflation under threat to development gains. TABLE 2 Benin / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 7.2 6.3 5.8 6.0 6.0 6.0 Private consumption 4.8 5.0 3.2 3.8 3.9 3.8 Government consumption 8.5 3.5 11.4 5.0 6.4 5.8 Gross fixed capital investment 17.8 12.9 5.6 8.6 7.6 8.1 Exports, goods and services 12.6 19.1 2.9 8.0 7.9 8.3 Imports, goods and services 16.8 18.5 0.1 5.1 5.0 5.5 Real GDP growth, at constant factor prices 6.6 6.0 5.8 6.0 6.0 6.0 Agriculture 5.2 4.8 4.7 5.2 5.4 5.5 Industry 9.1 7.9 7.5 7.8 7.3 7.0 Services 6.6 6.0 5.7 5.8 5.9 5.9 Inflation (consumer price index) 1.7 1.4 2.8 2.0 2.0 2.0 Current account balance (% of GDP) -4.2 -6.2 -5.8 -5.4 -4.9 -4.8 Net foreign direct investment inflow (% of GDP) 1.7 1.9 1.6 1.6 1.6 1.7 Fiscal balance (% of GDP) -5.7 -5.5 -4.5 -3.8 -3.0 -3.0 Revenues (% of GDP) 14.1 14.3 14.9 15.2 15.7 16.0 Debt (% of GDP) 50.3 54.2 55.0 54.1 52.9 52.1 Primary balance (% of GDP) -3.5 -3.9 -2.8 -2.1 -1.4 -1.5 a,b International poverty rate ($2.15 in 2017 PPP) 12.7 12.3 11.7 10.8 10.0 9.2 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 43.4 42.5 41.0 38.5 37.0 35.6 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 81.4 80.5 79.5 77.7 76.4 75.2 GHG emissions growth (mtCO2e) -0.4 0.2 -1.9 0.2 1.0 1.6 Energy related GHG emissions (% of total) 30.6 29.7 27.1 25.9 25.3 25.1 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2021-EHCVM. Actual data: 2021. Nowcast: 2022-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 5 Apr 24 Reforms to promote competition, reduce the costs of doing business, remove policy BOTSWANA Key conditions and barriers to trade and services, and promote trade facilitation would strengthen eco- challenges nomic diversification, boost growth and exports, and encourage job creation. Im- Table 1 2023 Until the 2009 global financial crisis, abun- proving the effectiveness and efficiency of Population, million 2.7 dant diamond resources, political stability, public services, including public invest- GDP, current US$ billion 22.1 effective institutions, and prudent macro- ment efficiency and strengthening educa- GDP per capita, current US$ 8249.6 economic policies delivered robust tion outcomes to meet the demand for a 15.4 International poverty rate ($2.15) growth. They allowed the government to skills in the private sector, could further a 38.0 deliver improved public services, includ- enhance growth. Incentivizing innovative Lower middle-income poverty rate ($3.65) a 63.5 ing health, education, and infrastructure. new businesses to emerge and grow, at- Upper middle-income poverty rate ($6.85) Gini index a 53.3 Social assistance programs also served to tracting Foreign Direct Investment, creat- School enrollment, primary (% gross) b 93.7 reduce extreme poverty. ing linkages with local firms, encouraging b 61.1 Yet, since the early 2010s, structural con- market contestability would improve the Life expectancy at birth, years straints contributed to slowing down eco- business environment. Total GHG emissions (mtCO2e) 53.3 nomic expansion as the economy remains Source: WDI, Macro Poverty Outlook, and official data. dominated by the diamond sector, which is a/ Most recent value (2015), 2017 PPPs. b/ Most recent WDI value (2021). increasingly vulnerable to boom-and-bust cycles on international markets. Poor learn- Recent developments ing outcomes, skills mismatches, and infra- In 2023, economic growth slowed to 3.3 structure deficiencies in transportation, Economic activity moderated to an esti- communication, energy, and water services mated 3.3 percent in 2023 following the percent, driven by reduced global demand have negatively impacted productivity and 5.8 percent rebound in the aftermath of for diamonds. In FY24-26, economic ac- competitiveness. Regulatory barriers and the COVID-19 pandemic spurred by the tivity is projected to stabilize at 3.5-4.0 red tape have increased the cost of doing decline in global demand for rough di- percent, buoyed by an expansionary fiscal business, stifled entrepreneurship, and de- amonds, falling prices, and intensifying terred investment. The large state presence, competition from synthetic diamonds. policy and growth in the non-mining pri- especially state-owned enterprises, has Headline inflation declined in 2023, av- vate sector. Diamond value chain risks crowded out private investment. eraging 5.2 percent compared with 12.2 underscore the urgency of implementing The current growth model, based on low-la- percent in 2022, supported by tight mon- structural reforms to boost growth and bor-intensive sectors yields fewer jobs. The etary policy conditions and a reduction jobs, including through human capital unemployment rate remains high, at 25.9 in fuel prices. In December 2023, the cen- percent in 2023Q3, mainly affecting the tral bank cut the policy rate by 25 basis development, enhancing market con- youth. Poverty, projected at 14.3 percent in points to 2.4 percent to address the per- testability, reducing regulatory and 2022 using the US$2.15 per day international sistent and sizable output gap. trade barriers, allowing for reductions poverty line, remains high for Botswana’s The financial sector remains profitable and in poverty and inequality. income level, while inequality (Gini index of stable. However, the ongoing repatriation 53.3) is among the world’s highest. of pension fund assets poses liquidity risks FIGURE 1 Botswana / Fiscal consolidation will rest on FIGURE 2 Botswana / Actual and projected poverty rates spending cuts and real GDP per capita Percent of GDP Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 45 2 70 90000 40 80000 0 60 35 70000 -2 50 30 60000 25 -4 40 50000 20 -6 30 40000 15 30000 -8 20 10 20000 -10 10 5 10000 0 0 0 -12 2009 2011 2013 2015 2017 2019 2021 2023 2025 2016 2018 2020 2022 2024 2026 International poverty rate Lower middle-income pov. rate Revenues and Grants Expenditures Balance Upper middle-income pov. rate Real GDP pc Sources: Statistics Botswana and World Bank. Source: World Bank. Notes: see Table 2. MPO 6 Apr 24 in local financial markets due to limited in- Inflation is projected to remain within the vestment opportunities. central bank’s target range of 3-6 percent, After two years of a balanced budget, the fis- Outlook in line with declining import prices of en- cal balance deteriorated in 2023, despite ergy and food. The current account bal- higher Southern African Customs Union The economy is projected to expand by ance is projected to improve, driven by a (SACU) revenues. Higher recurrent spend- 3.5-4.0 percent annually over 2024-26 as recovery in global demand for diamonds. ing alongside capital investments under- the global economy strengthens and de- The expansion of the private sector is ex- score the need for improved expenditure ef- mand for copper and diamonds increas- pected to remain too subdued to increase ficiency. Increased subsidies necessitate re- es. Projected investments in power gen- the demand for employment. Lower in- evaluating their criteria, enhancing moni- eration from coal bed methane, battery- flation is expected to support household toring and evaluation, and exploring alter- grade manganese, and solar photovoltaic purchasing power. Still, limited job op- native policy instruments beyond price con- projects will support GDP growth. portunities will constrain significant re- trols to improve spending quality. Imple- An expansionary fiscal policy and ac- ductions in poverty and inequality, mentation deficiencies constrain the expan- commodative monetary policy in 2024 which is projected to remain high, at 14 sionary fiscal stance and require lower are expected to support the economy percent in 2024 based on the US$2.15 in- spending growth and a strong recovery in but effects of the first are mitigated by ternational poverty line. mineral revenues. leakages owing to a high import con- Downside risks to the outlook include how The current account turned into a surplus of tent. The fiscal deficit is projected to de- the G7’s decision regarding diamond 2.5 percent of GDP by 2023Q3 due to in- teriorate to 3.4 percent of GDP in FY24, traceability may impact the diamond trade creased SACU receipts and mineral export driven by large increases in capital and and the local value chain; inward-looking proceeds. Foreign exchange reserves in- recurrent spending and to steadily im- trade policies; delays in implementing the creased, averaging US$4.7 billion in October prove over the medium term, reach- Transitional National Development Plan 2023, equivalent to nine months of imports, ing a surplus by 2026. Projections hinge and the severity of the ongoing drought, supported by increased SACU receipts and on SACU revenue trends and the gov- which can impact output negatively and higher capital inflows. ernment’s initiatives to boost domestic the current account via higher imports, as Amid high domestic prices and weak job revenue mobilization, which include the well as renew inflationary pressures and creation, poverty is estimated to have re- introduction of electronic invoicing for create fiscal pressures as the government mained broadly unchanged. value-added tax. provides support to affected households. TABLE 2 Botswana / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 11.8 5.8 3.3 3.5 4.3 4.0 Private consumption 2.4 4.5 2.4 2.8 2.8 2.2 Government consumption 4.0 3.0 2.5 4.3 -0.3 -0.9 Gross fixed capital investment -0.3 0.0 -0.7 3.6 3.3 1.8 Exports, goods and services 31.7 -5.6 4.6 7.0 9.9 10.2 Imports, goods and services 2.3 -11.8 -10.4 7.6 5.4 5.2 Real GDP growth, at constant factor prices 11.9 5.8 3.3 3.5 4.3 4.0 Agriculture -1.0 2.4 2.6 2.0 2.4 2.2 Industry 19.3 7.6 4.0 4.4 4.6 4.7 Services 8.1 4.8 2.9 3.0 4.2 3.6 Inflation (consumer price index) 6.7 12.2 5.2 4.9 4.7 4.5 Current account balance (% of GDP) -0.5 2.9 2.0 1.1 1.3 1.5 Net foreign direct investment inflow (% of GDP) 0.6 0.2 0.7 0.7 0.6 0.6 a Fiscal balance (% of GDP) 0.0 0.0 -2.4 -3.4 -1.6 1.2 Revenues (% of GDP) 31.9 28.5 30.0 31.7 29.2 28.8 b Debt (% of GDP) 22.4 20.6 22.0 25.0 22.5 20.1 a Primary balance (% of GDP) 0.5 0.6 -1.6 -2.5 -1.0 1.8 c,d International poverty rate ($2.15 in 2017 PPP) 14.8 14.3 14.2 14.0 13.7 13.4 c,d Lower middle-income poverty rate ($3.65 in 2017 PPP) 37.5 37.0 36.8 36.6 36.4 36.1 c,d Upper middle-income poverty rate ($6.85 in 2017 PPP) 62.6 61.8 61.6 61.2 60.8 60.3 GHG emissions growth (mtCO2e) 0.8 -0.7 -0.4 1.2 1.5 1.5 Energy related GHG emissions (% of total) 11.3 11.3 11.1 16.3 18.0 19.6 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Fiscal balances are reported in fiscal years (April 1st -March 31st). b/ Refers to Public and Publicly Guaranteed debt. c/ Calculations based on 2009-CWIS and 2015-BMTHS. Actual data: 2015. Nowcast: 2016-2023. Forecasts are from 2024 to 2026. d/ Projection for $2.15 poverty uses annualized elasticity (2009-2015) with pass-through = 0.87 based on GDP per capita in constant LCU. Higher poverty lines use regional elasticity. MPO 7 Apr 24 per capita), up from 1.8 percent in 2022. The services sector, accounting for 48 per- BURKINA FASO Key conditions and cent of GDP, remained the main growth driver, fueled by an expansion of the pub- challenges lic sector. Agricultural sector growth was hindered by security challenges, which re- Table 1 2023 Insecurity and political instability remain stricted access to rural areas. Secondary Population, million 23.3 the most critical growth constraints. The sector growth was kept positive only by GDP, current US$ billion 22.9 two coups in 2022 triggered a sharp re- manufacturing and construction, while GDP per capita, current US$ 984.0 duction in external development financing gold production dropped further due to a 25.3 International poverty rate ($2.15) while negatively affecting private invest- insecurity despite high international gold a 60.7 ment. Insecurity has disrupted industrial prices. On the demand side, private con- Lower middle-income poverty rate ($3.65) a 88.1 mining (gold), which accounted for 77 per- sumption was the main growth driver, bol- Upper middle-income poverty rate ($6.85) Gini index a 37.4 cent of exports, 16 percent of GDP, and 22 stered by low inflation. In contrast, invest- School enrollment, primary (% gross) b 82.4 percent of government revenues in 2023. ment is expected to stagnate given high b 59.3 Displacement of local populations weakens public investment in 2022 and uncertain- Life expectancy at birth, years agricultural output, which employs over 90 ties in the mining sector. Favorable terms Total GHG emissions (mtCO2e) 67.6 percent of the poor and is already highly vul- of trade with an increase in gold prices Source: WDI, Macro Poverty Outlook, and official data. nerable to climate shocks, aggravating food coupled with a decrease in energy prices a/ Most recent value (2021), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy insecurity. In 2023 there has been a doubling helped narrow the current account deficit (2021). of recorded security-related deaths to 8,494. to 4.9 percent of GDP in 2023. In September 2023, Burkina Faso, Mali, and After surging to a record high of 14.1 percent Niger formed the “Alliance of Sahel States” in 2022, inflation fell to 0.7 percent in 2023 (AES) – a security and military pact with po- with declines in local product prices, partic- GDP growth is estimated at 3.2 percent litical and economic aims. On January 28, ularly for cereals, flour, and fresh vegeta- 2024, in a joint communiqué, the three coun- bles. As a result, the extreme poverty rate, (0.5 percent per capita) in 2023, sup- tries announced their ‘immediate’ with- which was rising through 2022, has de- ported by services, while mining was drawal from ECOWAS. According to the re- creased by 0.6 percentage points to 25.9 per- hampered by insecurity. Average infla- vised ECOWAS Treaty, a notification period cent in 2023. However, the humanitarian sit- tion subsided to 0.7 percent, facilitating of one year is required to leave ECOWAS. uation remains very critical, with around 2 These developments have increased politi- million internally displaced persons, and a small decrease in the extreme poverty cal and policy uncertainty, including the an estimated 2.3 million facing severe food rate to 25.9 percent. The growth out- timetable for elections in Burkina Faso. insecurity as of December 2023. look is expected to remain constrained To counter inflation across WAEMU coun- by insecurity and subject to downside tries, the Central Bank of West African risks, including political instability, in- States (BCEAO) raised policy interest creasing financing costs, impacts of the Recent developments rates by a cumulative 150 basis points since mid-2022 to 3.5 percent for liquidity announced ECOWAS withdrawal, and In 2023, the economy is estimated to calls and 5.5 percent for the marginal climate-related shocks. have grown by 3.2 percent (0.6 percent lending facility. However, inflation in the FIGURE 1 Burkina Faso / Real GDP growth and contributions FIGURE 2 Burkina Faso / Actual and projected poverty to real GDP growth rates and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 15 100 500000 90 450000 10 80 400000 70 350000 5 60 300000 50 250000 0 40 200000 -5 30 150000 20 100000 -10 10 50000 2021 2022 2023 2024 2025 2026 0 0 Gov. cons. Exports GFCF 2009 2011 2013 2015 2017 2019 2021 2023 2025 Private cons. Imports Statistical disc. International poverty rate Lower middle-income pov. rate GDP Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see Table 2. MPO 8 Apr 24 region (3.7 percent in 2023) was still 3-year T-bonds. The risk of external inflation has come down dramatically and above the 1-3 percent target range and debt distress remains moderate. is expected to remain below 3 percent over foreign exchange reserves have been on a the medium term, accelerating poverty re- downward trend, estimated at 3.5 months ductions will require higher growth per of imports at end-2023, down from capita, particularly in agriculture, which 4.3 months at end-2022. Outlook employs 71 percent of the poor. The country started fiscal consolidation The outlook remains subject to significant in 2023 with the deficit falling to 6.4 The outlook hinges on the security situa- downside risks, including a deterioration percent of GDP – 1.2 percent lower tion. If the situation does not deteriorate in the security situation, political instabili- than 2022 (excluding a one-time inclu- further, growth could slowly pick up and ty, climatic shocks, terms of trade shocks, sion of all accumulated securitized debt average 4 percent (1.5 percent per capita) and the withdrawal from ECOWAS. An in 2022). The consolidation was expen- over 2024-26, driven by recovering mining unnegotiated ECOWAS withdrawal with diture-driven, through a scaling back of and agricultural production and service disruptions to transport, transit, and free capital investment and subsidies (helped sector growth. This includes the expected movement of goods, services, capital, and by lower international oil prices), while impacts of an orderly ECOWAS withdraw- labor could exacerbate negative impacts military and humanitarian spending re- al: lower trade with non-WAEMU ECOW- due to spillovers onto WAEMU trade. The mained high. As bilateral donor grants AS states, higher investors’ risk premia, BCEAO may need to continue monetary declined, efforts were made to sustain and increased regional financing costs. tightening in 2024 to bring inflation under domestic revenue mobilization. With a If the government continues its fiscal con- control and in the context of increased still elevated fiscal deficit, public debt solidation path, the fiscal deficit is expect- risks from the withdrawal of Niger, Mali, is estimated to have crossed the 60 ed to gradually decline towards the WAE- and Burkina Faso from ECOWAS. A fur- percent of GDP mark in 2023. The MU ceiling of 3 percent of GDP. Public ther increase in the cost of financing on the share of expensive regional financing debt as a share of GDP is forecast to rise regional market for Burkina Faso could re- is increasing; in February 2024, Burk- at least until 2025, driven by high interest quire further cuts in public expenditure, ina Faso’s average yields on the re- rates on domestic debt. and especially investment, at the same gional bond market were 8 percent Poverty is expected to remain relatively time as defense and security expenditures for 6-month T-bills and 9.6 percent for unchanged over the medium term. While pressures mount. TABLE 2 Burkina Faso / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 6.9 1.8 3.2 3.7 3.8 4.2 Private consumption 3.4 4.3 3.1 3.4 3.5 3.6 Government consumption 6.6 5.2 4.5 5.4 3.9 3.8 Gross fixed capital investment 34.8 6.4 0.7 4.0 4.4 5.4 Exports, goods and services 6.5 -2.8 -2.1 3.0 3.1 3.4 Imports, goods and services 15.5 8.2 -1.9 3.8 3.2 3.3 Real GDP growth, at constant factor prices 6.9 1.8 3.2 3.7 3.8 4.2 Agriculture -4.1 5.7 2.3 4.5 4.3 4.3 Industry 11.0 -8.2 0.3 2.8 3.4 3.9 Services 10.3 6.0 5.2 3.7 3.8 4.3 Inflation (consumer price index) 3.9 14.1 0.7 2.8 2.5 2.2 Current account balance (% of GDP) 0.4 -6.2 -4.9 -4.2 -4.1 -3.7 Net foreign direct investment inflow (% of GDP) 0.5 0.3 0.3 0.4 0.5 0.4 Fiscal balance (% of GDP) -7.5 -10.6 -6.4 -5.6 -4.7 -4.4 Revenues (% of GDP) 20.2 21.6 21.3 21.3 21.2 21.2 Debt (% of GDP) 55.4 58.1 61.4 63.3 65.4 63.2 Primary balance (% of GDP) -6.0 -8.5 -4.3 -3.0 -1.9 -1.5 a,b International poverty rate ($2.15 in 2017 PPP) 25.3 26.5 25.9 25.4 25.0 24.4 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 60.7 62.4 61.4 61.1 60.5 59.7 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 88.1 88.7 88.3 88.1 87.8 87.3 GHG emissions growth (mtCO2e) 6.0 4.6 5.0 5.1 5.1 4.8 Energy related GHG emissions (% of total) 11.1 11.4 11.8 12.3 12.7 13.2 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2021-EHCVM. Actual data: 2021. Nowcast: 2022-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 9 Apr 24 in infrastructure and human capital. The provision of basic public services needs to BURUNDI Key conditions and keep pace with rapid population growth. Secondary school enrollment is a mere 48 challenges percent, and 30 percent of adolescent girls are not in school. Chronic malnutrition is Table 1 2023 Burundi’s economic landscape is marred by widespread, with stunting affecting 55.8 Population, million 13.2 a fragility trap, with entrenched poverty. percent of children under five, a figure GDP, current US$ billion 3.5 Political instability, weak institutions, rapid likely to have worsened by recent food GDP per capita, current US$ 267.3 population increase, and environmental inflation. As of 2023, poverty afflicts 62 a 62.1 International poverty rate ($2.15) degradation are persistent vulnerabilities. percent of the population (at US$ 2.15 a 86.2 Economic challenges include low produc- per capita/day in 2017PPP). Lower middle-income poverty rate ($3.65) a 37.5 tivity, high dependence on foreign aid, inad- Continued re-engagement with the in- Gini index School enrollment, primary (% gross) b 103.9 equate infrastructure, and limited diversifi- ternational community and the govern- Life expectancy at birth, years b 61.7 cation. Agriculture contributes 40 percent to ment’s commitment to reforms, through Total GHG emissions (mtCO2e) 9.3 GDP and engages over 90 percent of the the completion of the exchange rate uni- workforce. Industrialization is minimal, fication reforms, modernization of the Source: WDI, Macro Poverty Outlook, and official data. a/ Most recent value (2020), 2017 PPPs. and exports are confined largely to coffee monetary policy framework, fiscal con- b/ WDI for School enrollment (2022); Life expectancy and tea. Despite possessing significant re- solidation, governance reforms, and (2021). serves of minerals critical for the energy growth-enabling structural reforms, transition, the mining sector is stunted, sti- would help change the country’s growth fled by uncompetitive business environ- trajectory while boosting social spending ment, thus making an insignificant contri- and productive investments. In 2023, economic growth rebounded to bution of less than 1 percent to GDP. The ex- port-to-import coverage hovers between 2.7 percent from 1.8 percent in 2022, 15-20 percent, signaling structural external spurred by robust agricultural produc- imbalances. Environmental issues, includ- Recent developments tion. However, inflation spiked, then ing land degradation and deforestation, moderated late in the year. Poverty rate threaten to keep agricultural production Economic growth picked up in 2023 would remain stable in 2024, due to the low. High population growth strains re- against a backdrop of high inflation and sources and infrastructure, exacerbating widening fiscal and current account combination of insufficient growth, pro- conflicts amongst local communities while deficits. Growth accelerated to 2.7 per- jected to improve to 3.8 percent, and impeding sustainable development. cent, up from 1.8 percent in 2022, buoyed rapid population expansion. Risks in- Since the 2015 political crisis, macroeco- by favorable rains and robust public in- clude regional turmoil, closure of the nomic imbalances have persisted, ranging vestment. Industry and services felt the from high fiscal and current account pinch of high inflation, fuel shortages, Burundi-Rwanda border, delayed ex- deficits, and inflated currency value to lim- and flaring premium on the forex parallel change rate unification, and limited ited external financing and fiscal domi- market. On the demand side, growth was external financing. nance of monetary policy, compounded by underpinned by government and private soaring public debt and scant investment sector spending. FIGURE 1 Burundi / Fiscal and current account deficit FIGURE 2 Burundi / Actual and projected poverty rates and real private consumption per capita Percent of GDP Poverty rate (%) Real private consumption per capita (constant LCU) 18 100 155000 16 90 150000 14 80 70 145000 12 60 140000 10 50 8 135000 40 6 30 130000 4 20 125000 2 10 0 0 120000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2013 2015 2017 2019 2021 2023 2025 International poverty rate Lower middle-income pov. rate Fiscal deficit Current account deficit Real priv. cons. pc Sources: Official statistics and World Bank staff estimation. Source: World Bank. Notes: see Table 2. MPO 10 Apr 24 Aided by expenditure cutbacks, the fiscal poverty rates in the short term and erode before easing to 12.9 percent of GDP in deficit fell to 7.7 percent of GDP, down human capital long-term, as families cut 2026, due to mining exports resumption from 10.7 percent the previous year. The meals, liquidate assets, or resort to child and positive impacts of foreign exchange deficit was predominantly financed labor. International poverty rate ($2.15 in reforms. Burundi’s growth path is not through domestic shorter-maturity higher- 2017 PPP) is estimated to remain elevat- matching high demographic growth, and interest loans from banks and Central ed at 62 percent in 2023. population is set to double by 2050, Bank advances, reflecting a reliance on do- further exacerbating existing pressures mestic debt instruments. Subsequently, on limited land resources and services. public debt climbed to 72.4 percent of GDP Against the current trajectory, poverty is from 68.4 percent in 2022. The current ac- Outlook projected to remain unchanged at 61.9 count deficit (CAD) remained high at 13.9 percent in 2024. Substantial structural percent of GDP in 2023, pressured by soar- Growth is forecasted to rise to 3.8 percent reforms are essential to expand the pri- ing oil prices and sluggish exports amid in 2024, and to accelerate to 4.6 percent on vate nonfarm sector, boost agricultur- delayed mining contract negotiations. Re- average in 2025-26, supported by robust al output, and secure a well-educated, mittances fell, reducing net current trans- agricultural season, mining upticks, and healthy population. fers, but capital account balances benefited government spending. Favorable rainfall A favorable review of IMF’s program from increased project grants. Trade cred- will sustain agricultural growth, while ser- along with reducing the misalignment its are the mainstay of financing the cur- vices and industry should rebound due to between the official and parallel exchange rent account deficit. eased forex restrictions and increased rates could improve external accounts, By December 2023, Burundi’s internation- power generation. High private consump- with structural reforms likely enhancing al reserves could cover just 0.8 months tion and public investment will likely con- exports, foreign investment, and rev- of imports, a significant drop from 1.8 tinue, spurred by economic recovery. enues. Conversely, agricultural setbacks months the previous year. The foreign The fiscal deficit is expected to narrow to from adverse weather and a protracted exchange market saw a parallel premium 4.7 percent of GDP in 2024 and 3.2 per- closure of the border with Rwanda could soaring to 75.0 percent in March 2023, cent by 2026, underpinned by the digiti- cloud growth prospects. Failure to con- up from 62.0 percent a year prior. Infla- zation of tax administration and a recal- solidate fiscal accounts or boost revenue tion peaked to an average of 27.1 percent ibration of non-essential spending, sup- collection could heighten fiscal risks and in 2023 due to escalating food and fu- ported by the IMF ECF program. Pub- external vulnerabilities. A disruption to el costs—but softened in the final quarter lic debt is projected to recede by 6 per- the IMF program might reduce access as food prices declined. Inflation’s bite is centage points from its 2022 level, set- to crucially needed concessional financ- sharpest for the poor, who allocate more tling at 58.8 percent of GDP in 2026. The ing and aid, and spur a further deterio- budget to food. This trend may swell CAD will remain high over 2024–2025 ration of external accounts. TABLE 2 Burundi / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 3.1 1.8 2.7 3.8 4.4 4.8 Private consumption 3.0 2.4 2.7 3.0 3.2 3.4 Government consumption 2.9 5.9 5.4 5.1 5.2 5.0 Gross fixed capital investment 3.9 4.0 8.1 10.5 12.3 13.2 Exports, goods and services 3.4 5.8 7.8 13.8 14.2 15.2 Imports, goods and services 3.2 7.0 7.0 7.1 7.3 7.5 Real GDP growth, at constant factor prices 3.1 1.8 2.7 3.8 4.3 4.8 Agriculture 3.4 -0.8 2.8 3.8 4.0 4.2 Industry 3.0 3.2 2.7 3.8 4.9 5.3 Services 2.9 3.1 2.6 3.8 4.3 4.9 Inflation (consumer price index) 8.3 18.8 27.1 22.8 20.4 16.2 Current account balance (% of GDP) -11.9 -15.9 -13.9 -15.3 -15.2 -12.9 Net foreign direct investment inflow (% of GDP) 0.3 0.3 0.0 -0.1 -0.1 -0.1 Fiscal balance (% of GDP) -4.6 -10.7 -7.7 -4.7 -4.2 -3.4 Revenues (% of GDP) 23.8 22.8 22.3 23.0 23.4 23.6 Debt (% of GDP) 66.6 68.4 72.4 69.9 64.8 58.8 Primary balance (% of GDP) -1.6 -8.2 -4.8 -2.1 -1.4 -1.0 a,b International poverty rate ($2.15 in 2017 PPP) 61.9 62.1 62.0 61.9 61.7 61.4 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 86.1 86.2 86.2 86.1 85.9 85.7 GHG emissions growth (mtCO2e) 3.9 4.0 3.9 3.9 3.7 3.7 Energy related GHG emissions (% of total) 8.7 8.6 8.6 8.7 8.9 9.2 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2020-EICVMB. Actual data: 2020. Nowcast: 2021-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2020) with pass-through = 0.87 (Med (0.87)) based on private consumption per capita in constant LCU. MPO 11 Apr 24 of service exports after the post-covid tourism rebound. On the supply side, ac- CABO VERDE Key conditions and commodation, transport, and commerce drove growth, while on the demand side, challenges growth was led by exports and private consumption. Growth was accompanied Table 1 2023 Cabo Verde is a small, and vibrant island by a 0.9 percentage points reduction in Population, million 0.5 nation with an open economy. Its econom- poverty (using the US$3.65 per person GDP, current US$ billion 2.5 ic growth has been driven by tourism, remit- and per-day-2017 PPP). GDP per capita, current US$ 4968.9 tances, and foreign direct investment en- Headline inflation decelerated to 3.7 per- a 4.6 International poverty rate ($2.15) abled by structural reforms and social and cent (y/y) in 2023 from the high of 7.9 per- a 19.3 political stability. The development model cent in 2022, driven by the easing of inter- Lower middle-income poverty rate ($3.65) a 50.9 has shown signs of fatigue since the 2008 national food prices and falling oil prices. Upper middle-income poverty rate ($6.85) Gini index a 42.4 global financial crisis: growth fell from a ro- Food inflation, which represents 25 per- School enrollment, primary (% gross) b 97.0 bust average 7.5 percent in the 2000s to 2.8 cent of the CPI basket, slowed to 8.9 per- b 74.1 percent in the last decade (excluding 2020) cent while energy inflation decreased by Life expectancy at birth, years and is highly volatile. The impact of the pan- 3.2 percent on average. Core inflation Total GHG emissions (mtCO2e) 0.7 demic accentuated debt risks and under- reached an annual average of 2.3 percent. Source: WDI, Macro Poverty Outlook, and official data. scored key vulnerabilities, including the Poverty ($3.65 per day PPP 2017) is ex- a/ Most recent value (2015), 2017 PPPs. b/ WDI for School enrollment (2019); Life expectancy dominance of the tourism sector, absence of pected to reach 15.1 percent in 2023, down (2021). buffers to shocks, and poor performing from 16.0 percent in 2022, but above its State-Owned Enterprises (SOE). 2019 pre-pandemic level of 14.1 percent. Achieving higher and sustained growth re- Economic growth was fundamental for quires reforms to reduce the economy’s vul- poverty reduction in 2023, coupled with Growth is expected to have slowed to nerabilities to external economic and cli- a decrease in inflation compared to 2022. mate-related shocks; increase private sector Growth of the services sector led to cre- 4.8 percent in 2023 despite exports, productivity to benefit from the thriving ation of new jobs, especially in tourism, mainly tourism, returning to pre-pan- tourism sector; and reduce internal trans- but the household real income benefits demic levels. Inflation stood at 3.7 per- port costs and market fragmentation. A were dampened by inflation pressures, cent, aided by declining fuel and food gradual transition to blue (ocean related) especially in food items. and green (environment related) activities Increased revenues and under execution prices. Growth-friendly fiscal consolida- are policy priorities for the medium term. of the capital budget narrowed the fiscal tion should allow stable growth of 4.7 deficit to 0.5 percent of GDP in 2023 from percent over the medium term, though the 4.3 percent in 2022. Revenue increased by outlook remains subject to downside risks about 20 percent over the same period dri- from commodity price spikes, weaker ex- Recent developments ven by corporate income tax and VAT col- lection, as well as revenues linked to the ternal demand, limited progress on key Economic growth is estimated to have airport private concession. Total expendi- SOE reforms, and climate shocks. slowed to 4.8 percent in 2023 (4.2 percent in ture increased by 2.6 percent. Public debt per capita terms), reflecting the stabilization declined from 127.1 percent in 2022 to FIGURE 1 Cabo Verde / Real GDP growth and inflation FIGURE 2 Cabo Verde / Actual and projected poverty rates and real GDP per capita Percentage Percentage Poverty rate (%) Real GDP per capita (constant LCU) 40 40 70 600000 30 30 60 500000 20 20 10 50 10 400000 0 40 0 -10 300000 -10 30 -20 200000 -30 -20 20 -40 -30 10 100000 2019Q1 2019Q4 2020Q3 2021Q2 2022Q1 2022Q4 2023Q3 Real GDP growth (lhs) 0 0 Food and beverages inflation (rhs) 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 Headline inflation (rhs) International poverty rate Lower middle-income pov. rate Energy inflation (rhs) Upper middle-income pov. rate Real GDP pc Source: Government of Cabo Verde. Source: World Bank. Notes: see Table 2. MPO 12 Apr 24 115.3 percent in 2023, driven by GDP Inflation is expected to decline further to mobilize domestic revenue and contain growth. External debt is mainly conces- 2.7 percent in 2024, as global inflation current expenditure will reduce the fiscal sional, at 105 percent of GDP, while do- the international price shock continues to deficit to just above 1 percent of GDP mestic debt has surged to over 30 of GDP subside, and converge to around 2 per- by 2026. The public debt-to-GDP ratio is post-COVID-19, driving the high risk of cent over the medium term, supported by expected to improve to 102.1 percent by overall debt distress. the strong nominal anchor provided by 2026 but continued management of fis- The current account deficit (CAD) the peg to the Euro. cal risks related to SOE arising from loan widened from 3.4 percent of GDP in 2022 Poverty (using US$3.65 per day-2017 guarantees remains critical. to 5.3 percent in 2023, due to the slowdown PPP) is projected to decline to 14.9 per- Stronger import growth vis-à-vis exports, in exports of goods and services, mainly cent in 2024 driven by the services and with the continued dynamism of economic tourism, and remittances compared to industry sectors, and a moderation of in- activity, will increase the CAD to 6.2 per- 2022. The CAD was financed primarily by flation. Projections for 2025 suggest a fur- cent of GDP in 2024. CAD is projected to FDI and concessional loans, while interna- ther decline in poverty to 14.2 percent, decline to 5.7 percent of GDP in 2026 sup- tional reserves remained at a comfortable aligning with the pre-pandemic level, ported by stronger growth in tourism and 5.8 months of import coverage. with this downward trend continuing into remittances, which, together with higher 2026 to reach 13.4 percent. FDI inflows, will help maintain interna- Overall fiscal balance is projected to widen tional reserves at about 6 months of to -3.0 percent of GDP in 2024, reflecting prospective imports. Outlook the increase in total expenditure with staff The outlook is subject to substantial down- salary updates, increases in social benefits side risks stemming from new commodity Real GDP growth is projected to remain and acquisition of goods and services, and price spikes due to geopolitical shocks, relatively stable in 2024, at 4.7 percent (4.2 sound execution of public investments. weaker external demand in tourism mar- percent in per capita terms). Over the Tax revenue collection will remain strong, kets, and limited progress with the SOE re- medium term, growth will be supported with a review of tax benefits and the con- form agenda, which could undermine the by the implementation of structural re- tinued implementation of measures to im- fiscal consolidation and weaken growth. forms aimed at improving public sector prove tax administration efficiency and Climate-related shocks will remain a con- efficiency and the business environment. broaden the tax base. Continued efforts to cern, given the country's high vulnerability. TABLE 2 Cabo Verde / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 5.6 17.1 4.8 4.7 4.7 4.6 Private consumption 1.4 25.9 6.5 8.8 8.6 8.1 Government consumption 5.3 -4.6 0.5 20.4 0.9 2.7 Gross fixed capital investment 23.4 -54.2 -2.4 -19.1 -6.5 1.8 Exports, goods and services 2.1 97.5 4.4 8.6 9.2 9.5 Imports, goods and services 7.7 12.7 3.4 12.5 9.5 11.4 Real GDP growth, at constant factor prices 5.6 17.1 4.8 4.7 4.7 4.6 Agriculture 3.1 -14.3 -2.0 -2.3 2.6 2.7 Industry 13.2 7.5 7.7 5.2 5.5 5.4 Services 4.4 21.9 4.7 5.1 4.7 4.6 Inflation (consumer price index) 1.9 7.9 3.7 2.7 2.1 1.9 Current account balance (% of GDP) -12.2 -3.4 -5.3 -6.2 -6.5 -5.7 Net foreign direct investment inflow (% of GDP) 4.6 4.7 4.0 3.9 3.7 3.6 Fiscal balance (% of GDP) -7.7 -4.3 -0.5 -3.0 -2.2 -1.1 Revenues (% of GDP) 23.9 22.4 24.6 28.3 27.4 26.3 Debt (% of GDP) 152.0 127.1 115.3 112.0 107.7 102.1 Primary balance (% of GDP) -5.5 -2.0 1.8 -0.7 0.0 1.1 a,b International poverty rate ($2.15 in 2017 PPP) 4.7 3.7 3.5 3.5 3.5 3.1 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 19.7 16.0 15.1 14.9 14.2 13.4 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 51.8 45.7 42.4 41.9 40.1 38.5 GHG emissions growth (mtCO2e) -3.5 -1.2 5.3 6.4 6.7 6.6 Energy related GHG emissions (% of total) 84.5 85.0 85.2 85.6 86.0 86.5 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2015-IDRF. Actual data: 2015. Nowcast: 2016-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 13 Apr 24 Household survey data collected in 2021/ 22 suggest 23.0 percent of the population CAMEROON Key conditions and lives below the extreme international poverty line of $2.15 PPP per person per challenges day. The extreme poverty rate has re- mained unchanged since 2001, decreasing Table 1 2023 Cameroon is the largest economy in the by only 0.9 percentage points between Population, million 28.8 CEMAC region, accounting for 45 per- 2014 and 2021. The population living in ex- GDP, current US$ billion 47.4 cent of the region's GDP and 63 percent treme poverty has swelled by over 2 mil- GDP per capita, current US$ 1646.1 of regional foreign exchange reserves in lion since 2001 and now exceeds 6 million. a 23.0 International poverty rate ($2.15) 2023. It is also the region’s most diver- Inequality remains high, with a consump- a 46.7 sified economy. However, the oil sec- tion Gini coefficient of 42.2, indicating Lower middle-income poverty rate ($3.65) a 76.0 tor still accounts for 2.2 percent of GDP large disparities in living standards be- Upper middle-income poverty rate ($6.85) Gini index a 42.2 and 18.4 percent of fiscal revenues, keep- tween regions and urban and rural areas. School enrollment, primary (% gross) b 110.7 ing the country vulnerable to oil price Furthermore, fragility is proliferating, with b 60.3 shocks. Cameroon’s debt pressures have six out of Cameroon’s ten regions now af- Life expectancy at birth, years intensified, calling for cautious fiscal poli- fected by conflict, including spillovers from Total GHG emissions (mtCO2e) 134.6 cies and improved debt management. conflicts in neighboring countries. Climate Source: WDI, Macro Poverty Outlook, and official data. The current development model appears change also threatens Cameroon’s poverty- a/ Most recent value (2021), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy incapable of delivering Cameroon’s ambi- reduction prospects given its reliance on (2021). tion of becoming an upper middle-income natural resources, with around 4 in 10 work- country by 2035, as institutions of gover- ers being primarily engaged in agriculture. nance have deteriorated, human capital re- Cameroon's economy grew by 4.0 percent mains weak, the business environment is in 2023, up from 3.6 percent in 2022. unfavorable, and climate change repre- However, poverty reduction remains sents a growing threat. The employment Recent developments landscape reflects concerning trends, par- slow, with 23.0 percent living below the ticularly for the youth, with half of the Cameroon’s economic recovery continued international poverty line of $2.15 PPP working-age population either unem- in 2023, with real GDP growing by 4.0 per- per person per day. Sustained fiscal con- ployed or otherwise disengaged from the cent, up from 3.6 percent in 2022 driven by workforce. The informal sector, constitut- improvements across various sectors. Ser- solidation kept the deficit at 0.8 percent of ing over 85 percent of total employment, vices and manufacturing sectors expanded GDP in 2023. Looking ahead, while the is experiencing a shift from agriculture to respectively by 4.5 percent and 5.5 percent, medium-term outlook is favorable, risks urban informal activities, calling for urban thanks to better energy supply and market include commodity price volatility and development. Productivity, notably in conditions. Private investments supported persistent security crisis in certain re- agriculture, lags similar countries due to the construction sector’s growth despite high input costs, limited financing, and un- lower public spending. Agriculture sector gions. Low per capita growth coupled grew by 3.5 percent, driven by high cocoa derutilization of innovative technologies. with high food and energy prices may Cameroon has failed to reduce extreme and cotton prices and the recovery of the worsen poverty. poverty over the past two decades. Cameroon Development Corporation. FIGURE 1 Cameroon / Real GDP growth and contributions FIGURE 2 Cameroon / Actual and projected poverty rates to real GDP growth and real GDP per capita Poverty rate (%) Real GDP per capita (constant LCU) 90 800000 80 700000 70 600000 60 500000 50 400000 40 300000 30 20 200000 10 100000 0 0 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 International poverty rate Lower middle-income pov. rate Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see Table 2. MPO 14 Apr 24 Inflation increased to 7.4 percent as of the mitigate impacts, though the latter’s effect The fiscal deficit is projected to remain be- end 2023 from 6.3 percent in 2022 mainly on poverty reduction may be limited due low 1 percent of GDP, supported by mea- due to higher domestic fuel prices, despite to the prevalence of informal employment. sures aimed at enhancing revenue and the tight monetary policies and global in- gradually reducing current expenditures, flation easing. Despite service and income particularly fuel subsidies. These actions balance improvements, the current ac- are expected to counterbalance the antici- count balance deteriorated slightly, reach- Outlook pated rise in capital expenditure necessary ing 3.6 percent of GDP from 3.5 percent for accelerating investment projects. Public due to a widened trade deficit caused by The medium-term economic outlook for debt is projected to decline, reaching 35.5 declining oil and gas exports. Cameroon is positive on balance but sub- percent of GDP by 2026, driven by im- Fiscal consolidation efforts in 2023 result- ject to downside risks. Real GDP growth is proved debt management. ed in a reduced fiscal deficit of 0.8 per- projected at 4.3 percent in 2024 and 4.5 per- However, low per capita growth may ex- cent of GDP, down from 1.1 percent in cent in 2025 and 2026, driven by dynamism acerbate poverty, with the poverty rate at 2022, supported by lower fuel subsidies, in agro-industry, forestry, and services. the international poverty line of $2.15 PPP reduced capital spending, and improved The anticipated LNG production boom is per person per day projected to reach 25.0 tax collection. Public debt decreased to expected to offset declining oil field pro- percent by 2026, leaving around 8 million 41.9 percent of GDP in 2023 from 45.3 duction in 2025. Improved energy supply Cameroonians in poverty. Moreover, food percent in 2022. Nonetheless, Cameroon from projects like the Nachtigal hydroelec- prices are projected to rise faster relative remained at a high risk of debt distress, tric dam and Memve’ele power plant to other goods. Redirecting budgetary sav- despite sustainable debt levels. transmission lines will benefit manufactur- ings from fuel subsidy reductions into pro- The regional central bank (BEAC) main- ing and construction, backed by robust ductive spending, including investments tained in 2023 a tight monetary policy to public investment. in social programs and human capital, contain inflation and support the exchange The current account deficit is expected to could support the poor and vulnerable in rate. While Cameroon's banking system re- gradually narrow over the medium term, the short run, but sustained poverty re- mained strong, vulnerabilities remained, benefiting from sustained high commodity duction will require accelerating economic with the non-performing loan ratio reach- prices, the LNG boom in 2025, and gov- growth that creates more jobs. ing 15.3 percent in 2023 and a significant ernment export efforts. Over the medium The outlook is subject to risks such as exposure to sovereign bonds. term, inflation is expected to drop from 7.0 commodity price volatility, ongoing se- The gradual reduction in fuel subsidies will percent in 2024 to 4.9 percent by 2026, sup- curity crises in certain regions, uncertain provide additional fiscal space for pro-poor ported by moderating import price infla- budget support from external donors, spending but may lead to short-term infla- tion, improved industrial production from exchange rate fluctuations impacting tionary pressures. Tax incentives for agri- better energy supply, and the BEAC's tight debt and fuel subsidies, and increased culture and minimum wage increases will monetary policy. climate-related disasters. TABLE 2 Cameroon / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 3.3 3.6 4.0 4.3 4.5 4.6 Private consumption 3.5 3.6 3.7 3.7 3.8 4.0 Government consumption 3.4 5.1 3.1 2.4 2.2 1.7 Gross fixed capital investment 7.9 3.2 5.1 8.4 9.0 9.1 Exports, goods and services 3.2 10.1 10.1 10.0 9.9 9.9 Imports, goods and services 9.0 7.3 7.8 9.7 9.9 10.0 Real GDP growth, at constant factor prices 3.3 3.6 4.0 4.3 4.5 4.6 Agriculture 4.1 4.3 4.7 5.0 5.6 5.6 Industry 4.1 4.2 4.5 4.8 5.4 5.4 Services 2.7 3.1 3.5 3.9 3.8 3.9 Inflation (consumer price index) 2.5 6.3 7.4 7.0 5.7 4.9 Current account balance (% of GDP) -3.8 -3.5 -3.6 -3.3 -3.4 -3.0 Fiscal balance (% of GDP) -2.9 -1.1 -0.8 -0.7 -0.8 -0.7 Revenues (% of GDP) 14.2 15.9 16.0 16.1 16.1 16.3 Debt (% of GDP) 47.3 45.3 41.9 40.1 38.8 35.5 Primary balance (% of GDP) -1.9 -0.3 0.2 0.2 0.0 0.0 a,b International poverty rate ($2.15 in 2017 PPP) 23.0 22.9 23.9 24.8 25.2 25.0 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 46.7 46.3 47.7 48.3 48.4 48.4 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 76.0 75.6 76.5 77.0 77.0 76.7 GHG emissions growth (mtCO2e) 1.8 1.4 1.5 1.5 1.8 1.7 Energy related GHG emissions (% of total) 7.3 7.4 7.6 7.8 8.1 8.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2021-ECAM-V. Actual data: 2021. Nowcast: 2022-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 15 Apr 24 CENTRAL Key conditions and Recent developments challenges AFRICAN REP. Economic growth was estimated at 0.9 per- cent in 2023, a slight increase from 0.5 per- Since 2020, CAR’s macro-fiscal vulnera- cent in 2022, as a result of limited fuel sup- bilities have been exacerbated by a se- ply and mixed agricultural performance. Table 1 2023 ries of exogenous shocks (renewed in- Limited fuel supply has contributed to Population, million 5.7 security and violence, COVID-19 pan- higher transportation prices and disrupted GDP, current US$ billion 2.6 demic and Russian invasion of Ukraine). trade and local production. Production of GDP per capita, current US$ 460.3 These shocks have strained public fi- diamonds, one of the country’s most im- International poverty rate ($2.15) a 65.7 nances, added inflationary pressures, portant commodity exports, fell by 6.7 per- a 85.8 jeopardized food security, and slowed cent in FY2022/23 due to the decline of in- Lower middle-income poverty rate ($3.65) a poverty reduction efforts. Also, climate ternational demand for natural diamond Upper middle-income poverty rate ($6.85) 96.2 a shocks, including drought and floods, due to synthetic diamond surge. However, Gini index 43.0 continue to pose threats to an already a shift of artisanal miners from the diamond b 110.7 School enrollment, primary (% gross) alarming humanitarian situation, partic- to the gold sector and a relative rise in the b 53.9 Life expectancy at birth, years ularly in remote areas. As of December price of gold helped to boost the production Total GHG emissions (mtCO2e) 55.9 31, 2023, the total number of internally of gold. Official timber and sawn wood pro- Source: WDI, Macro Poverty Outlook, and official data. displaced persons (IDPs) was estimated duction would have increased in 2023, dri- a/ Most recent value (2021), 2017 PPPs. at 511,803 individuals, while approxi- venbyimprovementsinsecurityconditions, b/ WDI for School enrollment (2017); Life expectancy (2021). mately 754,421 people were registered as secured contracts with key bilateral part- refugees in neighboring countries. ners, and a slight rebound in international The private sector continues to be prices for logs and sawn wood. Persistent hampered by unattractive business power shortages continued to hold back the Economic growth is estimated to have conditions and high borrowing costs. industrial sector while the services sector reached 0.9 percent in 2023, compared to Employment opportunities remain ex- suffered from higher transportation prices. 0.5 percent in 2022. CAR's structural vul- tremely limited while the workforce is Despite rising transportation costs, inflation nerabilities, compounded by external growing. Continued efforts by country fell from 5.6 percent in 2022 to 3.0 percent in shocks, continue to strain public finances authorities to promote more inclusive 2023,itslowestlevelsince2021. and resilient growth will be critical. Tight budget constraints due to lack of and adversely affect growth, food security, This includes improving the business growthandelevatedtransportationpricesre- and poverty reduction efforts, necessitating environment and state-owned enter- duced households’ purchasing power, wors- bold macro-fiscal reforms. As of 2023, two- prise (SOE) governance to attract pri- ened food insecurity, and slowed poverty re- thirds of the population lived in extreme vate investment, improving revenue duction efforts. Poverty remains elevated, mobilization to restore fiscal sustain- with an estimated 65.9 percent of the pop- poverty, with projections suggesting a one ability, and rationalizing untargeted ulation living in extreme poverty in 2023 percentage point increase in the next two subsidies to create space for higher (i.e., below the international poverty line years due to negative per capita growth. social spending. of US$2.15 per person per day, 2017 PPP). FIGURE 1 Central African Republic / Real GDP growth FIGURE 2 Central African Republic / Actual and projected and contributions to real GDP growth poverty rates and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 5 100 300000 4 90 3 250000 80 2 70 200000 1 60 0 50 150000 -1 40 100000 -2 30 -3 20 50000 10 -4 2021 2022 2023 2024 2025 2026 0 0 Private consumption Government consumption 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Gross fixed investment Net exports International poverty rate Lower middle-income pov. rate GDP (market price) Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see Table 2. MPO 16 Apr 24 The extreme poverty rate is set to increase by In 2023, domestic debt is estimated to The overall fiscal balance is projected to one percentage point over the next two reach 21 percent of GDP. Yields on 3-year gradually improve from 2024 to 2026, pro- years, due to negative per capita growth. issuances have hovered around 11 percent, vided that DRM efforts continue, particular- The Bank of Central African States (BEAC) among the highest in CEMAC. ly in improving the collection of taxes, espe- maintained its tight monetary policy The current account deficit improved to 9 cially VAT, and miscellaneous revenues stance during 2023 to contain inflationary percent of GDP in 2023, mainly due to a 14.4 through a treasury single account (TSA) sys- pressures and support the external viabil- percent improvement in the terms of trade. tem. Under these circumstances, domestic ity of the exchange rate arrangement. The However, a lack of competitiveness, cou- revenue could reach pre-war levels for the BEAC policy rate was maintained at five pled with commodity price shocks and a first time in 2026. The country is expected to percent following a cumulative increase by weak linkages with global value chains, con- remain at high risk of external debt distress 175 basis points between November 2021 tinued to weigh on the external position. and overall debt distress, although public and March 2023. Weekly liquidity injec- debtisprojectedtoremainsustainable. tions were discontinued in early 2023 and The current account balance is projected to BEAC stepped up its liquidity absorption improve but remain in significant deficit. operations. CAR’s indicators of financial Outlook Thebalanceofpaymentsisprojectedtoshow soundness remain broadly adequate, al- a financing gap of roughly 1 percent of GDP though the non-performing loan ratio de- The medium-term outlook shows gradual peryearinthemediumtermwhichwouldbe teriorated and stood at 16.4 percent in improvement in economic performance coveredbybridgefinancingfromtheregion- 2023, compared to 15.5 percent in 2022. but is vulnerable to headwinds. Real GDP al market, possible disbursements of budget While the overall fiscal balance continued growth is projected to recover gradually, support from donors, and disbursements to improve in 2023, it remained structural- reaching 1.3 percent in 2024 before aver- undertheIMF’songoingECFprogram. ly in deficit. Fuel shortages during the last aging 1.8 percent in 2025-26, partly due to Risks to the outlook remain tilted to the quarter of 2023 reduced petroleum tax col- the base effect and contingent on the sec- downside and include: (i) a reversal of se- lection and dampened recent tax recovery ond disbursement of budget support from curity gains that could jeopardize econom- efforts. Domestic revenue mobilization the African Development Bank (AfDB) and ic growth and the pathway out of fragility; (DRM) efforts, including the implementa- the implementation of policy adjustments (ii) persistent pressure on food and trans- tion of the new tax on electronic communi- to pave the way for improved fuel supply. portation prices that could slow down cations, combined with moderation of cur- Inflation is expected to be above the re- poverty reduction efforts; (iii) failure to im- rent spending and expanded external gional ceiling in 2024 and remain elevated plement bold and agreed policy reforms grant financing enabled a reduction in the in the medium term. Poverty is expected to under the ECF program, which could de- overall fiscal balances in 2023. Public debt remain high due to declining per capita in- lay expected disbursements, dampen increased to 55.7 percent of GDP in 2023 in come, relatively high food prices, and the donor appetite for budget support and the form of issuance of net domestic bonds. weak economic recovery. lead to a possible accumulation of arrears. TABLE 2 Central African Republic / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 1.0 0.5 0.9 1.3 1.7 1.9 Private consumption 1.3 0.0 1.2 3.3 2.5 2.7 Government consumption -3.8 -8.2 3.5 -4.5 -4.4 -1.9 Gross fixed capital investment -15.9 -4.5 -1.5 0.2 9.8 3.2 Exports, goods and services -5.3 2.6 9.0 5.2 9.0 5.4 Imports, goods and services -11.5 -5.5 5.5 7.3 9.9 5.5 Real GDP growth, at constant factor prices 1.5 1.0 0.9 1.3 1.7 1.9 Agriculture 2.7 2.2 2.3 2.5 2.9 3.1 Industry -1.7 -3.9 -0.5 1.3 1.8 2.1 Services 2.2 2.4 0.5 0.3 0.6 0.9 Inflation (consumer price index) 4.3 5.6 3.0 4.7 4.6 3.8 Current account balance (% of GDP) -11.1 -12.7 -9.0 -7.7 -6.7 -5.4 Fiscal balance (% of GDP) -6.0 -5.3 -3.5 -3.1 -1.8 0.1 Revenues (% of GDP) 13.7 12.3 14.4 13.9 16.1 18.2 Debt (% of GDP) 48.6 54.2 55.7 55.6 54.5 50.7 Primary balance (% of GDP) -5.7 -4.9 -2.9 -2.2 -0.9 0.9 a,b International poverty rate ($2.15 in 2017 PPP) 65.7 65.3 65.9 66.2 66.8 67.3 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 85.8 85.6 86.2 86.1 86.7 87.1 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 96.2 96.1 96.4 96.4 96.5 96.7 GHG emissions growth (mtCO2e) 0.6 0.1 0.0 -0.1 0.0 0.0 Energy related GHG emissions (% of total) 0.4 0.4 0.4 0.4 0.4 0.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2021-EHCVM. Actual data: 2021. Nowcast: 2022-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 17 Apr 24 economy is poised for its strongest, albeit still modest, performance since 2014, with CHAD Key conditions and an estimated GDP growth of 4.1 percent (1 percent per capita) in 2023. This challenges growth is underpinned by oil production, which is expected to rise by 4.4 percent. Table 1 2023 Chad’s economic growth has been volatile and Non-oil GDP is estimated to grow 4.1 Population, million 18.3 weak, reflecting the lack of economic diversifi- percent (up from 2 percent the previous GDP, current US$ billion 13.2 cation and dependence on the oil sector, which year) driven by public investment. After GDP per capita, current US$ 722.4 accountsfor85percentofexportsand56percent recovering from the 2022 floods, the agri- a 30.8 International poverty rate ($2.15) of fiscal revenues. Chad is also among the cultural sector is estimated to contribute a 62.8 world’s most vulnerable countries to climate 1.6 percentage points (ppts) to growth, Lower middle-income poverty rate ($3.65) a 88.8 change.Insufficientrainsandfrequentflooding followed by the services (1.4 ppts) and Upper middle-income poverty rate ($6.85) Gini index a 37.4 have often had adverse impacts on the agricul- industry (1 ppt) sectors. Investment, pri- School enrollment, primary (% gross) b 90.4 tural sector, the main sector of employment, marily government-driven, is the main b 52.5 which, together with conflict and displace- growth driver on the demand side, con- Life expectancy at birth, years ment, has led to chronic food insecurity. tributing 7 ppts to growth. In contrast, Total GHG emissions (mtCO2e) 121.1 Security remains precarious with threats private investment is expected to have Source: WDI, Macro Poverty Outlook, and official data. by Boko Haram in the Lake Chad region, fallen due to increased interest rates and a/ Most recent value (2022), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy the armed FACT rebellion in the north, and crowding out effects. The boom in public (2021). escalating inter-community tensions. Ac- investment (+195.9 percent) led to a sharp cording to UNHCR, Chad was hosting increase in domestic demand (+9.5 per- nearly one million forcibly displaced per- cent). This in turn increased imports, sons at the end of 2022, including 593,000 along with other imports for humanitar- Chad’s economy has proven resilient de- refugees and nearly 400,000 IDPs. Since ian-related operations in support of the April 15, 2023, the war in Sudan has caused Sudanese refugees, and by significantly spite the war in neighboring Sudan. GDP a mass influx of Sudanese refugees and Cha- more than exports (imports +16 percent growth in 2023 is estimated at 4.1 per- dian returnees to eastern Chad. The number vs. exports +2.9 percent), resulting in a cent (1 percent per capita), supported by of new arrivals was estimated at around current account deficit of 2.4 percent of higher oil production and public invest- 496,834 at end-December 2023. In addition GDP in 2023. to the humanitarian challenges, the war in Inflation eased to 4.1 percent in 2023, ow- ment. Improved agricultural production Sudan has induced higher expenditures ing to the base effect of high inflation in eased inflation to 4.1 percent. While the (mostly military) and shortages of goods. 2022 and the deceleration in food inflation poverty rate has declined, 5.5 million peo- (4.8 percent) because of improved agricul- ple still live in extreme poverty. Down- tural production. Food insecurity remains side risks include uncertainty from the a significant problem despite these im- political transition, regional instability, Recent developments provements, with around 2.1 million peo- ple, or 11.5 percent of the population, fac- insecurity, and climate shocks. Despite the ongoing humanitarian crisis ing severe food insecurity as of December triggered by the war in Sudan, Chad’s 2023. The extreme poverty rate is expected FIGURE 1 Chad / GDP growth, current account, and fiscal FIGURE 2 Chad / Actual and projected poverty rates and balance real GDP per capita Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 6 100 450000 5 90 400000 4 3 80 350000 2 70 300000 1 60 0 250000 50 -1 200000 -2 40 -3 150000 30 -4 100000 20 -5 10 50000 -6 -7 0 0 2021 2022 2023 2024 2025 2026 2011 2013 2015 2017 2019 2021 2023 2025 Fiscal balance Current account balance International poverty rate Lower middle-income pov. rate Real GDP growth Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see Table 2. MPO 18 Apr 24 to decrease by 1 ppts to 29.9 percent in reduction. Extreme poverty is projected 2023; however, about 30 percent of the to increase by 0.5 ppt in 2024, equivalent population (5.5 million people) continue Outlook to an additional 263,671 people falling in- living in extreme poverty. to extreme poverty. The Bank of Central African States (BEAC) In 2024, growth is projected to decelerate Reflecting lower oil prices and still elevat- maintained its tight monetary policy to 2.7 percent (0.4 percent per capita) due ed levels of government expenditures, the stance during 2023 to contain inflationary to an expected decline in oil production fiscal balance is projected to turn into a pressures and support the external viabil- and expectations of lower public invest- 1.4 percent of GDP deficit in 2024, remain- ity of the exchange rate arrangement. The ment, compared to 2023 levels. During ing in deficit through to 2026. Public debt BEAC policy rate was maintained at five 2025-2026, growth is projected to average to GDP is projected to decline to 41.6 per- percent following a cumulative increase by 3.1 percent (0.1 percent per capita), as new cent in 2025 and stabilize in the medium 175 basis points between November 2021 oil fields are brought onstream. Non-oil term. The current account deficit is expect- and March 2023. GDP growth is projected at around 3.5 per- ed to further deteriorate to 3 percent of Chad maintained a fiscal surplus of 1.3 cent over 2024-2026. Government mea- GDP in 2024, and average 3.1 percent over percent of GDP in 2023, equivalent to a sures addressing food insecurity should 2025-2026, driven by moderating oil prices. non-oil fiscal deficit of 15.8 percent, and ease food inflation, with inflation projected The outlook is subject to multiple down- falling from a 5 percent of GDP fiscal sur- to fall to 3.9 percent in 2024 as a result, be- side risks, including lower oil prices, polit- plus in 2022. Despite high growth in tax fore averaging 3.3 percent over 2025-2026. ical instability during the upcoming elec- revenues, supported by tax administration With few linkages to poor and vulnerable tions, heightened insecurity, and climate digitalization measures, and a peak in oil populations, oil-sector driven growth is shocks. A prolonged Sudan war could revenue, the fiscal surplus declined, re- not expected to lead to poverty reduction worsen the humanitarian crisis, strain pub- flecting the sharp rise in public investment. without significant structural reforms. lic finances, and increase inflationary pres- Total public debt is estimated to decline to Moreover, continued security restrictions, sures. Moreover, an escalation of tensions 44.8 percent of GDP in 2023, compared to low social protection coverage, and the between Chad and Sudan could lead to 47.4 percent in 2022. ongoing Sudan crisis will restrict poverty considerable security concerns. TABLE 2 Chad / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices -1.2 2.8 4.1 2.7 3.3 2.9 Private consumption 1.6 2.7 1.9 3.6 3.2 2.3 Government consumption 3.7 -1.5 1.1 0.4 3.0 3.1 Gross fixed capital investment -4.3 -6.1 62.8 -17.2 -2.1 -0.4 Exports, goods and services -0.4 5.0 2.9 3.8 4.1 4.2 Imports, goods and services 5.1 2.0 16.0 -3.1 2.0 2.1 Real GDP growth, at constant factor prices -1.2 2.8 4.1 2.8 3.3 2.9 Agriculture 6.2 2.0 5.0 3.1 3.4 3.3 Industry -4.6 4.1 3.3 1.1 2.0 1.7 Services -4.3 2.3 4.1 3.9 4.4 3.5 Inflation (consumer price index) 1.0 5.8 4.1 3.9 3.6 3.0 Current account balance (% of GDP) -6.0 2.9 -2.4 -3.0 -3.3 -2.8 Fiscal balance (% of GDP) -2.2 5.0 1.3 -1.4 -1.2 -2.1 Revenues (% of GDP) 16.3 23.5 27.1 22.3 22.6 21.8 Debt (% of GDP) 52.1 47.4 44.8 42.3 41.6 41.9 Primary balance (% of GDP) -0.6 6.5 3.0 -0.5 -0.3 -1.2 a,b International poverty rate ($2.15 in 2017 PPP) .. 30.8 29.9 30.4 30.8 30.9 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) .. 62.8 61.6 62.4 62.9 63.1 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) .. 88.8 87.8 88.4 88.7 88.7 GHG emissions growth (mtCO2e) 2.0 2.1 2.0 2.1 2.0 1.9 Energy related GHG emissions (% of total) 1.2 1.2 1.2 1.2 1.2 1.2 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2022-EHCVM. Actual data: 2022. Nowcast: 2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 19 Apr 24 market institutions and persistent forms of wage discrimination against women. COMOROS Key conditions and A low employment intensity of growth and weak economic growth contribute to challenges the high poverty level, which is a source of fragility for the Comoros. Furthermore, re- Table 1 2023 Economic growth slowed to 1.9 percent cent shocks have highlighted the Comoros’ Population, million 0.9 over 2019-23, below already anemic long- vulnerabilities and the need to implement GDP, current US$ billion 1.3 term growth, which averaged 2.7 percent reforms that increase productivity and pri- GDP per capita, current US$ 1520.5 over the previous two decades. This re- vate investment to promote growth. These a 18.6 International poverty rate ($2.15) cent poor growth performance is mainly include reforms to improve the business a 39.5 due to multiple natural and external environment and increase financial inter- Lower middle-income poverty rate ($3.65) a 68.6 shocks, including Cyclone Kenneth in mediation. Higher public investment, in- Upper middle-income poverty rate ($6.85) Gini index a 45.3 2019, the COVID-19 pandemic, and the cluding in infrastructure, is also needed School enrollment, primary (% gross) b 106.2 2022 global commodity price shock. As a to attract larger private investments, in- b 63.4 result, poverty remains high at 38.2 per- cluding foreign direct investment. Life expectancy at birth, years cent in 2023 (using the lower middle-in- Total GHG emissions (mtCO2e) 0.7 come poverty rate threshold). The Co- Source: WDI, Macro Poverty Outlook, and official data. moros’ growth is driven by private con- a/ Most recent value (2014), 2017 PPPs. b/ Most recent WDI value (2021). sumption fueled by remittances as they Recent developments support “grands marriages.” Low and declining productivity, limited invest- The economy expanded by an estimated 3 ment and fiscal space, and underperform- percent in 2023 as domestic activities were ing state-owned enterprises (SOEs) also supported by the resumption of “grands The Comoros’ economy continues to re- weigh on growth. Even though public marriages” and the associated increase in cover following the resumption of private debt is assessed as sustainable, the Co- diaspora community arrivals, primarily consumption and investments in tourism moros is at high risk of public debt dis- from France. Public servant salary hikes and transport infrastructure. Growth is tress, largely reflecting the issuance of in January 2023 aimed at preserving pur- non-concessional loans. chasing power, a high level of remittances, expected to average 3.9 percent over Due to red tape, the dominance of state- and higher public investment supported 2024-26, compared to 2.8 percent in owned enterprises, and limited market domestic demand. On the supply side, the 2022-23. The poverty rate has remained competition and challenges in accessing construction sector benefited from in- high at 38.2 percent (using the lower finance, private sector development is creased public spending, while the prima- middle-income poverty threshold). Policy weak, constraining job creation. Low lev- ry sector benefited from higher agricultur- els of human and physical capital and al prices and favorable climate conditions. priorities include fiscal consolidation and misallocation of resources have hin- As inflationary pressures from imported reforms to improve financial intermedia- dered growth in the tourism and fish- food and energy products moderated, in- tion, and enhance the business climate eries sectors, which hold high potential flation declined from 12.4 percent in 2022 and access to basic services. for job creation. Labor force participa- to 9.2 percent in 2023. An increase of 50 ba- tion is also constrained by weak labor sis points in the key monetary policy rate FIGURE 1 Comoros / Public debt, fiscal and current account FIGURE 2 Comoros / Actual and projected poverty rates balances and real GDP per capita Percent of GDP Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 45 0 80 570000 40 560000 -1 70 35 550000 -2 60 30 540000 50 530000 25 -3 40 520000 20 -4 30 510000 15 -5 500000 10 20 490000 -6 5 10 480000 0 -7 0 470000 2019 2020 2021e 2022f 2023f 2024f 2025 2026 2014 2016 2018 2020 2022 2024 2026 Debt (lhs) Fiscal balance (rhs) International poverty rate Lower middle-income pov. rate Current account balance (rhs) Upper middle-income pov. rate Real GDP pc Sources: National authorities and World Bank estimates and forecasts. Source: World Bank. Notes: see Table 2. MPO 20 Apr 24 in July 2023 and lower credit growth in which weighed on economic activities and Lower imported inflation would con- response to liquidity management opera- slowed progress on the implementation of tribute to lower headline inflation of tions also helped decrease inflation. public projects and policy. 2.2 percent in 2024. Lower global com- Stronger domestic demand translated into modity prices and improvements in high import demand and contributed to the monetary policy framework would the widening of the current account to 5.8 also help reduce inflation. The current percent of GDP in 2023 (from 0.5 percent in Outlook account deficit is expected to average 2022). However, international reserves re- 5.5 percent of GDP over 2024-26, as mained at adequate levels as the Comoros The economic recovery from the COVID- major public investments contribute to received exceptional financing from inter- related slowdown is expected to contin- the widening of the trade deficit to an national financial institutions. ue, with growth reaching 3.3 percent in average of 20 percent of GDP. Pub- The fiscal deficit continued to widen in 2024 and 4.2 percent over 2025-26, driven lic debt is projected to reach 38.2 per- 2023 to an estimated 4.4 percent of GDP, primarily by private consumption and cent of GDP by 2026. Fiscal consolida- despite improved domestic revenue mobi- public investment. The construction of tion, enhanced SOE performance mon- lization. The deterioration of the fiscal po- the El Maarouf hospital and the Galawa itoring, and increased expenditure ef- sition by 0.4 percentage points of GDP in hotel, as well as the construction or ficiency are expected to reduce the fiscal 2023 was mainly driven by a large increase restoration of roads and ports, should deficit to 2.2 percent of GDP by 2026. in public spending of 3.5 percentage points support the economic recovery. In the The outlook faces significant down- of GDP, particularly higher public capital medium term, productivity growth is ex- side risks related to the impact of the expenditures. Public debt stock reached pected to benefit from the 2023 energy 2024 elections on the pace of execu- 38.2 percent of GDP at end-2023, compared law, which promotes the production of tion of investment projects and de- with 34.0 percent of GDP at end-2022. electricity from renewable sources. The lays in the implementation of key fis- Compliance with quantitative fiscal targets creation of a credit registry and a partial cal and governance reforms during under the four-year International Mone- credit guarantee scheme, as well as the the first half of the year. Concomi- tary Fund Extended Credit Facility pro- operationalization of the leasing law in tantly, contingent liabilities threaten gram approved in June 2023 is expected to 2024-25, are also expected to support the debt sustainability. Other downside help improve fiscal outturns and contain recovery in 2025-26. The poverty rate is risks include the cholera outbreak the increase in public debt. expected to decrease slowly to 36.2 per- in February 2024, prolonged global The January 2024 presidential election was cent in 2026 as the economy continues to geopolitical tensions, and the occurrence followed by post-electoral demonstrations, expand more rapidly. of natural disasters. TABLE 2 Comoros / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 2.1 2.6 3.0 3.3 4.0 4.3 Private consumption 1.0 0.2 1.9 3.2 3.6 3.6 Government consumption 5.0 5.4 11.6 0.7 4.5 5.4 Gross fixed capital investment 9.6 2.0 8.0 4.8 6.8 2.9 Exports, goods and services 48.2 22.6 -4.2 5.1 6.5 6.5 Imports, goods and services 7.7 4.2 3.0 3.7 5.6 3.2 Real GDP growth, at constant factor prices 2.0 2.4 3.0 3.3 4.0 4.2 Agriculture 3.4 3.3 4.7 4.3 4.6 5.0 Industry -0.2 0.4 2.3 1.0 1.5 3.0 Services 1.8 2.4 2.4 3.2 4.2 4.1 Inflation (consumer price index) 0.0 12.4 9.2 2.2 2.3 2.2 Current account balance (% of GDP) -0.5 -0.7 -5.8 -5.8 -5.4 -5.6 Fiscal balance (% of GDP) -2.8 -3.9 -4.4 -3.2 -2.5 -2.2 Revenues (% of GDP) 17.0 14.2 17.4 17.2 15.7 15.7 Debt (% of GDP) 29.8 33.7 38.2 39.9 39.1 38.7 Primary balance (% of GDP) -2.5 -3.7 -4.0 -2.9 -2.2 -1.9 a,b International poverty rate ($2.15 in 2017 PPP) 18.2 18.1 18.1 17.9 17.4 16.8 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 39.0 38.5 38.2 38.1 37.0 36.2 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 68.2 67.9 67.2 66.7 65.7 64.8 GHG emissions growth (mtCO2e) 2.1 2.1 2.1 2.2 2.3 2.1 Energy related GHG emissions (% of total) 48.7 48.8 49.0 49.1 49.3 49.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2015-EESIC. Actual data: 2014. Nowcast: 2015-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2014) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 21 Apr 24 Sub-Saharan Africa after Nigeria in terms of the number of extreme poor despite DEMOCRATIC Key conditions and some improvements in the past decades. The December 2023 elections have led to challenges REP. OF CONGO a second 5-year term for incumbent Pres- ident Tshisekedi, but a majority is yet The Democratic Republic of the Congo to be negotiated in Parliament to form (DRC), home to the second largest rain- a government. Reaching political consen- Table 1 2023 forest in the world and vast metal de- sus and increasing the presence and cred- Population, million 102.3 posits, has yet to leverage its natural ibility of the state, including through im- GDP, current US$ billion 64.4 wealth to spur economic development. proved governance, are key to maintain- GDP per capita, current US$ 629.5 DRC’s exports are highly concentrated ing stability and peace, and advancing International poverty rate ($2.15) a 78.9 with copper and cobalt accounting for structural reforms that will attract invest- a 92.1 80 percent of the total (40 percent of ments and create jobs. The imperative for Lower middle-income poverty rate ($3.65) a which headed to China). With its agri- the state to enhance service delivery to Upper middle-income poverty rate ($6.85) 97.7 a cultural potential untapped, DRC is a citizens, alongside preserving macroeco- Gini index 44.7 net food importer, increasing vulnerabil- nomic stability, underscores the impor- b 122.4 School enrollment, primary (% gross) ities to external shocks. Political insta- tance of boosting domestic revenue mo- b 59.2 Life expectancy at birth, years bility, weak institutional capacity, poor bilization to expand fiscal space. Total GHG emissions (mtCO2e) 691.7 governance, and frequent bouts of vio- Source: WDI, Macro Poverty Outlook, and official data. lence have all contributed to undermin- a/ Most recent value (2020), 2017 PPPs. ing DRC’s foundations of a robust and b/ Most recent WDI value (2021). diversified economy. These issues have Recent developments not only deterred the creation of eco- nomic opportunities but also contributed The DRC economy expanded by 7.8 Following a strong recovery at 8.9 per- to escalating poverty levels, particularly percent in 2023 (2022: 8.9 percent), cent in 2022, the DRC’s economy is esti- with a rapidly growing population. Per- supported by a strong mining sector, mated to have slowed down in 2023 but sistent structural constraints result in an which grew by 15.4 percent, contribut- underdeveloped private sector and a large ing around 70 percent to overall remained resilient. The terms-of-trade de- informal economy. Climate-related shocks, growth in 2023. DRC copper and terioration and higher imports would including floods and droughts, and the as- cobalt production increased by 18.7 maintain high current account and fiscal sociated infrastructure damage add to and 21.2 percent, respectively, in 2023 deficits and put pressure on the domestic these challenges. (2022: 33.2 and 24.0 percent, respec- currency with strong pass-through to in- Poverty remains widespread, with the tively), reflecting ongoing expansions bulk of the poor living in extreme poverty. of production at relevant mines. Non- flation. Prospects for growth and poverty Significant geographical disparities in mining GDP grew by 3.6 percent in reduction are favorable, but subject to poverty exist, with extreme poverty con- 2023, led by the construction and ser- downside risks related to commodity price centrated in the central and northwestern vices sectors. Agriculture production shocks and geopolitical conflicts. areas and the largest number of poor in slowed to 2.2 percent in 2023 (from Eastern provinces. DRC remains second in 2.4 percent in 2022). On the demand FIGURE 1 Democratic Republic of Congo / Real GDP FIGURE 2 Democratic Republic of Congo / Actual and growth and contributions to real GDP growth projected poverty rates and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 10 100 180000 90 160000 8 80 140000 6 70 120000 60 4 100000 50 2 80000 40 60000 0 30 20 40000 -2 10 20000 0 0 -4 2012 2014 2016 2018 2020 2022 2024 2026 2020 2021 2022 2023e 2024f 2025f 2026f International poverty rate Lower middle-income pov. rate Non-Mining Mining sector SSA growth GDP Upper middle-income pov. rate Real GDP pc Sources: Democratic Republic of Congo statistical authorities and World Bank. Source: World Bank. Notes: see Table 2. MPO 22 Apr 24 side, growth was led by private investment stability while the inflation rate (end-of- and exports, while inflationary pressures period) is expected to decline towards its caused private consumption to contract, Outlook 7 percent medium-term target. potentially impacting poverty reduction. Extreme poverty is projected to further Extreme poverty is estimated at 74.6 per- GDP growth is expected to moderate to decrease reaching 72.4 percent by 2025 cent in 2023, a 1.4 percentage points de- 6.0 percent in 2024 and to stabilize around given favorable economic prospects, de- crease compared to 2022. 5.8 percent over 2025-26. The mining sector spite the lasting negative effects of the The current account deficit (CAD) fur- will continue to drive growth. Moreover, pandemic, high population growth, and ther deteriorated to 6.3 percent of GDP non-mining sectors (mainly services and war in Ukraine. in 2023, from 4.9 percent in 2022, owing manufacturing) will gradually support DRC’s economy remains subject to down- to higher imports. Nevertheless, FDI growth in the medium term with a growth side risks given its vulnerability to com- and external financing contributed to rate of 5.5 percent by 2026. On the demand modity price swings and growth perfor- build up foreign reserves, reaching 8.9 side, government consumption and invest- mance of major trading partners which weeks of imports in 2023 (2022: 7.7 ment and, to a lesser extent, private con- might be disturbed by geopolitical con- weeks). However, the exchange rate de- sumption shall support growth in the flicts. The continued economic conse- preciated by 21.6 percent in 2023 and medium term. quences of the war in Ukraine, through ris- inflation accelerated to 19.9 percent on The fiscal deficit is projected at 2.0 per- ing global commodity prices, could exert average in 2023 (up from 9.2 percent in cent of GDP in 2024, driven by security- stronger pressure on the fiscal deficit, infla- 2022) despite the central bank’s inter- related spending, before narrowing to 0.2 tion, and households’ consumption, thus, vention in FX market and its contrac- percent in 2026. Gross fixed capital in- exacerbating poverty and inequality. tionary monetary policy during the sec- vestment is expected to drop in 2024 as In addition, with the agriculture sector ond half of the year (raising the policy lower domestic revenue and higher ex- employing over 60 percent of the work- rate from 11 to 25 percent). penditures -attributed to outgoing and in- ing force, the vulnerability to climate The security and elections spendings coming administrations- leave a narrow change-related risks (floods, droughts) is caused the fiscal deficit to widen to scope for relevant budget allocation. De- substantial. Finally, an escalating war in 1.7 percent of GDP in 2023 (from 0.3 spite rising imports of capital goods, the the East and continued political volatil- percent in 2022), amid softening do- current account deficit will narrow to 3.5 ity could undermine the ability to ad- mestic revenues, due to lower cobalt percent of GDP in 2024-26 thanks to im- vance with ambitious structural reforms prices and declining windfall taxes. proved terms of trade associated with fa- efforts. To mitigate these risks, DRC’s The fiscal deficit was partly funded vorable commodity prices. Furthermore, immediate challenge is to strengthen se- by treasury bills/bonds and external FDI inflows will contribute to building up curity and maintain political and macro- concessional borrowing. reserves and maintaining exchange rate economic stability. TABLE 2 Democratic Republic of Congo / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 6.2 8.9 7.8 6.0 5.9 5.7 Private consumption 1.6 10.1 -1.6 8.6 5.5 6.5 Government consumption 11.8 25.1 -9.2 4.0 8.9 4.6 Gross fixed capital investment 7.7 5.7 17.8 0.3 4.6 4.0 Exports, goods and services 11.7 25.0 24.9 8.9 3.7 2.5 Imports, goods and services 5.4 18.0 13.1 5.3 3.4 3.0 Real GDP growth, at constant factor prices 6.2 8.9 7.8 6.0 5.9 5.6 Agriculture 2.4 2.4 2.2 2.5 2.5 2.5 Industry 7.8 16.1 13.0 7.2 6.4 5.3 Services 5.8 2.7 2.9 5.6 6.4 7.3 Inflation (consumer price index) 9.0 9.3 19.9 17.2 14.5 10.5 Current account balance (% of GDP) -0.4 -4.9 -6.3 -4.3 -3.3 -2.9 Fiscal balance (% of GDP) -1.7 -0.3 -1.7 -2.0 -0.7 -0.2 Revenues (% of GDP) 12.1 16.9 14.2 13.4 13.9 14.6 Debt (% of GDP) 24.0 24.0 23.7 22.8 21.5 19.8 Primary balance (% of GDP) -1.4 0.0 -1.4 -1.7 -0.4 0.1 a,b International poverty rate ($2.15 in 2017 PPP) 77.9 76.0 74.6 73.4 72.4 71.5 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 91.6 90.6 89.8 89.5 89.1 88.8 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 97.6 97.2 97.1 96.9 96.8 96.7 GHG emissions growth (mtCO2e) 0.3 0.1 0.1 0.1 0.2 0.2 Energy related GHG emissions (% of total) 1.4 1.4 1.4 1.4 1.4 1.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2020-EGI-ODD. Actual data: 2020. Nowcast: 2021-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2020) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 23 Apr 24 The enduring reliance on oil revenues has left the economy vulnerable to oil price REPUBLIC OF Key conditions and volatility and weakened long-term growth prospects. Attaining sustainable develop- challenges CONGO ment in Congo urgently requires efforts to diversify national assets, focusing on Between 2015 and 2023 the Republic of stronger institutions, development of hu- Congo’s (ROC) real GDP annual growth man and physical capital, and a more bal- Table 1 2023 averaged -1.9 percent, while its GDP per anced exploitation of natural capital. Population, million 6.1 capita contracted by a cumulative 32.3 per- GDP, current US$ billion 15.3 cent. The 2014-16 collapse in oil prices GDP per capita, current US$ 2506.0 plunged the economy into a prolonged re- International poverty rate ($2.15) a 35.4 cession as a result of a massive cut in pub- Recent developments a 59.1 lic spending and the accumulation of do- Lower middle-income poverty rate ($3.65) a mestic arrears to private sector firms, Driven by the non-oil sector, economic ac- Upper middle-income poverty rate ($6.85) 83.5 a which impacted private investment. The tivity in Congo is estimated to have in- Gini index 48.9 COVID-19 crisis further exacerbated the creased by 1.9 percent in 2023, compared b 87.7 School enrollment, primary (% gross) economic recession. GDP per capita has to an estimated 1.5 percent in 2022. Non-oil b 63.5 Life expectancy at birth, years now regressed to levels of the early 1970s, growth, estimated at 2.8 percent in 2023, Total GHG emissions (mtCO2e) 34.2 just a decade after gaining independence. was broad-based, spurred by agriculture, Source: WDI, Macro Poverty Outlook, and official data. The decline in per capita income levels manufacturing (including beverages, sug- a/ Most recent value (2011), 2017 PPPs. since 2015 have resulted in extreme pover- ar, and cement), and services (including b/ WDI for School enrollment (2018); Life expectancy (2021). ty incidence (less than US$2.15 PPP per restaurants and hotels, transport, and post day) increasing from 33.5 percent in 2015 and electronic communications). The oil to 46.6 percent in 2022. sector, on the other hand, underperformed The country’s high levels of non-conces- with production declining for the fourth Theeconomyisgraduallyrecovering,but sional borrowing in a context of reliance consecutive year in 2023 by 0.5 percent, growthremainedmodestatanestimated1.9 on volatile oil revenue and weak gover- due to technical challenges and maturing percentin2023,drivenbynon-oilactivi- nance, led its debt to be classified as “in oil fields. Despite a drop in oil revenues ties.Theongoingfuelsubsidiesreformis distress” and unsustainable in 2017, with due to lower oil prices and oil production, helpingtomaintainfiscalsurplusesbuthas its debt-to-GDP ratio increasing from 42.3 the budget posted a surplus in 2023. Fiscal percent in 2014 to 103.5 percent in 2020. discipline and strong reforms such as the alsocontributedtoatemporaryincreasein Higher oil prices, improved debt man- 30 percent increase in gasoline retail prices inflation,whichisprojectedtoreturntothe agement, and debt restructuring agree- since January 2023 and a new requirement 3.0percenttargetby2025.Growth ments helped restore debt sustainability on dividends payment from state-owned prospects,albeitimproved,remainvulnera- in the second half of 2021, but Congo re- enterprises helped sustain the budget sur- mains in debt distress due to the ongo- plus estimated at 3.6 percent in 2023. Low- bletounsteadyoilproduction,volatileoil ing restructuring and audit of domestic er export receipts and increased imports prices,delayedstructuralreformimple- arrears as well as the recurrent accumu- reduced the current account surplus to an mentation,andadverseweatherconditions. lation of temporary external arrears. estimated 2.1 percent of GDP in 2023. FIGURE 1 Republic of Congo / Real GDP growth FIGURE 2 Republic of Congo / Actual and projected poverty rates and real GDP per capita Percent change Poverty rate (%) Real GDP per capita (constant LCU) 6 100 1200000 4 90 1000000 2 80 70 0 800000 60 -2 50 600000 -4 40 -6 400000 30 -8 20 200000 -10 10 0 0 -12 2011 2013 2015 2017 2019 2021 2023 2025 2019 2020 2021e 2022e 2023e 2024f 2025f 2026f International poverty rate Lower middle-income pov. rate Oil GDP Non-Oil GDP Real GDP Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see Table 2. Note: Oil GDP growth rate in 2026 is projected at -0.1. MPO 24 Apr 24 The banking sector remains solvent, but average of 45.5 percent in 2025-26, consis- vulnerability to non-performing loans tent with projected growth in GDP per (NPLs) remains high. Bank deposits and Outlook capita. The fiscal balance is expected to re- credit to the private sector were up as main positive, fueled by high oil prices, in- of end-August 2023 (y-o-y), and while The Congolese economy is expected to creased oil production, the commercializa- the NPL to gross loan ratio has im- continue its gradual recovery. GDP is ex- tion of natural gas, the reduction in direct proved to 17 percent at end-August2023 pected to grow at 3.5 percent in 2024 and oil subsidies to energy SOEs, and fiscal dis- (compared to 19 percent a year ago), it to average 3.4 percent in 2025-26. Oil sec- cipline. Although debt vulnerabilities re- remains elevated. The Bank of Central tor growth (expected to average 2.7 per- main elevated (with a high level of non- African States (BEAC) maintained its cent in 2024-26) will be driven primari- concessional debt stock and domestic ar- tight monetary policy stance during ly by increased investments by oil com- rears), the debt-to-GDP ratio is projected 2023 to contain inflationary pressures panies, including in asset maintenance, to decline to 81 percent by 2026 thanks to and support the external viability of the and by new oil fields. Non-oil sector improved debt management and fiscal dis- exchange rate arrangement. The BEAC growth (expected to average 3.9 percent cipline. The current account surplus is policy rate was maintained at five per- in 2024-26) will be spurred by growth projected to decline, and to turn into a cent following a cumulative increase by in agriculture, non-oil industry and ser- deficit by 2026, due to lower oil export 175 basis points between November vices, supported by the continued clear- receipts and increased imports to support 2021 and March 2023. ance of government arrears, gradual in- investment, including for growing non- Real GDP per capita growth remained crease in social spending and public in- oil economic activities. negative in 2023 and the poverty inci- vestment, and the implementation of re- The economic recovery remains fragile as dence consequently increased slightly to forms in governance and the business risks are tilted to the downside. Risks in- an estimated 46.8 percent. The fuel price environment. Growth will be further sup- clude volatile global oil prices and un- adjustment and increased domestic de- ported by the development of the gas sec- steady oil production, persistent high mand pushed up inflation to 4.3 per- tor, with commercial production and ex- food inflation or refined oil shortages in cent in 2023. Food inflation decelerated in portation of liquefied natural gas expected Congo as part of spillover from conflicts 2023 but remains elevated at 4.3 percent, to start in 2024. Inflation is expected to ease elsewhere, weaker-than-expected global which is likely to continue to affect the to 3.8 percent in 2024 and to return to demand, further tightening of global or poorer segments of the population more BEAC’s 3.0 percent target by 2025. regional financial conditions, adverse as they typically spend a higher share of The poverty rate is expected to marginally weather conditions and delayed structural their household budget on food. decrease to 46.4 percent in 2024 and to an reforms implementation. TABLE 2 Republic of Congo / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021e 2022e 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 1.0 1.5 1.9 3.5 3.7 3.2 Private consumption 11.5 5.0 4.9 4.9 5.0 5.1 Government consumption 2.1 -5.0 0.6 1.8 1.6 1.6 Gross fixed capital investment 14.0 10.0 8.6 8.6 5.6 5.4 Exports, goods and services -1.0 -0.7 1.0 4.2 4.5 1.9 Imports, goods and services 25.0 5.9 8.9 8.5 7.0 5.0 Real GDP growth, at constant factor prices 1.0 1.5 1.9 3.5 3.7 3.2 Agriculture 1.9 3.0 2.8 3.2 3.4 3.7 Industry -3.3 -0.6 0.7 4.5 4.8 3.2 Services 2.0 3.1 2.9 3.1 3.2 3.4 Inflation (consumer price index) 2.0 3.0 4.3 3.8 3.0 3.0 Current account balance (% of GDP) 8.9 18.7 2.1 1.5 0.4 -0.7 Net foreign direct investment inflow (% of GDP) 0.3 0.5 4.1 4.5 4.7 4.8 Fiscal balance (% of GDP) 1.2 7.9 3.6 3.9 3.2 3.1 Revenues (% of GDP) 21.1 28.6 24.3 25.5 25.2 24.8 Debt (% of GDP) 92.1 86.6 96.0 91.3 85.9 81.0 Primary balance (% of GDP) 3.1 10.2 6.4 6.6 5.8 5.7 a,b International poverty rate ($2.15 in 2017 PPP) 46.4 46.6 46.8 46.4 45.6 45.4 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 70.6 70.9 71.0 70.7 70.2 70.1 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 90.6 90.7 90.8 90.6 90.4 90.3 GHG emissions growth (mtCO2e) 3.2 3.2 3.3 3.4 3.4 3.3 Energy related GHG emissions (% of total) 14.0 14.7 14.8 15.1 15.4 15.2 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2011-ECOM. Actual data: 2011. Nowcast: 2012-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2011) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 25 Apr 24 CÔTE D'IVOIRE Key conditions and Recent developments challenges Growth momentum slowed as geopolitical tensions persisted, and financial conditions Table 1 2023 The Ivorian economy demonstrated re- tightened. Real GDP growth is estimated at Population, million 28.9 markable resilience against overlapping 6.4 percent in 2023 (3.8 percent per capita) GDP, current US$ billion 81.3 global and regional crises, posting 7-percent down from 6.9 percent in 2022, driven by GDP per capita, current US$ 2815.2 average growth (5.5 percent in per capita) strong public and private investment, fu- a 9.7 International poverty rate ($2.15) over 2021-2022, albeit short of pre-pandemic eled by the African Cup of Nations prepara- a 38.4 performance. Nonetheless, increasing un- tion. Conversely, private consumption soft- Lower middle-income poverty rate ($3.65) a 76.4 certaintyhasunderscoredtheneedforstruc- ened, reflecting higher domestic fuel and Upper middle-income poverty rate ($6.85) Gini index a 35.3 tural reforms and increasing fiscal space to electricity tariffs (about +10 percent in Janu- School enrollment, primary (% gross) b 94.6 movetowardstheobjectiveofdoublingGDP ary 2024) as the government has rolled back b 58.6 per capita between 2020 and 2030. Creating crisis-related subsidies. Industry, including Life expectancy at birth, years better-paid jobs and promoting more inclu- construction, and services, supported sup- Total GHG emissions (mtCO2e) 55.0 sive growth would require improving hu- ply-side growth, albeit at a slower pace, con- Source: WDI, Macro Poverty Outlook, and official data. man capital, leveraging private investment, tributing 1.1 and 4.1 percentage points to a/ Most recent value (2021), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy and reducing allocative inefficiencies. 2023 growth, respectively. Export-oriented (2021). Short-term headwinds are high. Russia’s agriculture underperformed due to poor invasion of Ukraine has fueled commodity weather, with output falling for cocoa price volatility and macro-fiscal imbal- (-10.4 percent), coffee and cottonseed Amid global and regional turbulence and ances. Heightened market uncertainties, (around - 60 percent). tight financial conditions, economic tight monetary policy, and depreciated ex- Inflation averaged 4.4 percent in 2023, down change rates have increased external and from 5.2 percent in 2022, as increasing ener- growth has moderated slightly to 6.4 per- domestic debt costs, requiring active debt gy and transport inflation partially offset cent in 2023, while inflation remains ele- management and continued focus on do- slower food inflation. Core inflation was 3.2 vated at 4.4 percent, driving a small in- mestic revenue mobilization. Global and percent, still above the central bank's 2 per- crease in extreme poverty. Macroeconom- regional insecurity may aggravate eco- cent target and 1-3 percent band, reflecting nomic and fiscal pressures, with the recent- persistent effects of global supply chain dis- ic imbalances have eased owing to fiscal ly announced withdrawal of three Sahel ruptions and exchange rate depreciation. To consolidation and improved terms of countries from ECOWAS potentially affect- counter inflation across WAEMU countries, trade. Revenue-based fiscal consolidation ing trade, market confidence, investment the Central Bank of West African States continues as terms of trade improve, flows, and borrowing costs. Increasing im- (BCEAO) raised policy interest rates by a cu- strengthening debt sustainability. Medi- pact from climate change could cloud the mulative 150 basis points since mid-2022 to outlook. Upside risks rest on the rollout of 3.5 percent for liquidity calls and 5.5 percent um-term structural and climate transi- the national development plan, which re- for the marginal lending facility. However, tion reforms should help sustain growth quires adequate financing through greater inflation in the region (3.7 percent in 2023) around potential. public and private investment. was still above the 1-3 percent target range FIGURE 1 Côte d'Ivoire / Real GDP growth and contributions FIGURE 2 Côte d'Ivoire / Actual and projected poverty to real GDP growth rates and real GDP per capita Percent of GDP Poverty rate (%) Real GDP per capita (constant million LCU) 20 100 1.8 90 1.6 15 80 1.4 10 70 1.2 60 5 1.0 50 0.8 0 40 0.6 30 -5 0.4 20 -10 10 0.2 2015 2017 2019 2021 2023 2025 0 0.0 Gov. cons. Exports GFCF 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Inventories Private cons. Imports International poverty rate Lower middle-income pov. rate Statistical disc. GDP Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see Table 2. MPO 26 Apr 24 and foreign exchange reserves have been on debt at around 60 percent of GDP. Sub- within the WAEMU’s 1-3 percent target a downward trend, estimated at 3.5 months stantial gains in terms of trade almost band by 2025. of imports at end-2023, down from closed the large trade deficit in 2023 which, Continued progress on domestic revenue 4.3 months at end-2022. combined with a lower fiscal deficit, nar- mobilization would sustain the realign- Extreme poverty (less than $2.15 a day per rowed the CAD to a forecast 5.8 percent of ment to the 3 percent regional fiscal deficit capita at PPP 2017) is likely to reach 10.1 GDP from 7.5 percent in 2022. target by 2025, stabilizing debt at around percent in 2023, a 0.4 percentage points in- 58 percent of GDP, and creating headroom crease from 2021. Expanding industry and for sustained priority social and infrastruc- services, which employ 13.3 and 40.9 per- ture spending above pre-pandemic levels. cent of the workforce, respectively, would Outlook The recent $2.6b Eurobond issuance put downward pressure on poverty rates. should help tame short-term liquidity vul- However, agriculture (employing 45.8 per- Prudent macroeconomic policies, struc- nerabilities and shore up external reserves. cent of the workforce, 76.6 percent of rural tural and climate-related reforms should Improving terms of trade and private sec- workers, and 70.2 percent of the poor) is sustain robust growth in the short and tor-led export diversification should boost likely to slow in 2023 and along with high- the medium term, albeit below pre-pan- the trade balance and, alongside the im- er food prices, would offset the impacts of demic levels, amid persistent adverse proved fiscal stance, narrow the CAD. growth in industry and services. global and regional geopolitical trends. Downside risks include heightened glob- Frontloaded tax measures and phase-out of Growth should rebound to 6.6 percent in al and regional tensions, notably an es- crisis-related energy and food subsidies 2024 (4.0 percent per capita), boosted by calation of the Middle East crisis and lowered the fiscal deficit to an estimated 5.2 the hosting in Q1 of the African Cup of uncertainties over the withdrawal of the percent of GDP in 2023 from 6.5 percent in Nations and the start-up of the first op- Sahel economies from ECOWAS, which 2022. Revenues increased by 1.3 ppt of GDP erating phases of new oil and gas fields, could dampen market sentiment, stunt y/y in the first eleven months of 2023 com- and average 6.5 percent in 2025-26. Sus- inflation reduction, tighten financing con- pared to 2022, primarily on higher tax rev- tained investment in network infrastruc- ditions, exacerbate debt vulnerabilities, enues. Expenditure was contained as faster ture, particularly in the digital and trans- and squeeze the already low foreign ex- capital expenditures and interest payments port sectors, and higher oil extraction change reserves. Extreme poverty should were balanced by cuts in recurring expendi- should boost business confidence and in- stabilize at 10.2 percent in 2024, reflecting tures. Two-thirds of the fiscal deficit was crease productivity. Value chain develop- strong growth, but held back by persis- covered by short-term issuances on the re- ment could increase agricultural produc- tent post-pandemic inflation. Poverty re- gional market and one-third by external tivity and bolster manufacturing, sustain- duction will resume in 2025, sustained by loans and budget support, keeping public ing growth potential. Inflation should fall growth and abated inflation. TABLE 2 Côte d'Ivoire / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 7.1 6.9 6.4 6.6 6.5 6.5 Private consumption 5.3 5.1 2.6 3.8 4.3 4.3 Government consumption 6.2 10.6 9.0 7.4 7.1 7.1 Gross fixed capital investment 14.9 14.6 14.9 14.6 10.5 9.9 Exports, goods and services 16.9 4.9 8.9 6.0 6.5 7.0 Imports, goods and services 15.9 1.3 10.5 9.5 7.0 6.7 Real GDP growth, at constant factor prices 6.1 7.3 6.2 6.6 6.5 6.5 Agriculture 7.3 4.7 4.0 4.3 4.4 4.8 Industry 4.9 8.1 5.8 6.2 6.5 6.6 Services 6.2 7.9 7.2 7.5 7.2 7.0 Inflation (consumer price index) 4.2 5.2 4.4 3.6 3.0 2.0 Current account balance (% of GDP) -4.5 -7.5 -5.8 -4.0 -3.4 -3.3 Net foreign direct investment inflow (% of GDP) 1.5 1.3 1.6 2.2 1.9 1.7 Fiscal balance (% of GDP) -4.8 -6.6 -5.2 -4.0 -3.0 -3.0 Revenues (% of GDP) 15.7 14.9 16.2 16.8 17.2 17.5 Debt (% of GDP) 51.4 56.5 58.0 58.2 58.0 56.9 Primary balance (% of GDP) -2.9 -4.4 -2.8 -1.7 -0.6 -0.7 a,b International poverty rate ($2.15 in 2017 PPP) 9.7 9.8 10.1 10.2 10.0 9.6 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 38.4 38.3 38.1 37.6 36.7 35.4 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 76.4 76.1 76.0 75.1 74.1 72.8 GHG emissions growth (mtCO2e) 2.7 1.5 0.6 0.6 0.8 1.7 Energy related GHG emissions (% of total) 25.0 25.3 25.0 24.5 24.2 24.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2021-EHCVM. Actual data: 2021. Nowcast: 2022-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 27 Apr 24 income group. Around 40 percent of households experience at least one day EQUATORIAL Key conditions and without electricity per month. Scarce poverty data remain a challenge to an ef- challenges GUINEA fective protection of vulnerable groups. The II National Household Survey report, As a result of declining oil reserves and scheduled to be released in June 2024, will lower investment, Equatorial Guinea’s oil- fill knowledge gaps in poverty and in- Table 1 2023 dependent economy has contracted for equality, enabling more evidence-based Population, million 1.7 more than a decade. Between 2013 and social protection policies. GDP, current US$ billion 12.1 2023, the country registered an average GDP per capita, current US$ 7051.5 negative 4.2 percent growth per year. a 51.2 Gross national income (GNI) per capita School enrollment, primary (% gross) Life expectancy at birth, years a 60.6 has been declining and was at US$ 5,240 in Recent developments 2022, 58 percent lower than its peak level Total GHG emissions (mtCO2e) 16.6 in 2008. Structural reforms are needed to After two years of recovery, the Equatogu- Source: WDI, Macro Poverty Outlook, and official data. prevent the economic decline, by diver- inean economy fell back into recession a/ WDI for School enrollment (2019); Life expectancy (2021). sifying the growth drivers and building with an estimated real GDP growth rate fiscal stability through domestic revenue of -5.8 percent in 2023 (from 3.8 percent mobilization efforts and more efficient in 2022), driven by the decline in the hy- public spending. drocarbon sector (-19.3 percent growth in Reforms have been adopted in recent years 2023H1 compared to 2022H2). Lower in- to improve governance and the business vestment contributed to the contraction on Equatorial Guinea’s economy contracted environment, including with the passage the demand side. The current account by an estimated 5.8 percent in 2023, of an Anti-Corruption law in late 2021, the deficit widened to 1.6 percent of GDP mainly due to declining oil reserves. The completion of the audits of the largest (from 1.0 percent of GDP in 2022) on ac- state-owned oil and gas companies, and count of declining export earnings. fiscal and external balances deteriorated the signature of a decree establishing a Lower oil production and prices led to a 74 amid declining oil export earnings. The treasury single account. Yet, weaknesses percent decline in oil revenues in 2023Q3 (y- economy is projected to remain in reces- persist in the governance of extractive rev- o-y). The overall fiscal surplus is estimated sion over the medium term. A more-pro- enues and the business environment, pre- to have dropped to 7.3 percent of GDP in nounced-than-expected decline in oil pro- venting the country from attracting invest- 2023 from 13.0 percent in 2022, while the ments and creating jobs to achieve sus- non-oil fiscal balance in 2023 to 26.4 percent duction and prices, sustained tightening tained and diversified growth. of GDP, compared to 21.3 percent in 2022. of global financial conditions, global trade Actions are also needed to better protect The debt-to-GDP ratio declined in 2023. disruptions, and a decline in demand and include the poor. Despite Equatorial Over the period 2019-23, CFAF 572.2 billion from main export partners represent Guinea’s upper middle-income status, liv- (or 9.5 percent of GDP) out of the CFAF ing standards remain low. Life expectancy 1,382.5 billion outstanding arrears was paid downside risks to the outlook. at birth is estimated at 60.7 years, com- to construction companies: as of August pared to 75 years for countries in the same 2023, outstanding domestic arrears with FIGURE 1 Equatorial Guinea / Public finances FIGURE 2 Equatorial Guinea / Non-income poverty indicators Percent of GDP Percent 35 250 EqG relative to regional average 30 EqG relative to MIC average 200 25 150 20 15 100 10 50 5 0 0 Mortality rate, under-5 Maternal mortality Mortality rate -5 (per 1,000 live births) ratio (modeled attributed to unsafe estimate, per 100,000 water, unsafe -10 live births) sanitation and lack of 2016 2018 2020 2022 2024f 2026f hygiene (per 100,000 Fiscal balance Revenues Expenditures population) Sources: National authorities and World Bank. Source: World Bank. MPO 28 Apr 24 construction companies was 7.9 percent of stability. Global trade disruptions affect- GDP. High levels of non-performing loans – ing food prices amid a protracted war 32 percent of total loans in 2023Q4 – are a Outlook on Ukraine would increase food insecuri- source of banking system vulnerability. ty especially for the most vulnerable, as The Bank of Central African States Equatorial Guinea is expected to remain the country relies heavily on food import. (BEAC) continued to tighten its monetary in recession in 2024 (with growth of –4.3 A further tightening of global financial policy in 2022 and 2023 to contain in- percent) on the back of declining hydro- conditions and lower demand from Chi- flationary pressures and support the ex- carbon production and domestic demand. na and India, Equatorial Guinea’s main change rate arrangement. The BEAC pol- Without significant diversification efforts export partners, could also undermine icy rate was maintained at five percent and progress in structural reforms, declin- growth. The decline in hydrocarbon re- following a cumulative increase by 175 ing hydrocarbon production and lower serves indicates the need for Equatorial basis points between November 2021 and commodity prices are expected to keep im- Guinea to move to a new growth model March 2023. Moreover, the BEAC ended pacting the economy with a negative aver- by creating the conditions for successful its weekly liquidity injections in March age growth of 3.5 percent in 2025-2026. De- private sector activities in non-oil sectors 2023 after steadily scaling them back creasing exports would lead to current ac- to reinvigorate growth. Ultimately, im- since June 2021. Inflation is estimated to count deficits over the medium term. Al- plementing the economic diversification have decreased from 4.9 percent in 2022 beit at a slower pace, imports would also vision will require efforts to advance to 2.4 percent in 2023, including thanks to decrease, on account of declining public the governance agenda, facilitate trade, containment measures by the BEAC, the spending due to limited fiscal space. The improve the business environment and agreement to import food products from fiscal balance is projected to turn to deficits public financial management. Strengthen- Serbia, and the reduction of some import in 2025-2026, with public expenditure cuts ing the social protection system would tariffs. According to the national institute unable to compensate for the larger decline help protect the most vulnerable and of statistics, the prices of food products in hydrocarbon revenues. reduce inequities, especially as social increased by 7.1 percent between March Risks to the outlook are tilted to the spending in Equatorial Guinea was es- 2020 and September 2023, which repre- downside. A stronger decline in hydro- timated at 1.6 percent of GDP in 2022, sents an average loss of the purchasing carbon production or prices would re- three times lower than the West and power of households of 4.5 percent. duce the fiscal space and risks external Central Africa average. TABLE 2 Equatorial Guinea / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 0.3 3.8 -5.8 -4.3 -3.3 -3.6 Private consumption -0.8 9.6 -5.7 -4.8 2.8 2.0 Government consumption 5.2 -5.3 7.3 20.9 0.3 -6.2 Gross fixed capital investment 37.4 -2.0 -38.0 -25.2 -11.4 -9.0 Exports, goods and services 0.3 12.7 -3.7 -5.9 -8.2 -5.5 Imports, goods and services 8.5 19.0 -1.4 3.8 -3.3 -2.8 Real GDP growth, at constant factor prices 0.4 3.5 -5.8 -4.3 -3.3 -3.6 Agriculture 8.0 7.5 -9.1 -6.5 1.5 1.6 Industry -5.9 3.1 -39.1 -23.1 -19.6 -14.8 Services 10.8 3.8 43.1 7.5 3.9 0.1 Inflation (consumer price index) -0.1 4.9 2.4 4.0 2.5 2.2 Current account balance (% of GDP) -2.1 -1.0 -1.6 -3.6 -4.2 -4.1 Net foreign direct investment inflow (% of GDP) 5.2 5.6 4.5 3.4 2.5 1.9 Fiscal balance (% of GDP) 2.6 13.0 7.3 1.2 -2.4 -3.7 Revenues (% of GDP) 15.6 30.1 27.6 20.5 16.3 14.1 Debt (% of GDP) 43.4 39.3 36.6 32.6 32.3 34.8 Primary balance (% of GDP) 3.7 14.2 8.7 2.4 -1.3 -2.6 GHG emissions growth (mtCO2e) 22.0 12.3 -9.6 -5.6 -3.7 -2.3 Energy related GHG emissions (% of total) 39.0 44.2 41.7 40.4 39.8 39.7 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. MPO 29 Apr 24 The emergency conditions that prevailed in Eritrea over the past decade have led ERITREA Key conditions and to severe data production capacity con- straints. National accounts data are limited challenges to unofficial GDP estimates produced by the Ministry of Finance that the govern- Table 1 2023 Eritrea emerged from a decade of interna- ment does not endorse. Inflation estimates Population, million 3.7 tional isolation with the lifting of UN sanc- cover only the capital city, Asmara, and GDP, current US$ billion 2.7 tions in November 2018. During that pe- the full balance of payment accounts is not GDP per capita, current US$ 712.3 riod, the government relied on domestic produced. The last population census in a 72.0 School enrollment, primary (% gross) sources of growth. As a result, the econo- Eritrea took place more than 25 years a 66.5 my is dominated by large state-owned en- ago, and the last official poverty rate for Life expectancy at birth, years Total GHG emissions (mtCO2e) 7.0 terprises that crowded out the private sec- the country dates from 1996/97, when it Source: WDI, Macro Poverty Outlook, and official data. tor. Zinc, copper, and gold account for was calculated that 70 percent of urban a/ WDI for School enrollment (2019); Life expectancy over 90 percent of exports, so metal price households lived in poverty. Limited (2021). fluctuations are a key source of vulnera- growth and the multiple economic shocks bility. Monetary policy under a fixed ex- since then, affecting both urban and rural change rate regime (pegged to the US dol- households, suggest that this figure may lar) seems ineffective and has been under- now be higher. taken through administrative measures. Its effectiveness is further weakened by fiscal Economic growth is projected at 2.8 per- dominance and an underdeveloped finan- cent in 2024, supported by the Colluli cial sector. The absence of a competition Recent developments potash project construction. Lower global law framework discourages foreign capital food prices are expected to help reduce in- inflows. Competition is severely con- Real GDP growth is estimated to have flation to 5.1 percent in 2024. Downside strained by state-owned enterprises domi- remained relatively stable at 2.6 percent nance and government restrictions. Severe in 2023, underpinned mainly by the con- risks to the outlook include production import restrictions limit the demand for struction of the Colluli potash project. delays at the Colluli mine, global com- foreign currency in the context of low for- Meanwhile, inflation moderated to just modity price volatility, geopolitical and eign exchange reserves. The country is vul- over 6 percent, largely due to easing regional tensions, and climate vulnerabil- nerable to climate change, with frequent global food and energy prices, providing weather shocks posing a heavy burden on some respite for households. Although ities. Poverty is assessed to be widespread, the economy and rural livelihoods. global zinc prices fell by 24 percent in although national accounts and poverty The COVID-19 crisis hit Eritrea when 2023, relatively high gold and copper statistics have not been produced for more it paused its engagement with interna- prices contributed to higher export rev- than a decade. tional development partners and faced enues. Together with lower fuel and food challenges in accessing external funding. imports, this helped maintain the current Informal cross-border trade seemed less af- account surplus above 14 percent of fected as the conflict in northern Ethiopia GDP. Notwithstanding such large surplus- ended, giving cross-border trade a boost. es, international reserves are estimated at FIGURE 1 Eritrea / Evolution of total public debt FIGURE 2 Eritrea / Primary and overall fiscal balances Percent of GDP Percent of GDP 300 0 250 -1 -2 200 -3 150 -4 100 -5 50 -6 -7 0 2020 2021 2022 2023 2024f 2025f 2026f 2020 2021 2022 2023 2024f 2025f 2026f Domestic debt External debt Total public debt Overall fiscal balance Primary fiscal balance Sources: Ministry of Finance, Planning, and Economic Development, and World Sources: Ministry of Finance, Planning, and Economic Development, and World Bank estimates. Bank estimates. MPO 30 Apr 24 around three months of imports. Strong significantly in the coming years. Signifi- mining export revenues have also sup- cant improvements in the agricultural sec- ported government revenues. Public Outlook tor and increased productive employment debt was estimated at around 219 per- in urban areas are critical to addressing the cent of GDP at end-2023, of which near- GDP growth is projected to increase to 2.8 pervasive deprivation in the country. ly 80 percent is owed to domestic banks. percent in 2024, as domestic demand is Significant downside risks include weaker- The country is in debt distress, and as boosted in the short term by progress in than-expected global or Chinese demand of January 2023, Eritrea was at a pre-de- the construction of the Colluli mine. for Eritrean commodity exports and relat- cision point in the Highly Indebted Poor Growth is projected to reach 3.3 percent ed volatility in metals and minerals prices, Countries (HIPC) list. in 2026 once the mine begins production. production delays at the Colluli mine, Eritrea has begun to re-engage with de- In line with easing global food prices, in- spillovers from the conflict in Sudan, and velopment partners and revitalize some flation is expected to decrease further to heightened tensions in the Middle East. bilateral relations. In 2023, the African about 5 percent in 2024. The current ac- Moreover, severe climate vulnerabilities Development Bank Board approved count surplus is expected to widen to over could worsen in the coming years, posing US$49.9 million to build a 30-megawatt 14 percent of GDP in 2024, helped by ro- a high risk to food security in Eritrea. solar photovoltaic power plant in bust mining sector performance amid tight Against this backdrop, Eritrea’s re-engage- Dekemhare, and the project is scheduled import controls. Gradual fiscal consolida- ment with the international community to be completed in 2027. The Chinese tion and sustained strong mining sector re- could help to significantly reduce external company Sichuan Road and Bridge ceipts should support a narrowing of the arrears and provide much-needed financ- Group has acquired a 50 percent stake in fiscal deficit to 4 percent of GDP in 2024, ing to build essential infrastructure over the Colluli project, and the mine is sched- with fiscal consolidation continuing over the medium term, help abate the risks as- uled to start operating in 2026. In addi- the medium term. The economic recovery sociated with climate change, and jump- tion, Eritrea has rejoined the East African should support a reduction in the public start the private and financial sectors. De- trade bloc, the Intergovernmental Author- debt-to-GDP ratio, from 211 percent of velopment of the private and financial ity on Development, nearly 17 years after GDP in 2024 to 189 percent of GDP in 2026. sectors could enhance job creation and withdrawing from the body. The poverty rate is not expected to decline promote inclusive growth. TABLE 2 Eritrea / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 2.9 2.5 2.6 2.8 3.0 3.3 Private consumption 3.0 3.6 4.0 4.3 4.1 4.1 Government consumption 14.0 5.7 3.7 4.1 4.1 4.1 Gross fixed capital investment 39.1 13.1 22.7 3.6 12.5 14.9 Exports, goods and services 31.0 9.2 5.1 3.7 4.1 4.1 Imports, goods and services 21.6 11.0 5.3 4.1 4.3 4.3 Real GDP growth, at constant factor prices 2.9 2.5 2.6 2.8 3.0 3.3 Agriculture 4.5 1.6 3.5 3.6 3.2 3.2 Industry 1.4 3.2 2.9 3.3 3.3 3.1 Services 5.3 1.3 1.5 1.2 2.2 3.8 Inflation (consumer price index) 6.6 7.4 6.4 5.1 5.2 5.2 Current account balance (% of GDP) 14.0 13.0 14.1 14.2 14.2 15.8 Net foreign direct investment inflow (% of GDP) 1.4 1.3 1.2 1.2 1.0 1.0 Fiscal balance (% of GDP) -5.8 -5.6 -4.8 -4.0 -3.8 -3.4 Revenues (% of GDP) 26.7 27.0 27.6 27.9 27.7 26.9 Debt (% of GDP) 241.7 239.8 219.4 210.6 193.9 188.5 Primary balance (% of GDP) -4.2 -4.2 -3.7 -2.9 -2.8 -2.4 GHG emissions growth (mtCO2e) 1.6 1.6 1.4 1.6 1.5 1.5 Energy related GHG emissions (% of total) 11.7 11.7 11.5 11.7 11.9 12.1 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. MPO 31 Apr 24 owned enterprises (SOEs) reforms and, improve domestic revenue mobilization. ESWATINI Key conditions and Poverty and inequality remain high. Over 50 percent of the population live below the challenges US$3.65/day (2017 PPP) lower middle-in- come country poverty line. High and per- Table 1 2023 Over the past 20 years, Eswatini’s GDP per sistent inequality (54.6 percent in 2016) is Population, million 1.2 capita growth only averaged 1.8 percent. also a risk to social stability. GDP, current US$ billion 4.6 The proportion of the population living be- GDP per capita, current US$ 3822.9 low the US$3.65/day (2017 PPP) poverty line a 36.1 International poverty rate ($2.15) fell from 76.4 percent to 58.1 percent be- Lower middle-income poverty rate ($3.65) a 58.0 tween 2000 and 2016, but at 52 percent in Recent developments a 78.1 2024 poverty remains high. The country’s Upper middle-income poverty rate ($6.85) Gini index a 54.6 low growth rate can partly be explained by Real GDP rebounded to an estimated 4.8 School enrollment, primary (% gross) b 120.9 deteriorating public finances, characterized percent in 2023 (from 0.5 percent in 2022), b 57.1 by rising public debt, the accumulation of driven by an increase in services and ex- Life expectancy at birth, years domestic expenditure arrears, and public ports. The doubling of SACU receipts al- Total GHG emissions (mtCO2e) 3.1 spending inefficiencies. Concurrently, lowed the government to reduce the over- Source: WDI, Macro Poverty Outlook, and official data. structural weaknesses have hindered the all fiscal deficit, while increasing spending a/ Most recent value (2016), 2017 PPPs. b/ Most recent WDI value (2021). development of the private sector. These in- that boosted government-linked services. clude a weak investment climate due to Meanwhile, agriculture contracted by 2.5 cumbersome regulations, distortions percent, mainly due to weather-related Real GDP is projected to grow by 4.1 per- caused by inefficient state-owned enterpris- challenges that affected production. es, and a limited access to regional and inter- Annual average inflation increased from cent in 2024, driven by continued in- national markets. Adopting a comprehen- 4.8 percent in 2022 to 5.0 percent in 2023 crease in public spending financed by sive strategy that accumulates more physi- despite easing global inflationary pres- higher Southern African Customs Union cal and human capital, while ensuring more sures. The increase was partly the result of (SACU) revenues. Despite easing global efficient and inclusive use of these re- higher prices for transport and food. These sources, will be critical for Eswatini to meet pressures continued in early 2024, with in- inflationary pressures, annual average in- its development goals. The government is flation increasing from 4.3 percent in De- flation increased in 2023 but is projected working on a new growth strategy. cember 2023 to 4.5 percent in January 2024 to slightly decline to 4.9 percent in 2024. Volatile SACU revenues have shaped the (yoy). However, inflation remained within The budget deficit is projected to continue macro-fiscal dynamics. The increase in rigid the 3-6 percent band, with the central bank declining in 2024, though fiscal policy re- spending lines, such as wages and interest maintaining the repo rate at 7.5 percent payments in the face of volatile SACU rev- since July 2023. mains highly procyclical. The poverty rate enue, contributed to rising fiscal deficits, The fiscal deficit declined from 5 per- is projected to decrease slightly to 52 per- public debt, and arrears. To make fiscal pol- cent of GDP in 2022 to 2.1 percent in cent in 2024 using the poverty line for lower icy more predictable and countercyclical, 2023, but expenditure arrears increased and middle-income countries. there is an urgent need to consolidate expen- again. Revenue was boosted by the more diture including implementing the state than doubling of SACU receipts in 2023. FIGURE 1 Eswatini / SACU revenues and macroeconomic FIGURE 2 Eswatini / Actual and projected poverty rates and variables real GDP per capita Percent of GDP Months of imports, percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 14 4 100 50000 12 90 45000 10 80 40000 8 3 70 35000 6 60 30000 4 2 50 25000 2 0 40 20000 -2 30 15000 1 -4 20 10000 -6 10 5000 -8 0 0 0 2018 2019 2020 2021 2022 2023e 2024f 2009 2011 2013 2015 2017 2019 2021 2023 2025 Current account (lhs) SACU revenue (lhs) International poverty rate Lower middle-income pov. rate Fiscal deficit (lhs) International reserves (rhs) Upper middle-income pov. rate Real GDP pc Sources: Eswatini Ministry of Finance and World Bank projections. Source: World Bank. Notes: see Table 2. MPO 32 Apr 24 Expenditure also increased as a result of a increase should contribute to a reduction higher public sector wage bill, interest pay- in the fiscal deficit and the payment of ments, and election-related expenditures. Outlook accumulated expenditure arrears. How- While the level of public debt declined be- ever, the magnitude of the adjustment tween 2022 and 2023, arrears increased The medium-term economic outlook will also depend on public expenditures, again, due weak commitment controls, looks moderately favorable, with GDP especially the public sector wage bill and reaching an estimated 2.0 percent of GDP in growth stabilizing at about 3 percent SOEs reforms. The government should February 2024. The government established over 2024-26. Growth is expected to be capitalize on the positive revenue shock a SACU Revenue Stabilisation Fund in 2023, driven by higher investments, including by fully operationalize the SACU Rev- but it has not been fully capitalized, as ex- from the government (due to higher enue Stabilisation Fund while continu- penditure pressures continued in 2023. SACU revenue), and sustained improve- ing with fiscal consolidation- both ex- The current account returned to a surplus ments in industry and services. By con- penditure reducing and domestic rev- in 2023, reflecting higher SACU revenue trast, the agricultural sector could be neg- enue mobilization measures. Debt is and an increasing trade surplus, fueled by atively affected by climate change, which projected to stabilize in the medium higher exports of key commodities as such could hurt the poor most. Risks are tilted term, as the fiscal deficit declines. The soft drink concentrates, sugar and sugar to the downside given uncertainty in a current account is expected to remain in products. The level of international re- major trading partner (South Africa), es- surplus in 2024, on the back of higher serves remained constant at 2.6 months of pecially on energy supply, and interna- SACU receipts and increased export de- imports in 2023. tional geopolitical tensions. Domestically, mand of key products. While the increase in economic activity has the country remains exposed to social Poverty, based on the lower-middle-in- contributed to higher income, higher trans- and political uncertainty. Inflation is pro- come country poverty line, is projected to port and food prices disproportionately af- jected to slow slightly to 4.9 percent in decline from 52 percent in 2024 to 51.3 fect the poor, who spend a larger share of 2024, following global trends, but elevat- percent in 2025. While the projected eco- their resources on these items. High infla- ed crude oil prices, a weaker exchange nomic recovery should have a positive tion has limited the progress in poverty re- rate, and higher food prices could mar impact on households, such improvement duction, with estimated poverty rates only this outlook. will be constrained by the lower agri- showing a slight decline from 54 percent in On the fiscal side, SACU revenues are cultural production and structural chal- 2022 to 52.8 percent in 2023, using the lower- projected to increase again in 2024, by lenges facing the poor including low job middle-income country poverty line. 11.5 percent relative to FY2023/24. This creation and low access to services. TABLE 2 Eswatini / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 10.7 0.5 4.8 4.1 3.3 2.7 Private consumption 5.7 -5.3 4.1 3.2 2.6 2.6 Government consumption -10.6 -0.3 9.7 2.2 0.8 0.8 Gross fixed capital investment 11.4 -10.8 1.0 9.6 7.0 3.5 Exports, goods and services 8.8 -0.4 8.0 2.6 2.4 2.4 Imports, goods and services 14.0 3.4 7.0 2.7 2.0 2.0 Real GDP growth, at constant factor prices 10.7 0.2 4.8 4.1 3.3 2.7 Agriculture 4.6 5.1 -2.5 -1.2 1.9 2.5 Industry 17.9 -0.3 1.5 4.0 3.0 2.0 Services 7.1 -0.1 8.2 4.9 3.7 3.2 Inflation (consumer price index) 3.7 4.8 5.0 4.9 5.2 5.3 Current account balance (% of GDP) 2.6 -2.4 4.0 2.3 0.6 -1.5 Net foreign direct investment inflow (% of GDP) 1.2 0.7 0.8 0.8 0.7 0.7 Fiscal balance (% of GDP) -4.6 -5.0 -2.1 -2.0 -2.7 -1.3 Revenues (% of GDP) 25.1 23.9 29.4 27.7 26.3 24.5 Debt (% of GDP) 37.9 41.8 38.9 35.4 33.5 31.2 Primary balance (% of GDP) -2.7 -2.7 -0.2 -0.3 -1.2 0.1 a,b International poverty rate ($2.15 in 2017 PPP) 30.9 31.0 29.6 28.5 27.5 26.9 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 53.7 54.0 52.8 52.1 51.4 50.7 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 76.1 76.2 75.1 74.7 74.2 73.7 GHG emissions growth (mtCO2e) 5.8 0.4 0.7 2.8 4.0 4.1 Energy related GHG emissions (% of total) 48.2 47.9 47.5 48.0 49.1 50.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2016-HIES. Actual data: 2016. Nowcast: 2017-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2016) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 33 Apr 24 sector-specific institutional and market failures and enhance productivity. ETHIOPIA Key conditions and The combination of climatic shocks, dis- ease outbreaks, armed conflict, and eco- challenges nomic shocks have made difficult to con- tinue reducing poverty at the pace ob- Table 1 2023 Ethiopia’s state-led and public-invest- served before 2019. Poverty rates are esti- Population, million 126.5 ment-intensive development model sup- mated to have stagnated at around the lev- GDP, current US$ billion 171.3 ported growth rates of nearly 10 percent el observed in 2016. Food insecurity has al- GDP per capita, current US$ 1353.5 between 2004 and 2018, among the world’s so worsened, due to global food and en- a 27.0 International poverty rate ($2.15) highest, and drove significant gains in ergy price shocks and the disruptions to a 65.0 poverty reduction. Despite these achieve- grain supply due to the war in Ukraine. Lower middle-income poverty rate ($3.65) a 90.9 ments, the country’s development model Upper middle-income poverty rate ($6.85) Gini index a 35.0 yielded negligible improvements in struc- School enrollment, primary (% gross) b 85.5 tural transformation and productivity Life expectancy at birth, years b 65.0 growth while contributing to macroeco- Recent developments nomic imbalances: debt vulnerabilities, fis- Total GHG emissions (mtCO2e) 216.4 cal constraints, depleted liquidity buffers, Growth picked up to 7.2 percent in Source: WDI, Macro Poverty Outlook, and official data. and foreign-exchange shortages. The 2019 FY23 (ending June 2023) from 6.4 per- a/ Most recent value (2015), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy Home-Grown Economic Reform Agenda cent in FY22 as good harvests supported (2021). sought to prioritize reforms that would ad- agricultural sector growth despite pro- dress macroeconomic distortions, unlock tracted drought in pastoral areas. Ser- greater private sector participation and vice sector dynamism also contributed Growth surged from 6.4 percent in FY22 market orientation. However, implemen- to growth, while the manufacturing and to 7.2 percent in FY23, supported by tation was slowed amid multiple construction sectors were negatively af- shocks—including the COVID-19 pan- fected by worsening foreign exchange good harvests and steady service sector demic, major conflict in the north, and shortages, restrictions on non-essential im- growth. However, growth remains lower soaring global food and energy ports, and the suspension of preferential than before COVID-19, and compounded prices—that exacerbated macroeconomic US market access. shocks since 2019 made it more difficult vulnerabilities. This has slowed growth to The current account deficit narrowed to 2.8 about 6 percent since FY20. percent of GDP in FY23 from 4 percent of to translate economic growth into poverty In recent months, the government has GDP in FY22, due to strong service exports reduction. Reflecting slow reform imple- announced a revival of the 2019 HGER and lower imports related to foreign ex- mentation, growth is expected to drop to to target macro-financial measures to sta- change shortages. It was largely financed 7 percent in FY24 and over the medium bilize the macroeconomy and reduce through foreign direct investment and the term. Urgent reforms implementation is macroeconomic vulnerabilities; introduce drawdown of foreign exchange reserves. A structural reforms to alleviate business two-year debt suspension agreement with critical to restore macroeconomic stability the G20 Official Creditors’ Committee in constraints to create an enabling environ- and create enabling environment for ment for private sector investment; and November 2023 helped ease external fi- structural transformation. implement sectoral policies to address nancing pressures, but its continuity is FIGURE 1 Ethiopia / Gross foreign exchange reserves FIGURE 2 Ethiopia / Actual and projected poverty rates and real private consumption per capita Million US$ Months of imports Poverty rate (%) Real private consumption per capita (constant LCU) 4,500 3.0 100 14000 4,000 90 2.5 12000 3,500 80 70 10000 3,000 2.0 60 8000 2,500 1.5 50 2,000 40 6000 1,500 1.0 30 4000 1,000 20 0.5 2000 500 10 0 0 0 0.0 2010 2012 2014 2016 2018 2020 2022 2024 2026 Jul-16 Jul-17 Jul-18 Jul-19 Jul-20 Jul-21 Jul-22 Jul-23 International poverty rate Lower middle-income pov. rate In million US$ (lhs) In months of imports (rhs) Upper middle-income pov. rate Real priv. cons. pc Source: National Bank of Ethiopia. Source: World Bank. Notes: see Table 2. MPO 34 Apr 24 contingent on reaching agreement with the food, fuel, and fertilizer prices– have also of critical macroeconomic and structural International Monetary Fund on an eco- contributed to inflation. reforms under discussion would help ad- nomic reform program. Against this backdrop, poverty is expected dress macroeconomic distortions and im- Fiscal space narrowed further amid declin- to have remained stagnant, which com- prove the quality of growth. ing revenues and donor flows. Ethiopia’s bined with high population growth has led A shift in Ethiopia’s economic model to- tax revenues (with a tax-to-GDP ratio of to a ceaseless increase in the already large wards a private sector led and more mar- 6.8 percent in FY23) are insufficient to fund number of poor people in the country—by ket oriented one is urgently needed to ad- essential spending and growth-enhancing 2023, 31.5 million people lived below the dress mounting macroeconomic vulnera- investments and anchor fiscal sustainabili- $2.15/day poverty line. bilities, restart a stalled structural transfor- ty. To contain fiscal deficits, public spend- mation and create jobs. Addressing the sig- ing has been steadily cut, falling to 10.8 nificant distortions in the foreign exchange percent of GDP in FY23 (less than half the market is critical to restore productivity- levels in the early 2000s). With limited fi- Outlook led growth, improve resource allocation, nancing options, the deficit narrowed and alleviate external payment risks. Debt from 4.2 percent of GDP in FY22 to 2.5 Growth is projected to drop to about 7 per- treatment and the resumption of official percent of GDP in FY23, and was fi- cent over the medium term amid slow external flows will also be crucial to ease nanced mainly through domestic borrow- progress in reform implementation. Al- external financing pressures. However, ing, including from the central bank. The though still a high level of growth, the con- any intensification in conflicts would com- public debt-to-GDP ratio continued to de- tinuance of policy distortions, including a plicate reform implementation and affect crease in FY23 as external disbursements significantly overvalued exchange rate, con- foreign exchange inflows. remained constrained. strains Ethiopia from translating this Substantial poverty reduction in the medi- Inflation remains high, reaching 28.7 growth into tangible improvements in pro- um term would require strong performance percent in December 2023, with large ductivity and job opportunities for people. in the agricultural sector, which employs contributions from non-food inflation Although fiscal and current account deficits over 70 percent of the labor force, as well as due to the phasing out of fuel subsidies, narrow over the medium term, Ethiopia will dynamism in other sectors. Additional monetary financing of the deficit, and remain severely constrained by a shortage of shocks could push millions more into widening premiums in parallel currency domestic and external financing. Inflation is poverty and increase further spatial in- markets (that reached over 100 percent projected to decline gradually, as mone- equalities and mitigating this risk requires, in recent months). Overlapping crises tary financing declines in line with nar- among other things, an acceleration of re- –persistent droughts and a surge in global rowing fiscal deficits. The implementation forms to rebuild fiscal and social buffers. TABLE 2 Ethiopia / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2020/21 2021/22 2022/23e 2023/24f 2024/25f 2025/26f Real GDP growth, at constant market prices 6.3 6.4 7.2 7.0 7.0 7.0 Private consumption 3.0 4.5 6.1 6.1 6.1 6.1 Government consumption 12.2 1.5 -16.0 0.6 4.8 5.0 Gross fixed capital investment 7.6 11.0 11.2 10.7 6.3 6.4 Exports, goods and services 5.5 11.7 -0.8 6.5 6.1 6.1 Imports, goods and services 2.0 10.8 -4.1 11.2 1.2 1.2 Real GDP growth, at constant factor prices 6.3 6.4 7.2 7.0 7.0 7.0 Agriculture 5.5 6.0 6.3 6.0 6.0 5.9 Industry 7.3 4.8 6.9 7.0 7.0 7.1 Services 6.3 7.9 8.0 7.9 7.7 7.7 Inflation (consumer price index) 20.2 33.7 32.6 28.5 23.2 17.6 Current account balance (% of GDP) -2.7 -4.0 -2.8 -2.4 -1.7 -1.3 Fiscal balance (% of GDP) -2.8 -4.2 -2.5 -2.0 -1.8 -1.8 Revenues (% of GDP) 11.2 8.3 8.2 7.5 7.0 6.8 Debt (% of GDP) 56.6 54.4 42.7 36.1 31.8 29.8 Primary balance (% of GDP) -2.2 -3.6 -1.9 -1.5 -1.4 -1.5 a,b International poverty rate ($2.15 in 2017 PPP) 25.6 25.4 24.9 24.4 24.0 23.5 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 62.7 62.2 61.4 60.6 59.8 59.0 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 89.7 89.5 89.1 88.6 88.2 87.8 GHG emissions growth (mtCO2e) 3.5 2.3 2.5 2.6 2.5 2.7 Energy related GHG emissions (% of total) 14.5 14.0 13.5 13.0 12.4 11.9 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Growth projections reflect limited available information, and are subject to revision as better data becomes available. a/ Calculations based on 2010-HICES and 2015-HICES. Actual data: 2015. Nowcast: 2016-2023. Forecasts are from 2024 to 2026. b/ Projection using annualized elasticity (2010-2015) with pass-through = 0.7 based on private consumption per capita in constant LCU. MPO 35 Apr 24 support to the most vulnerable would also be crucial for higher and inclusive GABON Key conditions and growth. A new development plan with these goals is being prepared. It brings challenges forward an ambitious program targeting key areas such as roads, energy, health, Table 1 2023 Despite Gabon’s rich natural endowments, and education. However, investments Population, million 2.4 over recent decades low and erratic will need to be prioritized to ensure GDP, current US$ billion 20.5 growth and insufficient diversification re- its feasibility and fiscal sustainability. A GDP per capita, current US$ 8414.1 sulted in high unemployment and persis- more detailed focus on jobs is key for in- a 2.5 International poverty rate ($2.15) tent poverty. Popular discontent around clusive growth and lower wage bill pres- a 8.1 governance weaknesses and electoral sures. A successful implementation will Lower middle-income poverty rate ($3.65) a 31.2 fraud allegations fueled support for the also rely on strong coordination and im- Upper middle-income poverty rate ($6.85) Gini index a 38.0 August 2023 coup d’état. A transitional proved public investment management. School enrollment, primary (% gross) b 100.6 government was rapidly set up with a two- b 65.8 year plan for return to elected government. Life expectancy at birth, years After six months of sanctions, Gabon was Total GHG emissions (mtCO2e) 22.5 reintegrated in the Economic Community Recent developments Source: WDI, Macro Poverty Outlook, and official data. of Central African State on March 9, 2024. a/ Most recent value (2017), 2017 PPPs. b/ Most recent WDI value (2021). Public expectations for the transition are Gabon’s economy grew by an estimated high, putting pressure on social spending 2.3 percent in 2023, down from 3.0 percent and delivery of quick results. The authori- in 2022. The lower growth was caused by ties increased civil service hirings, extend- weaker wood and manganese production, ed fuel subsidies to the electricity utility amid high fuel costs and railway disrup- Gabon’s economy grew by 2.3 percent in (SEEG), and reinstated scholarships for tions caused by landslides. Oil production 2023 on the back of sustained oil produc- secondary education. These decisions have grew by 3.7 percent, fueled by new oil- tion, down from 3.0 percent in 2022. Fol- a fiscal cost in a context of constrained fi- fields, low OPEC+ restrictions and global lowing a coup d’état in August 2023, nancing capacity. While domestic revenue demand. Demand-side growth was driven mobilization efforts are underway, re- by public investments, oil and agricultural an orderly return to an elected govern- liance on volatile oil revenues and tight fi- exports, and oil investments. ment over the planned two-year transi- nancing conditions pose risks to the bud- Gabon’s investments in optimizing oil- tion period will be key to avoid risks of get. Calibrating spending pressures fields and expanding mines and wood sanctions and adverse impacts on in- against realistic revenue mobilization production led to large trade surpluses, vestment and growth. Substantial re- goals will be key for fiscal sustainability. offsetting its strong reliance on food im- The transition could provide an opportu- ports. In 2023, although oil, palm oil, and forms are needed to boost growth, re- nity for renewed reform momentum and rubber export volumes increased, lower duce poverty, restore fiscal stability, and improved institutional controls of public oil prices, appreciated USD and lower strengthen governance. resources, as well as governance of public wood and mining production decreased finances. Promoting access to credit, en- exports. Imports remained stable, and trepreneurship, and strengthening social the current account surplus remained FIGURE 1 Gabon / Growth of real GDP, Real oil GDP and FIGURE 2 Gabon / Actual and projected poverty rates and real non-oil GDP real GDP per capita Percent change Poverty rate (%) Real GDP per capita (constant million LCU) 14 40 2.6 12 2.6 35 10 2.5 8 30 2.5 6 25 2.5 4 2 20 2.5 0 2.5 15 -2 2.4 -4 10 2.4 -6 5 2.4 -8 -10 0 2.4 2017 2018 2019 2020 2021 2022 2023e 2024f 2025f 2026f 2017 2019 2021 2023 2025 International poverty rate Lower middle-income pov. rate Oil GDP Non-Oil GDP Real GDP Upper middle-income pov. rate Real GDP pc Sources: Official government data and World Bank calculations. Source: World Bank. Notes: see Table 2. MPO 36 Apr 24 high but decreased to estimated 28.7 per- households remain affected. Combined would exacerbate spending pressures, cent of GDP in 2023. with static per capita growth, this in- resulting in fiscal deficits (averaging 4.9 The fiscal deficit increased slightly in creased poverty to 35.2 percent in 2023. percent of GDP in 2024-26, with non-oil 2023 to an estimated 1.0 percent of GDP. primary deficits of 12.0 percent of non- Government revenues benefited from oil GDP). Primary balances would turn higher non-oil receipts and tax expendi- negative, increasing debt. Without sig- ture cuts. Public spending increased due Outlook nificant fiscal adjustment, these pres- to elections, public works, and the set- sures could make the fiscal and debt tlement of domestic arrears in late 2023. Gabon’s recovery should continue, with situation unsustainable. Lower oil prices and the removal of fu- higher risks due to recent political de- Inflation would remain below the 3.0 per- el subsidies for industrial consumers mit- velopments. An average 2.7 percent cent regional convergence criteria. How- igated the fiscal cost of fuel subsidies. growth is projected in 2024-2026, mainly ever, the poverty rate should increase to While efforts are ongoing to avoid the coming from non-oil sectors, including 36.9 percent by 2026. Most jobs are in ser- accumulation of arrears, external arrears new iron and manganese deposits, tim- vices, which is expected to have insuffi- at end-2023 were estimated at CFAF 123 ber production, and new oil palm, cient growth. Also, growth is largely dri- billion (1.0 percent of GDP). Public debt biodiesel, and gas industries. Maturing ven by capital-intensive extractive indus- stood at 70.5 percent of GDP (57.4 per- oilfields would gradually reduce oil out- tries, which do not create sufficient jobs cent of domestic and external debt, plus put from 2025, but exploration projects and equitable income distribution. arrears and T-bills). could reverse this scenario. Downside risks include commodity price The Bank of Central African States main- Higher imports in real terms are expected, shocks, competition from Russian oil in tained a tight monetary policy, with policy driven by infrastructure projects and pri- Asian markets, tighter financing condi- rate kept at 5.0 percent after a 175-basis vate investments. With oil exports declin- tions, and impacts of intensifying war in point increase between late 2021 and ing from 2025, the authorities are promot- Ukraine or conflict in the Middle East. March 2023. Yet, credit to the private sector ing investments to boost exports of other Uncontrolled spending from higher social increased by 14.2 percent in September commodities, notably manganese, iron, pressures or SOE acquisitions could lead 2023 (y-o-y), driven by oil and public and timber. Current account surpluses to spiraling deficits and debt. While EC- works. Inflation decreased from 5.2 per- would remain high, supported by high CAS’ sanctions were lifted, a delayed cent (y-o-y) in January 2023 to 2.7 per- commodity exports. transition could trigger sanctions, hitting cent in October, but food inflation was Diminishing oil production and prices access to regional markets. The political at 4.7 percent. While exemptions and would impact fiscal revenues. Also, agenda could limit reforms needed for price controls on essential food items higher wage bills, large infrastructure better governance, higher, job-based were expanded to alleviate living costs, projects, and social support measures growth, and poverty reduction. TABLE 2 Gabon / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 1.5 3.0 2.3 3.0 2.3 2.8 Private consumption -1.4 -0.3 3.2 5.6 2.3 4.7 Government consumption 3.2 3.8 -1.5 -4.9 1.8 -4.8 Gross fixed capital investment 9.2 8.3 -0.5 2.4 3.8 2.4 Exports, goods and services -2.0 6.9 1.4 5.5 5.3 4.2 Imports, goods and services 3.5 8.3 -0.9 4.1 5.7 3.2 Real GDP growth, at constant factor prices 2.9 3.3 2.3 3.0 2.3 2.8 Agriculture 11.2 9.4 2.1 3.6 5.5 6.6 Industry 3.2 3.2 3.5 2.2 0.0 4.2 Services 1.4 2.4 1.5 3.3 3.1 1.1 Inflation (consumer price index) 1.1 4.3 3.7 2.4 2.3 2.2 Current account balance (% of GDP) 30.1 35.2 28.7 29.2 28.8 28.4 Net foreign direct investment inflow (% of GDP) 2.1 4.6 5.5 5.4 5.0 5.4 Fiscal balance (% of GDP) -1.8 -0.8 -1.0 -3.8 -5.9 -5.0 Revenues (% of GDP) 14.7 20.4 22.9 20.0 18.8 18.1 Debt (% of GDP) 65.8 55.3 70.5 73.7 79.1 81.8 Primary balance (% of GDP) 0.9 1.7 1.9 -0.7 -2.8 -1.7 a,b International poverty rate ($2.15 in 2017 PPP) 2.3 2.4 2.9 3.1 3.2 3.2 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 8.2 8.5 10.0 10.1 10.7 10.9 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 32.1 32.3 35.2 35.1 36.1 36.9 GHG emissions growth (mtCO2e) 4.5 2.5 -0.7 -0.2 0.1 0.8 Energy related GHG emissions (% of total) 15.9 16.0 14.9 13.8 12.8 12.1 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2017-EGEP. Actual data: 2017. Nowcast: 2018-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 37 Apr 24 services, putting persistent pressure on the balance of payments and forex mar- THE GAMBIA Key conditions and ket and exacerbating the vulnerability to global shocks in commodity markets. challenges Fiscal risks remain substantial given State-Owned Enterprises (SOEs) contin- Table 1 2023 The Gambia is consolidating its democra- gent liabilities and the high dependence Population, million 2.8 tic transition and implementing reforms on external grant financing due to low GDP, current US$ billion 2.3 to transform the economy. However, tax collection. High domestic debt also GDP per capita, current US$ 845.8 structural factors continue to hamper crowds out private credit. a 17.2 International poverty rate ($2.15) growth, including low productivity Against this backdrop, the Government is a 47.0 growth, lack of structural change, con- implementing the National Development Lower middle-income poverty rate ($3.65) a 80.6 strained fiscal space for infrastructure in- Plan (NDP) 2023-2027 to consolidate de- Upper middle-income poverty rate ($6.85) Gini index a 38.8 vestments, a constraining business envi- mocratic governance, accelerate growth, School enrollment, primary (% gross) b 92.3 ronment for private sector development, and build resilience to shocks. Implement- b 62.1 limited economic diversification, and hu- ing this agenda poses significant financing Life expectancy at birth, years man capital challenges. This has resulted needs, with US$0.7 billion of available Total GHG emissions (mtCO2e) 3.3 in limited job creation and economic op- funding as of December 2023 out of total Source: WDI, Macro Poverty Outlook, and official data. portunities, limited access to essential cost estimated at US$3.5 billion. a/ Most recent value (2020), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy public services, and high poverty. (2021). Real GDP growth averaged 3.1 percent in 1990–2022—less than 0.5 percent in per capita terms. The labor market faces a Recent developments low labor force participation rate (43.6 Economic growth accelerated to 5.3 per- percent), significant underutilization (41.5 Economic growth accelerated to 5.3 per- percent), predominance of informal (62.8 cent in 2023 (2.7 percent per capita), main- cent in 2023 as favorable rainfall led to a percent) and unwaged employment (72 ly driven by agriculture and industry. good harvest while investment supported percent), and more significant gender Agriculture benefited from favorable rain- growth in the industry sector. Inflation gaps. Poverty rates are higher, with an fall and increased fertilizer subsidies. De- averaged 16.9 percent, eroding the pur- estimated 17.2 percent of the population spite increased tourism activity, services living in poverty in 2020, using the in- decelerated as many subsectors contracted chasing power of households and increas- ternational poverty line of $2.15 (in 2017 (information and communication, enter- ing poverty. The fiscal deficit halved to PPPs). Social disparities prevail in access tainment, etc.). Private investment, sup- 2.6 percent of GDP, driven by strong tax to essential services, and most of the ported by remittances and public invest- collection and higher grants. High infla- country still needs better connections to ment, drove growth on the demand side. tion, debt vulnerabilities, foreign ex- roads, schools, and health facilities. Inflation averaged 16.9 percent in 2023 – These weaknesses are coupled with the highest level in decades – caused by change pressures, and regional and global imported food inflation, utility tariffs in- downside risks such as reemerging for- geopolitical tensions cloud the outlook. eign exchange pressures, high depen- creases, and currency depreciation, drag- dence on imports of essential goods and ging down private consumption. FIGURE 1 The Gambia / Real GDP growth and sectoral FIGURE 2 The Gambia / Actual and projected poverty rates contributions to real GDP growth and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 8 100 30000 90 6 25000 80 4 70 20000 60 2 50 15000 40 0 10000 30 -2 20 5000 10 -4 0 0 2019 2020 2021 2022 2023 2024 2025 2026 2010 2012 2014 2016 2018 2020 2022 2024 2026 Agriculture Industry Services International poverty rate Lower middle-income pov. rate Net taxes Real GDP growth Upper middle-income pov. rate Real GDP pc Sources: The Gambian authorities and World Bank estimates. Source: World Bank. Notes: see Table 2. MPO 38 Apr 24 Rising food prices are expected to have declined to 4.2 months of imports in 2023 well-being. However, sustained increases increased poverty to 16.9 percent in 2023, from 5.1 months in 2022, alongside a de- in food prices will continue to undermine from 16.4 percent in 2022 - an increase of preciation of the nominal exchange rate such gains in 2024, given poor households over 25,000 people, using the internation- of 4.6 percent. spend 65 percent on food. Consequently, al poverty line of $2.15 (in 2017 PPPs). the international extreme poverty rate is The increase in poverty is mainly due expected to increase to 17.2 percent in 2024 to food price inflation which rose to 22 before declining in 2025 and 2026. percent in 2023, eroding the purchasing Outlook The CAD is expected to remain contained, power of households. averaging 3.8 percent in 2024-26, reflecting The fiscal deficit halved to 2.6 percent of Growth is projected to average 5.6 percent robust remittances, a decrease in invest- GDP in 2023, driven by increased tax rev- in 2024-26 (3.1 percent per capita), driven ment-related imports, and strong export enues and grants. Public expenditure re- by increased activity in all sectors. Agricul- growth. The monetary policy is set to re- mained high owing to increased spending ture and services are expected to sustain main tight as inflation persists. The fiscal on road infrastructure. With lower net do- growth, assuming favorable rainfall and deficit is projected to narrow to 1.5 percent mestic borrowing, public debt declined to continued recovery in tourism. Robust re- of GDP over 2024-26, supported by the 75.8 percent of GDP in 2023. Nevertheless, mittances, which represented 32.1 percent completion of major infrastructure projects the Gambia remains at high risk of debt of GDP in 2023, will support the recovery and domestic revenue mobilization efforts, distress. The current account deficit (CAD) in private sector demand, which, together including the digitization of tax adminis- is estimated at 4.5 percent of GDP in 2023, al- with infrastructure programs, are expect- tration and customs, the implementation most comparable to the 4.2 percent in 2022, ed to drive growth. Inflationary pressures of digital excise stamps for excisable prod- on the back of a recovery in tourism and in- are predicted to persist in 2024 and grad- ucts, the introduction of fuel marking, and creased imports related to ongoing infra- ually ease, with CPI inflation reaching reforms to broaden the tax base. Public structure projects. The monetary stance was 6.5 percent in 2026, close to the Central debt is projected to decrease to 68.9 per- further tightened, with the policy rate in- Bank’s 5 percent target, reflecting the cent of GDP in 2024, supported by the fis- creasing to 17 percent in August 2023 from restrictive monetary policy and easing cal path. Nevertheless, The Gambia is ex- 10 percent in April 2022. However, the effect global supply conditions. pected to remain at high risk of debt dis- of monetary tightening seems limited, as Agriculture growth, recovery of the tress, and the end of the debt-service defer- inflation is essentially imported. Due to tourism sector, and robust remittances are rals in 2024 could weigh on debt sustain- import pressures, international reserves expected to positively affect household ability and economic growth. TABLE 2 The Gambia / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 5.3 4.9 5.3 5.5 5.8 5.4 Private consumption 7.2 3.4 3.3 3.7 4.1 4.1 Government consumption -7.9 2.3 2.4 2.5 2.6 2.7 Gross fixed capital investment -8.7 15.1 13.7 14.1 11.8 9.1 Exports, goods and services -27.2 8.5 18.9 18.0 20.1 22.0 Imports, goods and services -15.2 16.2 11.0 12.0 11.0 10.0 Real GDP growth, at constant factor prices 5.3 4.9 5.3 5.5 5.8 5.4 Agriculture 13.7 3.6 7.2 6.6 6.2 5.1 Industry 2.9 3.1 6.5 6.4 6.1 6.1 Services 2.8 6.0 4.1 4.8 5.6 5.4 Inflation (consumer price index) 7.4 11.5 16.9 15.9 10.5 6.5 Current account balance (% of GDP) -4.3 -4.2 -4.5 -5.1 -3.2 -2.3 Fiscal balance (% of GDP) -4.8 -5.0 -2.6 -2.1 -1.3 -1.0 Revenues (% of GDP) 16.8 17.7 20.6 21.8 20.4 20.2 Debt (% of GDP) 83.9 83.4 75.8 68.9 64.6 59.5 Primary balance (% of GDP) -1.8 -2.9 -0.4 1.0 1.4 1.5 a,b International poverty rate ($2.15 in 2017 PPP) 16.1 16.4 16.9 17.2 16.5 15.9 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 45.4 45.9 47.0 47.6 46.7 45.8 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 80.3 81.5 82.3 83.2 82.9 81.8 GHG emissions growth (mtCO2e) 4.2 3.4 2.9 2.5 2.5 2.5 Energy related GHG emissions (% of total) 20.7 21.0 21.4 21.7 22.0 22.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2020-IHS. Actual data: 2020. Nowcast: 2021-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 39 Apr 24 integration with global value chains will also be important in this regard. These will GHANA Key conditions and need to be complemented with measures to expand well-targeted social protection challenges programs to mitigate the impact of the cri- sis and fiscal consolidation on the poor and Table 1 2023 Ghana is in debt distress and public debt most vulnerable. Population, million 34.1 is unsustainable. In response, the Govern- GDP, current US$ billion 76.2 ment has embarked on a comprehensive GDP per capita, current US$ 2234.2 debt restructuring, a significant fiscal con- International poverty rate ($2.15) a 25.2 solidation program, and the implementa- Recent developments a 48.8 tion of reforms to foster economic stability Lower middle-income poverty rate ($3.65) a 78.5 and resilience. The authorities’ stabiliza- In 2023, economic growth slowed down to Upper middle-income poverty rate ($6.85) Gini index a 43.5 tion efforts are being supported by an an estimated 2.9 percent, albeit surpassing School enrollment, primary (% gross) b 97.9 Extended Credit Facility (ECF) program initial projections for the year. This growth b 63.8 of the International Monetary Fund (IMF) was primarily driven by robust expansions Life expectancy at birth, years for approximately US$3 billion. The pro- in the agriculture and services sectors Total GHG emissions (mtCO2e) 18.3 gram aims to attain a moderate risk of while industrial production fell by 1.2 per- Source: WDI, Macro Poverty Outlook, and official data. debt distress over the medium term and cent due to contractions oil, electricity, and a/ Most recent value (2016), 2017 PPPs. b/ Most recent WDI value (2021). replenish the foreign exchange reserves construction sub-sectors; and subdued of the Bank of Ghana (BoG) to cover growth in gold and manufacturing. three months' worth of imports by the Fiscal consolidation is broadly on track conclusion of the program. with estimated deficit of 4.7 percent of The crisis has taken a toll on the pace of eco- GDP, significantly lower than the 11 per- Ghana’s economic conditions improved in nomic growth – which decelerated to an es- cent deficit in 2022. At 15.7 percent of GDP 2023 but challenges remain, notably ele- timated 2.9 percent in 2023 and is projected in 2023, revenues and grants reached the vated inflation, subdued growth, and sub- to remain weak in 2024. Returning growth to same level as 2022 despite lower oil rev- stantial pressure on public finances and its potential rate of 5 percent will require enues. The government implemented mea- macroeconomic stability. Over the longer sures to contain wage bill increase, re- debt sustainability. These lingering chal- term, structural reforms aimed at promot- duced Capex and spending on goods and lenges will continue to subdue growth in ing private sector development and increas- services leading to a reduction in expen- 2024 at 2.9 percent but, in the medium ing FDI attractiveness are necessary to raise ditures from 26.6 percent of GDP in 2022 term, growth will rebound to its long- the country’s growth potential. Critical re- to an estimated 20.4 percent in 2023. De- term potential as prevailing conditions forms include strengthening the insolvency creased in interest payments also helped regime, access to finance, the energy sector, contain expenditures. The key financial stabilize. Accordingly, lower growth pro- and the legal and regulatory environment soundness indicators demonstrate overall jections coupled with recent bouts of high faced by foreign direct investors. Accelerat- stability but credit to the private sector has inflation mean that poverty in 2024 will ing digitalization and harnessing the oppor- contracted reflecting increased risk aver- be at its highest level in over a decade. tunities offered by the Africa Continental sion among banks, as non-performing Free Trade Agreement (ACFTA) through loans ratio increased above 20 percent. FIGURE 1 Ghana / Real GDP growth and contributions to FIGURE 2 Ghana / Actual and projected poverty rates and real GDP growth real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 25 90 7000 20 80 6000 15 70 10 5000 60 5 50 4000 0 40 3000 -5 -10 30 2000 -15 20 1000 -20 10 2021 2022 2023 2024 2025 2026 0 0 Gov. cons. Exports GFCF 2012 2014 2016 2018 2020 2022 2024 2026 Inventories Private cons. Imports International poverty rate Lower middle-income pov. rate Statistical disc. GDP Upper middle-income pov. rate Real GDP pc Sources: Statistical service and World Bank. Source: World Bank. Notes: see Table 2. MPO 40 Apr 24 Inflation has declined significantly but re- The immediate implications of the macro- restructuring. By 2026, the authorities ex- mains well above the Bank of Ghana economic crises and debt distress in the pect to generate a primary surplus of 1.4 (BoG) target range of 8±2 percent. Year- country are the worsening in poverty and percent of GDP, a fiscal adjustment almost on-year inflation fell from 53.4 percent in living standards of the population. The 4 percentage points of GDP between 2023 January 2023 to 23.2 percent in Decem- “international poverty” rate is estimated to 2026. ber 2023, reflecting more stable exchange at 30.3 percent in 2023, a worsening of Ghana’s outlook is subject to significant rates and the effects of monetary poli- 3.5 percentage points since 2022. downside risks as baseline projections de- cy tightening in 2022-23. Over the first pend on the completion of the authorities’ months of 2024, the deceleration of infla- comprehensive debt restructuring and suc- tion has stalled due to pass-through of cessful reform implementation, including the depreciation on prices of imported Outlook meeting projected revenue mobilization goods, on non-food inflation while food targets. Further, there is significant risks to inflation marginally fell. Growth is expected to remain weak in 2024 financial sector stability, due to the DDE In 2023, the (pre-external debt restruc- at 2.9 percent as the ongoing fiscal con- while exchange rate, credit, and liquidity turing) current account balance improved solidation, high inflation rates, elevated in- risks further add to the vulnerabilities. to an estimated deficit of 1.7 percent of terest rates, and lingering macroeconomic Possible policy slippages due to the ap- GDP, from the 2022 deficit of 2.3 percent, uncertainties are all projected to dampen proaching end-2024 general elections rep- as a decline in oil exports was more-than- private consumption and investment, lim- resent additional domestic vulnerabilities. offset by import compression, strong re- iting non-extractive sector growth. How- Overall, the combination of economic chal- mittances, and lower income repatriation ever, growth will gradually rebound to its lenges, fiscal consolidation measures, and by mining and oil companies. The capital long-term potential of approximately 5 downside risks suggests a challenging en- account continues to be in deficit due to percent by 2026 as prevailing conditions vironment for poverty reduction efforts in weak FDI inflows and continued net out- stabilize. The external sector is forecast to Ghana. Adjustments to the country’s main flows of portfolio investments. Thus, BOP significantly improve over the medium cash transfer program, Livelihoods Em- remained in high deficit, at 3.2 percent term due to enhanced net capital inflows powerment Against Poverty, are expected of GDP. Gross international reserves was and continued trade surpluses. to help the poorest of the poor yet more is equivalent to 1.1 months of imports at the In 2024, fiscal consolidation is expected to needed. Poverty is expected to change lit- end of 2023, an increase from 0.7 months of be on track due to continued revenue and tle between 2024 and 2025 and is expected imports in December 2022. expenditure reforms; and the external debt to come down slowly by 2026. TABLE 2 Ghana / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 5.1 3.8 2.9 2.9 4.4 4.9 Private consumption 0.8 4.8 4.6 4.9 5.0 5.7 Government consumption 82.1 -31.7 -8.0 1.9 -0.6 -2.2 Gross fixed capital investment 4.5 28.6 3.9 -2.7 9.3 9.9 Exports, goods and services 69.1 9.6 5.8 10.3 6.4 7.2 Imports, goods and services 113.8 13.8 6.3 8.3 9.2 10.1 Real GDP growth, at constant factor prices 5.4 3.7 2.9 2.9 4.4 4.9 Agriculture 8.5 4.2 4.5 3.2 5.4 3.9 Industry -0.5 0.6 -1.2 3.8 4.1 5.8 Services 9.4 6.2 5.5 2.0 4.1 4.8 Inflation (consumer price index) 10.0 31.5 40.3 23.2 11.5 8.0 Current account balance (% of GDP) -3.7 -2.3 -1.7 -1.9 -2.2 -2.4 Net foreign direct investment inflow (% of GDP) 2.0 2.0 1.5 2.7 3.3 3.4 a Fiscal balance (% of GDP) -11.4 -11.0 -4.7 -5.0 -4.0 -3.5 Revenues (% of GDP) 15.3 15.6 15.7 16.7 17.3 18.2 a,b Debt (% of GDP) 76.7 88.7 86.1 83.6 80.9 77.9 a Primary balance (% of GDP) -4.1 -3.6 -0.5 0.6 1.6 1.4 c,d International poverty rate ($2.15 in 2017 PPP) 24.8 26.8 30.3 32.9 33.2 32.2 c,d Lower middle-income poverty rate ($3.65 in 2017 PPP) 47.0 50.2 55.3 58.7 59.4 57.5 c,d Upper middle-income poverty rate ($6.85 in 2017 PPP) 76.7 78.9 82.8 84.6 84.8 83.9 GHG emissions growth (mtCO2e) 6.0 11.8 7.3 4.8 5.9 7.1 Energy related GHG emissions (% of total) 129.8 121.2 117.0 114.3 110.9 106.8 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Fiscal and debt forecasts do not factor in the impact of the ongoing Debt Restructuring (DR) as the process is yet to conclude. b/ Starting from 2022, public debt numbers include, in addition to central government debt, explicitly guaranteed (and certain implicitly guaranteed) SOE debt, cocobills issued by Cocobod, and reconciled domestic arrears to suppliers. c/ Calculations based on 2016-GLSS-VII. Actual data: 2016. Nowcast: 2017-2023. Forecasts are from 2024 to 2026. d/ Projections using microsimulation methodology. MPO 41 Apr 24 access and e-government transactions have helped bolster economic activity and stream- GUINEA Key conditions and lined tax collection; yet further digitaliza- tion and structural reforms are needed to challenges spur diversification and inclusive growth. Table 1 2023 Growth was robust over 2019-23, averag- Population, million 14.2 ing 5.4 percent (2.9 percent per capita GDP, current US$ billion 23.0 terms) driven by the mining sector and Recent developments GDP per capita, current US$ 1617.5 agriculture productivity growth, support- a 13.8 International poverty rate ($2.15) ing low fiscal deficits to GDP (averaging Growth accelerated to 7.1 percent in 2023 a 46.6 1.7 percent). However, weak mining link- (4.6 percent per capita terms) bolstered by Lower middle-income poverty rate ($3.65) a 86.8 ages to non-mining sectors, headwinds strong mining sector performance. Bauxite Upper middle-income poverty rate ($6.85) Gini index a 29.6 from Dutch-disease (DD) dynamics, and production surged by 22 percent, and gold School enrollment, primary (% gross) b 98.0 recent external shocks from the COVID-19 exports by 10 percent attributable to both b 58.9 pandemic and Russia’s invasion of artisanal operators and new formal sector Life expectancy at birth, years Ukraine limited job creation and poverty companies. On the demand side, an invest- Total GHG emissions (mtCO2e) 45.9 reduction. The $2.15 international poverty ment surge (private and public) fueled Source: WDI, Macro Poverty Outlook, and official data. rate was 10.6 percent on average over the growth. The fiscal deficit widened to a/ Most recent value (2018), 2017 PPPs. b/ Most recent WDI value (2021). same period, only marginally affected by 1.6 percent of GDP in 2023 from 0.9 per- the mining-driven growth. The Simandou cent in 2022, due to a 1.3 percentage point mining operation, expected to almost of GDP increase in capital expenditure. triple Guinea’s GDP in the medium term, Inflation decelerated but remained high, holds potential to transform Guinea’s at 9.3 percent in 2023, down from 11.6 economy and create jobs if reforms are im- percent in 2022, aided by stable transport Mining investment will boost growth to plemented that counter DD. costs and prudent fiscal and monetary 7.1 percent in 2023, poverty will decline However, the ongoing mining boom, and policy (reserve money increased only by slightly, and the fiscal deficit widen to 1.6 associated real appreciation of the local 3 percent and broad money by 1.5 per- currency, adversely affects competitive- cent). However, food price inflation is percent as capital spending rises. Growth ness of non-mining sectors and hampers estimated to have increased from 13.9 in 2024 will slow primarily due to a dip efforts to diversify the economy to create percent in 2022 to 16.2 percent in 2023. in mining and slight impacts of the De- more and better jobs. Structural chal- Consequently, the US$2.15 international cember 2023 fuel depot explosion. Ex- lenges include low human capital levels, poverty rate is expected to remain at 10.5 treme poverty is projected to fall in 2024 large infrastructure gaps, an underdevel- percent in 2023, same as in 2022. With oped financial sector, weak institutional inflation easing, and to encourage credit as food prices ease. Risks include delays to capacity, and large gender gaps in ed- to the private sector, the central bank re- the political transition and reforms. ucation, earnings, agriculture productivi- duced its key rate by 50 basis points to ty, and political representation. Weak fis- 11 percent, and the reserve requirement cal revenue mobilization constrains pub- ratio from 15 percent to 13 percent in lic investment. Recent increases in digital September 2023. FIGURE 1 Guinea / Debt, fiscal deficit, and inflation FIGURE 2 Guinea / Actual and projected poverty rates and real GDP per capita Percent of GDP Percent Poverty rate (%) Real GDP per capita (constant million LCU) 45 14 100 7.0 40 90 12 6.0 35 80 10 70 5.0 30 8 60 4.0 25 50 20 6 3.0 40 15 30 4 2.0 10 20 2 1.0 5 10 0 0 0 0.0 2021 2022 2023 2024 e 2025 f 2026 f 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 International poverty rate Lower middle-income pov. rate Debt (lhs) Fiscal defit (rhs) Inflation (CPI, rhs) Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see Table 2. MPO 42 Apr 24 The current account balance (CAB) the $2.15 international poverty rate is price mechanism as of July 2022. Electricity widened to -12.9 percent in 2023, due to projected to decline to 9.3 percent in subsidies are to decrease by 38 percent, per a significant decrease of trade surplus, 2024 and 8.1 percent in 2025 due to the 2024 budget law, as utility company linked to FDI-related imports and a fall in easing food price inflation. Given the reforms bear fruit, particularly the contin- exports price. Mining-related FDI, the limited poverty gains from mining-dri- ued rollout of prepaid meters and intensi- main source of external financing, in- ven growth, redistribution mechanisms fied billing recovery efforts. Debt-to-GDP creased to 15 percent of GDP in 2023, while to vulnerable populations and produc- would decrease slightly to 35.3 percent in the real effective exchange rate is likely to tivity gains in non-mining sectors will 2024 and to average 32.0 percent in continue to appreciate. be required for inclusive growth. 2025-2026, due to reduced domestic debt. Inflation would decelerate to 8.8 percent The CAB is forecast to remain high at in 2024 and 8.1 percent on average in -12.7 percent of GDP in 2024 as the FDI- 2025-26, due to easing supply constraints induced trade deficit persists yet would Outlook and improving road-network conditions, improve slightly during 2025-26 to an av- facilitating food distribution, as well as to erage -10.1 percent. Mining-related FDI, Mining will continue to drive growth prudent monetary policy including mini- the main source of external financing, is while the non-mining sectors, impacted mal fiscal financing. expected to rise to 17 percent of GDP by the fuel depot explosion in mid- The fiscal deficit (including grants) would in 2024, while the real effective exchange December 2023, recover. Growth will widen to 2.7 percent of GDP due to in- rate would likely continue to appreciate. slow to around 4.9 percent in 2024 creased capital expenditures but decrease Risks are tilted to the downside as polit- (2.4 percent per capita) and accelerate to 2.1 percent in 2025-2026 consistent with ical transition uncertainties leading up to to 6.3 percent on average in 2025–2026 prudent fiscal policies. Tax revenues are the 2025 elections could slow implemen- (excluding Simandou mine exports an- to increase slightly in 2024 to 12.7 percent tation of reforms, potentially reducing ticipated by end-2026), though below of GDP, buoyed by tax administration re- private investment. On the upside, min- the potential of 9.3 percent. Despite de- forms and additional mining revenues ing related FDI inflows could increase, celeration in agriculture and services, from implementing the bauxite-reference- reflecting planned new projects. TABLE 2 Guinea / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 5.0 3.7 7.1 4.9 6.2 6.5 Private consumption 0.6 7.6 4.8 3.3 4.7 4.7 Government consumption 16.8 -22.4 3.4 24.8 4.6 5.6 Gross fixed capital investment 8.3 6.2 39.8 48.4 41.8 3.9 Exports, goods and services 0.8 5.8 11.3 6.8 6.0 5.9 Imports, goods and services -6.2 6.7 18.2 25.3 20.3 3.3 Real GDP growth, at constant factor prices 5.1 4.6 7.1 4.9 6.2 6.5 Agriculture 8.3 5.4 5.1 3.0 4.4 5.1 Industry 3.1 2.0 10.8 6.7 7.8 8.9 Services 5.2 6.5 5.1 4.4 5.7 5.0 Inflation (consumer price index) 12.6 11.6 9.3 8.8 8.7 7.5 Current account balance (% of GDP) 0.6 -0.3 -12.9 -12.7 -12.3 -7.8 Net foreign direct investment inflow (% of GDP) 11.1 12.1 15.0 17.4 16.9 9.6 Fiscal balance (% of GDP) -1.9 -0.9 -1.6 -2.7 -2.1 -2.1 Revenues (% of GDP) 15.2 13.2 13.8 13.9 14.2 15.3 Debt (% of GDP) 41.5 36.7 35.5 35.3 33.7 30.3 Primary balance (% of GDP) -0.8 0.0 -0.4 -1.6 -1.2 -1.3 a,b International poverty rate ($2.15 in 2017 PPP) 11.1 10.5 10.5 9.3 8.1 7.8 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 44.5 44.5 44.7 41.2 38.5 38.4 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 86.7 87.3 87.6 85.0 82.6 83.8 GHG emissions growth (mtCO2e) 3.2 3.1 3.1 3.2 3.1 3.1 Energy related GHG emissions (% of total) 10.8 10.7 10.7 10.6 10.5 10.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 43 Apr 24 distress and limiting capacity to absorb shocks. Non-performing loans continue to GUINEA-BISSAU Key conditions and make the banking sector another possible source of contingent liabilities. challenges Table 1 2023 Exports of raw cashew nuts, approxi- Population, million 2.2 mately 90 percent of merchandise ex- Recent developments GDP, current US$ billion 2.0 ports, determine economic performance. GDP per capita, current US$ 918.1 Cashew production is dispersed among Economic activity grew by 4.2 percent in a 26.0 International poverty rate ($2.15) smallholder farmers, whose income sup- 2023 (2.1 percent in per capita terms), un- a 60.2 ports overall economic activity. Poverty changed from 2022. On the supply side, Lower middle-income poverty rate ($3.65) a 89.1 remains widespread – particularly in rur- growth was driven by agriculture and gov- Upper middle-income poverty rate ($6.85) Gini index a 33.4 al areas. Human development indicators ernment infrastructure investment stimu- School enrollment, primary (% gross) b 113.3 are among the lowest in the world, and lating the construction sector. On the de- b 59.7 low access to basic services contribute mand side, inflationary pressures caused Life expectancy at birth, years to exclusion and marginalization. Polit- private consumption to fall. Total GHG emissions (mtCO2e) 4.4 ical instability is chronic in Guinea-Bis- Inflation remained high at 8 percent (y/ Source: WDI, Macro Poverty Outlook, and official data. sau, the world’s most coup prone coun- y) in 2023, from 7.9 percent in 2022, dri- a/ Most recent value (2021), 2017 PPPs. b/ WDI for School enrollment (2010); Life expectancy try, and recent regional and international ven by food and energy inflation. This (2021). geopolitical uncertainty only threaten to followed an average of 1 percent between stoke domestic tensions further. 2015 and 2020. Access to credit is limited and the enabling A cashew campaign marred by problems, environment for private sector-led growth including shipping container shortages, Weak cashew export performance and is weak due to poor infrastructure, low lev- smuggling, disruptions from legislative els of human capital, and limited public elections, and low international demand, high inflation kept growth at 4.2 percent services. Recently, there have been invest- put exports at just 168,000tn in 2023 de- in 2023, undermining poverty reduction. ments to improve infrastructure, though spite production of 260,000tn. This, along Budget slippages and lower revenues de- mostly donor financed as fiscal space is with high import costs, kept the current railed fiscal consolidation efforts while in- limited by low domestic revenue mobiliza- account deficit (CAD) high at 9.4 percent. tion and the relatively high wage bill. Fiscal consolidation efforts were derailed frastructure investment, rice subsidies, Transparency and governance of state- as higher-than-planned discretionary and energy arrears increased debt. owned enterprises is limited, especially the spending and lower customs receipts Growth should improve as energy and national utility company, EAGB, which ac- widened the fiscal deficit to 7.6 percent in transport infrastructure come online, but crues substantial public debt in the energy 2023, from 6.1 percent in 2022. Legislative its sustainability depends on institutional sector through government guaranteed elections, energy sector arrears accumula- letters of credit that only partially cover tion, rice subsidies costing 0.2 percent of reforms. The outlook is subject to down- GDP, and urban road infrastructure in- mounting arrears. Identifying contingent side risks from political instability, shocks fiscal liabilities is difficult, increasing fiscal vestments kept debt above the conver- to the cashew sector, and climatic shocks. risks and amplifying the high risk of debt gence criterion at 77.8 percent of GDP. FIGURE 1 Guinea-Bissau / Evolution of main FIGURE 2 Guinea-Bissau / Actual and projected poverty macroeconomic indicators rates and real GDP per capita Percent, percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 8 100 600000 6 90 4 500000 80 2 70 400000 0 60 -2 50 300000 -4 40 200000 -6 30 -8 20 100000 -10 10 -12 0 0 2016 2017 2018 2019 2020 2021 2022 2023e2024f 2025f 2026f 2010 2012 2014 2016 2018 2020 2022 2024 2026 International poverty rate Lower middle-income pov. rate GDP growth Fiscal balance Current account balance Upper middle-income pov. rate Real GDP pc Sources: Ministry of Finance and World Bank. Source: World Bank. Notes: see Table 2. MPO 44 Apr 24 To counter inflation across WAEMU coun- stimulating the real sector. Easing of infla- subject to considerable uncertainty given tries, the Central Bank of West African tionary pressures and a strong cashew sea- the country’s ongoing political volatility. States (BCEAO) raised policy interest rates son will encourage private consumption. The BCEAO may need to continue mon- by a cumulative 150 basis points since Favorable weather conditions and divi- etary tightening in 2024 to bring inflation mid-2022 to 3.5 percent for liquidity calls dends from government investments into under control and in the context of rising and 5.5 percent for the marginal lending agricultural inputs over the last few years uncertainties over the withdrawal of facility. However, inflation in the region should support strong cashew production. Niger, Mali, and Burkina Faso from (3.7 percent in 2023) was still above the Exports should markedly improve as nine ECOWAS and potential spillovers to WAE- 1-3 percent target range and foreign ex- overland border routes are authorized for MU. These uncertainties are likely to in- change reserves have been on a down- exports, curtailing smuggling. Historical- crease investors’ risk perceptions leading ward trend, estimated at 3.5 months of ly, only cashew exports via the port of Bis- to tighter financing conditions and putting imports at end-2023, down from sau were authorized. This opening could additional strain on already low foreign 4.3 months at end-2022. contribute to higher demand from possible exchange reserves. The combination of agricultural growth processing activity in neighboring coun- A rebound in the agriculture sector will and high food prices is expected to have tries. Additionally, Chinese firms should partly drive the poverty rate to decline to left poverty unchanged between 2022 and enter the market for processing in Asia, 25.4 percent in 2024. Further progress is 2023 at about 26 percent, with population competing with India and Vietnam. Con- expected to be supported by lower food growth implying over 10,000 additional sequently, the CAD is projected to narrow prices reducing poverty to 24.1 percent in poor people. to 5.7 percent of GDP, mostly financed by 2025, lifting over 15,000 out of poverty, and concessional loans and grants. Higher rev- reaching 22.6 percent by 2026. Household enue collection and greater spending dis- purchasing power will improve with high- cipline could lower the fiscal deficit to 4.8 er cashew prices and lower food prices, Outlook percent of GDP in 2024, or 5.6 percent in- benefiting the poorest who spend a higher cluding planned arrears clearance, with share of their income on food. Economic activity is likely to expand by 4.7 public debt falling to 75.6 percent of GDP. The outlook is subject to substantial down- percent in 2024 (2.2 percent per capita) fol- The pace of the fiscal adjustment is highly side risks stemming from political instabil- lowing a strong cashew campaign. Agri- dependent on greater revenue mobiliza- ity, climate and agricultural shocks, uncer- culture will drive growth with cheaper en- tion, strengthened expenditure controls, tainty of EAGB operations, and financial ergy from regional energy project OMVG and increased grant financing, and thus sector non-performing loans. TABLE 2 Guinea-Bissau / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 6.4 4.2 4.2 4.7 4.8 4.9 Private consumption 16.0 3.0 -1.2 5.1 4.4 4.2 Government consumption 16.0 7.0 5.5 -8.5 -5.6 3.9 Gross fixed capital investment -5.0 15.7 23.0 5.6 7.6 2.6 Exports, goods and services 15.0 -6.5 -3.1 12.2 9.6 7.6 Imports, goods and services 4.0 2.5 0.8 3.0 4.0 3.0 Real GDP growth, at constant factor prices 6.3 4.7 4.2 4.7 4.8 4.9 Agriculture 5.4 6.1 7.5 5.1 5.1 5.1 Industry 5.6 4.8 4.0 4.4 4.5 4.6 Services 7.3 3.7 1.8 4.4 4.7 4.8 Inflation (consumer price index) 3.3 7.9 8.0 4.5 2.0 2.0 Current account balance (% of GDP) -0.8 -9.6 -9.4 -5.7 -4.7 -4.4 Fiscal balance (% of GDP) -5.9 -6.1 -7.6 -4.8 -4.0 -4.0 Revenues (% of GDP) 19.1 15.2 13.9 16.0 15.3 15.2 Debt (% of GDP) 78.8 80.4 77.8 75.6 72.8 70.4 Primary balance (% of GDP) -4.3 -4.7 -5.0 -2.2 -1.6 -1.6 a,b International poverty rate ($2.15 in 2017 PPP) 26.0 26.0 25.9 25.4 24.1 22.6 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 60.2 59.9 60.4 60.2 58.8 57.7 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 89.1 89.2 89.5 89.6 89.0 88.3 GHG emissions growth (mtCO2e) 1.4 1.4 1.4 1.5 1.5 1.6 Energy related GHG emissions (% of total) 8.0 8.2 8.3 8.6 8.8 9.0 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2021-EHCVM. Actual data: 2021. Nowcast: 2022-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 45 Apr 24 to global capital markets through the is- suance of a Eurobond in February 2024 KENYA Key conditions and helped to improve market confidence and foreign currency reserves. But there is challenges scope to do more. Despite strengthened tax administrative measures, tax collec- Table 1 2023 Kenya’s GDP growth accelerated in 2023 tion is characterized by low compliance Population, million 55.1 after two consecutive years of droughts. levels, while expenditure inefficiencies GDP, current US$ billion 107.5 Notwithstanding the cyclical rebound, and fiscal slippages are common. FDI is GDP per capita, current US$ 1950.1 long-term development challenges remain. still restricted by complex entry and li- a 36.1 International poverty rate ($2.15) Years of public-sector led growth and debt censing procedures which limit interna- a 70.1 accumulation brought macroeconomic im- tional integration, and the economy is Lower middle-income poverty rate ($3.65) a 91.3 balances and did not create enough quality losing competitiveness in major exporting Upper middle-income poverty rate ($6.85) Gini index a 38.7 jobs that can sustain higher wages and ac- markets. Recent measures to strengthen School enrollment, primary (% gross) b 97.2 celerate poverty reduction. Compounded market regulations and reduce the foot- b 61.4 with high trade costs, these imbalances print of the State in the economy are pos- Life expectancy at birth, years have generated a sluggish tradable sector itive, although there is space to enable a Total GHG emissions (mtCO2e) 82.5 in the economy. During 2023, uncertainty greater expansion of the private sector to Source: WDI, Macro Poverty Outlook, and official data. over future external financing were added raise productivity and create better jobs. a/ Most recent value (2021), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy to regular low exports and FDI, creating (2021). pressures on the foreign currency market. Climate shocks are increasing in frequen- cy and intensity, threatening the liveli- Recent developments Kenya’s growth rebounded after two con- hoods of many Kenyans, especially in secutive years of droughts, as the poverty dry and arid regions. Kenya’s real GDP expanded by 5.4 percent Kenya’s economic growth has not been in 2023. The agricultural sector experi- rate continued its declining trend. The sufficiently inclusive, with the connection enced a stronger than expected rebound Government of Kenya is taking bold mea- between growth and poverty reduction after two years of drought. The onset of sures to strengthen its macroeconomic poli- weakening. The poor have fewer house- the rains led to improved crop yields and cy framework. Fiscal consolidation remains hold members working and are more like- livestock health, which supported poverty ly to be engaged in subsistence agriculture rates to resume their downward trajectory. a top priority, which in combination with a and low-productivity services sub-sectors The $2.15 international poverty rate is pro- tighter monetary policy and improved glob- for employment. Strategies to enhance in- jected to have declined from 35.8 percent al credit outlook made the country regain clusive growth should focus on promoting in 2022 to 35,1 percent in 2023. access to international financial markets. productive employment and strengthen- Moreover, industry and services contin- The outlook remains positive in the medium ing resilience to adverse weather shocks. ued to show resilience despite surging The government has taken steps to re- production costs, increased cost of credit, term, although the failure to achieve fiscal and a depreciating shilling. The depre- inforce its macroeconomic policy frame- consolidation targets could exacerbate work. A tighter monetary policy contin- ciated currency depressed imported oil Kenya’s debt vulnerabilities. ued fiscal consolidation, and the return products, machinery, and transport FIGURE 1 Kenya / Annualized quarterly real GDP growth FIGURE 2 Kenya / Actual and projected poverty rates and and contributions to annualized real quarterly GDP growth real private consumption per capita Percentage points Poverty rate (%) Real private consumption per capita (constant LCU) 12 100 160000 90 140000 10 80 120000 8 70 60 100000 6 50 80000 4 40 60000 2 30 40000 20 0 20000 10 -2 0 0 2021Q1 2021Q3 2022Q1 2022Q3 2023Q1 2023Q3 2015 2017 2019 2021 2023 2025 Agriculture Industry Services International poverty rate Lower middle-income pov. rate Taxes GDP growth Upper middle-income pov. rate Real priv. cons. pc Sources: World Bank and Kenya National Bureau of Statistics. Source: World Bank. Notes: see Table 2. MPO 46 Apr 24 equipment but did not result in higher Ongoing fiscal consolidation is expected to exports. As imports fell faster than ex- reduce the fiscal deficit, which is projected to ports and remittance flows held up, the Outlook decline to -4.1 percent of GDP in 2024, target- current account deficit narrowed to 3.9 ingaprimarysurplusof1.2percent. percent of GDP in 2023. FX reserves Kenya’s outlook remains positive in the Real per capita incomes are expected to stood at US$ 7.1 billion or 3.7 months of medium term, with real GDP projected grow, and the poverty incidence is expected import by January 2024, improving from to grow by 5.2 percent on average in to resume its pre-pandemic downward December 2023 but still below the Cen- 2024-2026. Persistent structural challenges trend,decliningbynearlyapercentagepoint tral Bank of Kenya’s (CBK) statutory min- notwithstanding, a stronger macroeco- each year toward pre-pandemic levels. The imum of 4.0 months of import cover. nomic framework and the regaining of US$2.15 poverty rate is expected to fall from Inflation fell to 6.9 percent by January access to international financial markets 35.1percentin2023to34.4percentin2024. 2024, within the CBK’s target range of will spur investor confidence and private The outlook is subject to elevated uncer- 5±2.5 percent, as falling commodity prices investment, supporting capital inflows, tainty. The failure to achieve fiscal consol- and tight monetary policy offset exchange- and freeing more credit to the private idation targets could exacerbate Kenya’s rate passthrough. During 2023, the CBK in- sector through reduced domestic gov- debt vulnerabilities, especially due to still creased its policy rate by a total of 375 basis ernment borrowing. As reforms materi- high-debt service repayments. Climate points, including a 200-basis-point hike in alize, exports are projected to increase hazards could resume inflationary pres- December, with another increase of 50bps, as Kenya implements trade agreements sures and food insecurity, affecting to 13 percent, in February 2024. signed under the EU-EPA, AfCFTA, and growth. Lower than anticipated growth of Fiscal consolidation continues as the gov- potential other trade agreements. FDI, international partners could undercut on- ernment is expanding the tax base and ratio- tourism, and remittance inflows will sup- going recovery in tourism, exports, and re- nalizing non-priority spending. However, port external financing; the current ac- mittances. Elevated commodity prices revenue collection is lagging. Tax policy and count deficit is expected to remain within would further tighten financial condition, tax administration measures were submit- 3.9 and 4.1 percent of GDP. A more sta- weaken external balances, and impact in- ted to parliament by mid-December 2023 to ble currency, moderating global and lo- flation. The upside risks are linked to faster ensure meeting end-of-year targets. As a cal inflation pressures, and, eventually, than expected normalization in global fi- share of GDP, public debt rose to 73.2 per- a more accommodative monetary policy nancing conditions and lower internation- cent in 2023 from 70.6 percent in 2022. will accelerate credit growth. al fuel and food prices. TABLE 2 Kenya / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 7.6 4.8 5.4 5.0 5.3 5.3 Private consumption 6.2 3.1 5.0 4.9 5.3 5.4 Government consumption 6.0 7.4 5.7 1.6 0.8 1.1 Gross fixed capital investment 10.8 -1.1 0.1 5.3 7.8 7.8 Exports, goods and services 15.3 10.7 -6.8 8.7 9.6 9.9 Imports, goods and services 22.2 4.5 -7.8 3.0 5.5 6.4 Real GDP growth, at constant factor prices 7.1 4.5 5.4 5.0 5.3 5.3 Agriculture -0.4 -1.6 6.1 4.1 4.4 4.5 Industry 7.5 3.9 2.2 4.0 4.1 4.3 Services 9.6 6.7 6.2 5.6 5.9 5.9 Inflation (consumer price index) 6.1 7.6 7.7 7.0 5.0 5.0 Current account balance (% of GDP) -5.2 -5.1 -3.9 -3.9 -4.0 -4.1 Net foreign direct investment inflow (% of GDP) 0.0 0.3 0.4 0.6 0.7 0.8 Fiscal balance (% of GDP) -7.3 -5.9 -5.2 -4.1 -3.3 -3.2 Revenues (% of GDP) 16.8 17.1 17.8 19.1 19.3 19.4 Debt (% of GDP) 68.1 70.6 73.2 71.8 69.0 66.6 Primary balance (% of GDP) -2.5 -0.8 0.0 1.2 1.7 1.7 a,b International poverty rate ($2.15 in 2017 PPP) 36.1 35.8 35.1 34.4 33.6 32.7 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 70.1 69.8 69.2 68.5 67.8 67.0 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 91.3 90.9 90.1 89.2 88.2 87.2 GHG emissions growth (mtCO2e) 3.5 4.6 5.0 5.9 6.5 6.4 Energy related GHG emissions (% of total) 26.5 26.6 26.4 26.1 25.8 26.0 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2013-, 2018-, and 2021-KCHS. Actual data: 2021. Nowcast: 2022-2023. Forecasts are from 2024 to 2026. b/ Projection using point to point elasticity at regional level with pass-through = 1 based on private consumption per capita in constant LCU. MPO 47 Apr 24 and diversify the economy. The future of the textile sector hinges on the renewal LESOTHO Key conditions and of the United States’ African Growth and Opportunities Act (AGOA) beyond 2025 challenges and measures to relaunch the compet- itiveness of the sector. South Africa’s Table 1 2023 Growth rate has averaged only 1.2 percent weak economy affects growth prospects Population, million 2.3 since 2010, indicating that the consump- through trade and lower remittances. GDP, current US$ billion 2.3 tion-driven growth model anchored on a Limited private sector activity and GDP per capita, current US$ 972.0 large public sector has not been sustain- skills mismatches contribute to high a 32.4 International poverty rate ($2.15) able. Weaknesses in fiscal policy and man- unemployment, estimated at 22.5 per- a 54.6 agement has undermined public spending cent in 2019 (reaching 38.3 percent Lower middle-income poverty rate ($3.65) a 81.0 inefficiencies. The large public sector has when discouraged job seekers are in- Upper middle-income poverty rate ($6.85) Gini index a 44.9 also crowded out the private sector, cur- cluded), and high poverty rates. Over School enrollment, primary (% gross) b 110.0 tailing business investment and the de- one-third of the population was esti- b 53.1 velopment of new private sector activi- mated to live on less than US$2.15 per Life expectancy at birth, years ties. Domestic entrepreneurs face difficul- day (2017 PPP) in 2022. Lesotho is in Total GHG emissions (mtCO2e) 4.3 ties in accessing credit. Gaps in the regu- the top quintile of countries with the Source: WDI, Macro Poverty Outlook, and official data. latory competition and investment frame- most unequal income distribution. a/ Most recent value (2017), 2017 PPPs. b/ Most recent WDI value (2021). works, including for foreign direct invest- ment, raise uncertainty and costs of do- ing business. Large infrastructure gaps, Growth increased to 2 percent in 2023 including in information and communi- Recent developments cations technology, dampen private in- and will remain at around this rate over vestment and the country’s integration in The economy expanded by an estimated 2024-26. The outlook is subject to down- global value chains. 2 percent in 2023, mainly driven by the side risks from delays in the Lesotho Fiscal imbalances have been persistent public sector, especially the LHWP-II Highlands Water Project (LHWP), and overtime, as spending was not compensat- megaproject and its spillover effects on ed by higher revenue, leading to higher transportation, logistics, and financial ser- the implementation of reforms to control public debt. Volatile Southern African vices. The project experienced some de- public spending, raise efficiency, as well Customs Union (SACU) receipts, poor lays in early 2024 owing to strikes, but as public investment effectiveness. Fur- cash management, and deficiencies in pub- activity has since resumed. On the down- ther delays in implementing reforms to lic procurement processes have led to the side, weaknesses in public investment bolster private sector development and accumulation of arrears, which threaten management and efforts to control macroeconomic stability. spending are delaying the implementa- human capital will also stall growth. Weak- Weak regional and global demand are un- tion of capital projects. On the supply er global and regional growth, rising geopo- dermining exports, which remain heavily side, the industrial sector grew by about litical tensions, and climate shocks could concentrated to apparel and textile, and 5 percent, while the expansion of the adversely affect the growth trajectory. natural resources. Policy measures are agricultural sector, while still positive, needed to unlock private investment decelerated significantly. FIGURE 1 Lesotho / Fiscal dynamics FIGURE 2 Lesotho / Actual and projected poverty rates and real GDP per capita Percentage of GDP Percentage of GDP Poverty rate (%) Real GDP per capita (constant LCU) 70 8 90 10500 60 6 80 10000 70 50 4 60 9500 40 2 50 9000 40 30 0 30 8500 20 -2 20 8000 10 -4 10 0 7500 0 -6 2017 2019 2021 2023 2025 2021 2022 2023e 2024f 2025f 2026f International poverty rate Lower middle-income pov. rate Revenues Expenditures Fiscal balance (rhs) Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see Table 2. MPO 48 Apr 24 Headline inflation decreased from its SACU transfers are projected to remain el- peak of 9.8 percent in July 2022 to 7.2 evated, risking undermining macroeco- percent in December 2023, owing primar- Outlook nomic stability. Although the projected ily to the moderation in fuel and food deficits will be driven by public invest- prices, but pressures are emerging again. Growth is projected to remain subdued, at ment, and there are substantial gaps in the central bank revised upwards the around 2-2.5 percent over the next three productive, social, and resilient infrastruc- net international reserves target floor to years. This rate will be insufficient to re- ture, public investment prioritization and US$750 million in January 2024 and in- turn the economy to its pre-pandemic level management have been weak, raising con- creased the policy rate to 7.75 percent in by 2026 and significantly reduce poverty cerns about the country’s absorptive ca- July 2023, which stands below the South and inequality rates. The implementation pacity and resource misallocation. Using African policy rate. of the LHWP-II project should continue to the SACU windfall to implement reforms The fiscal balance improved dramatically, drive growth, but private activities are ex- that stimulate private sector investment from a deficit of 4.3 percent of GDP in pected to expand modestly as longstand- and bring down recurrent spending would 2022 to a surplus of 5.5 percent of GDP ing structural constraints remain unad- strengthen growth. in 2023, owing to the more than dou- dressed. Consequently, the US$2.15 per Domestic and external risks are tilted bling of SACU revenue. The government day poverty rate is projected to fall only to the downside. Weaker global and re- has spent more than half of SACU wind- slightly from 37.0 percent in 2022 to gional growth, and the intensification of fall in FY 2023/24, to increase public in- 36.1 percent in 2025. geopolitical conflicts, would impact neg- vestment and recurrent spending by 2 Inflation is expected to gradually moder- atively on diamond exports and remit- percentage points of GDP each. Recur- ate to 5.0 percent in line with declining tances. This and failure to renew AGOA rent spending increases were driven by energy and food prices, but to remain rel- would widen the current account deficit, transfers to other public sector bodies, so- atively high owing to the rand depreci- while further delays in the LHWP-II cial benefits, and subsidies. The public ation. The current account deficit is pro- would lower growth. On the positive sector wage bill growth kept constant jected to widen due to higher imports as- side, devising a plan to clear arrears as a share of GDP, even though it in- sociated with the LHWP-II, and weaker and delivering on it would strengthen creased above inflation. Limited progress demand for exports, driven by uncertain- the macroeconomic policy framework has been made on arrears’ clearance, ties surrounding the renewal of AGOA, and public spending. Climate shocks which have emerged owing to recurrent and a deceleration in the US economy. could weaken the outlook and endanger fiscal deficits in the past, and weaknesses After the large fiscal surplus registered in gains in poverty alleviation, underscor- in public financial management and in 2023, the government’s accounts are ex- ing the need to strengthen climate risk public procurement. pected to return to deficits, even though management and resilience. TABLE 2 Lesotho / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 1.9 1.1 2.0 2.2 2.5 2.3 Private consumption -6.7 9.1 3.6 3.5 3.2 3.2 Government consumption -5.3 2.4 2.2 17.9 11.5 12.3 Gross fixed capital investment 6.5 10.8 54.7 9.3 26.7 18.3 Exports, goods and services 5.1 36.7 2.2 2.2 2.2 2.0 Imports, goods and services -0.4 22.5 10.3 10.8 11.3 10.5 Real GDP growth, at constant factor prices 1.9 1.1 2.0 2.2 2.5 2.3 Agriculture -16.0 12.5 2.4 2.4 2.4 2.4 Industry 4.7 5.0 5.0 5.3 5.0 5.0 Services 2.3 -0.8 1.0 1.1 1.6 1.3 Inflation (consumer price index) 6.0 8.3 6.4 5.3 5.0 5.0 Current account balance (% of GDP) -4.1 -6.2 -5.5 -6.2 -6.6 -6.4 Net foreign direct investment inflow (% of GDP) 1.2 1.2 1.4 1.9 1.4 1.2 Fiscal balance (% of GDP) -4.3 -4.3 5.5 -2.5 -0.8 -1.5 Revenues (% of GDP) 50.2 49.1 57.6 58.9 59.1 59.6 Debt (% of GDP) 60.4 60.6 57.5 54.9 51.2 47.7 Primary balance (% of GDP) -3.3 -3.4 6.4 -1.6 0.0 -0.8 a,b International poverty rate ($2.15 in 2017 PPP) 37.0 37.0 36.8 36.6 36.1 35.6 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 59.7 59.7 59.4 59.0 58.6 58.3 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 84.8 84.8 84.5 84.3 83.8 83.6 GHG emissions growth (mtCO2e) 1.3 2.3 2.6 2.8 2.9 2.1 Energy related GHG emissions (% of total) 57.9 58.1 58.2 58.4 58.6 58.5 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2017-CMSHBS. Actual data: 2017. Nowcast: 2018-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2017) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 49 Apr 24 Growth in the primary sector was sluggish –1.4 percent, as the outputs of key agricul- LIBERIA Key conditions and tural products such as rubber and crude palm oil declined by 2.0 percent and 10.7 challenges percent, year-on-year (y/y), respectively. The secondary sector expanded by 13.9 Table 1 2023 Since 2021, Liberia has seen steady eco- percent, led by mining. Gold production Population, million 5.4 nomic progress, but not at a rate fast increased by 16.4 percent (y/y) in response GDP, current US$ billion 4.3 enough to accelerate the country's efforts to higher international demand, while iron GDP per capita, current US$ 799.5 to reduce poverty. The medium-term out- ore output grew by 1.0 percent (y/y). In a 27.6 International poverty rate ($2.15) look for the country is promising; how- manufacturing, cement production ex- a 60.6 ever, to accelerate growth, macroeconomic panded by 5.6 percent, driven by increased Lower middle-income poverty rate ($3.65) a 88.9 stability and fiscal sustainability must be construction activity. The services sector Upper middle-income poverty rate ($6.85) Gini index a 35.3 upheld in the near term, and infrastructure expanded by 3.8 percent. School enrollment, primary (% gross) b 72.9 and private investment enhanced in the Headline inflation rose to 10.1 percent in b 60.7 medium term. Macroeconomic stability 2023, from 7.6 percent in 2022, driven by Life expectancy at birth, years must be complemented by institutional increases in transport and food prices, and Total GHG emissions (mtCO2e) 17.2 reforms, enhancements in the business a weaker Liberian dollar. As of December Source: WDI, Macro Poverty Outlook, and official data. environment, and significant upgrades to 2023, the Liberian dollar to US dollar ex- a/ Most recent value (2016), 2017 PPPs. b/ Most recent WDI value (2021). basic services and infrastructure to un- change rate had increased by 22.0 percent lock the country's growth potential. In (y/y) but was broadly stable during the last addition, investing in human capital and half of the year, trading at L$186.6 per US Liberia’s economy expanded by an esti- building climate resilience are essential dollar. Nonfood inflation averaged 10.3 for long-term growth and breaking the percent in 2023, down slightly from 10.6 mated 4.7 percent in 2023. Inflationary cycle of entrenched poverty. Liberia has percent in 2022, while food inflation av- pressures increased due to rising food and limited access to health care, education, eraged 12.3 percent, from a disinflation of transportation costs. Medium-term and basic utilities by regional and global 1.6 percent during the same period. Food growth prospects are promising but re- standards, and despite being among the prices will remain a major driver of infla- nations with the lowest greenhouse gas tion and will continue to have a dispro- quire maintaining macroeconomic stabili- emissions, the country faces significant portionate impact on the poor, who are net ty, prudent fiscal consolidation, and im- challenges in adapting to consequences of consumers of food and are at risk of food plementation of ongoing structural re- climate change. insecurity and falling into deeper poverty. forms in key enabling sectors. However, The rice sector remains vulnerable to exter- risks to the outlook are tilted to the down- nalities, as trends in rice supply, demand, and prices shape food insecurity and side as inflationary pressures, fiscal slip- Recent developments poverty in Liberia. Although rice accounts pages, and fluctuations in commodity for more than 20 percent of total food con- prices could undermine macroeconomic Liberia’s economy expanded by an esti- sumption, its price remains volatile in the stability and growth. mated 4.7 percent in 2023, driven mainly market. This has recently compelled the by mining, specifically gold production. government to intervene, halting all price FIGURE 1 Liberia / Real GDP growth and contributions to FIGURE 2 Liberia / Actual and projected poverty rates and real GDP growth real private consumption per capita Percent, percentage points Poverty rate (%) Real private consumption per capita (constant LCU) 7 100 1000 90 900 6 80 800 5 70 700 60 600 4 50 500 3 40 400 30 300 2 20 200 1 10 100 0 0 0 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2021 2022 2023e 2024f 2025f 2026f International poverty rate Lower middle-income pov. rate Agriculture Industry Services Real GDP growth Upper middle-income pov. rate Real priv. cons. pc Sources: Liberian authorities and World Bank staff estimates. Source: World Bank. Notes: see Table 2. MPO 50 Apr 24 increases and looking at ways to offer al- The current account deficit is estimated to down to 5.4 percent by 2026. The fiscal ternative varieties of rice. The extreme in- have risen to 24.4 percent of GDP in 2023, deficit is projected to moderate to an av- ternational poverty rate (US$2.15 per per- up from 17.7 percent in 2022. The increase erage of 3.3 percent of GDP in the medi- son per day) is estimated to have declined in current account deficit was driven by um term as the government strengthens by 1.1 percentages points to 31.3 percent in trade dynamics. The trade deficit wors- domestic resource mobilization and ex- 2023, from 32.4 percent in 2022. ened to 18.4 percent of GDP, from 11.8 per- penditure controls. The current-account In 2023, the Central Bank of Liberia (CBL) cent in 2022, as growth in imports driven deficit is expected to remain elevated raised the policy rate twice in May and by minerals, machinery, and petroleum in the medium term due to a surge July by 500 basis points cumulatively to outpaced the growth in exports. The cur- in aggregate demand driven by foreign 20.0 percent to rein in inflation. The CBL rent-account deficit was financed by net direct investment (FDI) related imports. also removed the ceiling on the offered IMF credit, loans, and drawdowns of gross The deficit will be financed by FDI in amount of CBL bills to help accommo- official reserves. By December 2023, the mining, private financing flows, and dis- date the growing oversubscription, ab- gross external reserves fell to US$496 mil- bursements of project grants and loans. sorb the excess liquidity in the banking lion (about 2.3 months of imports), from Real income per capita is expected to grow system, and strengthen its monetary pol- US$644 million (3.0 months of imports) in and poverty incidence is expected to de- icy operations. The financial sector re- December 2022. cline by 3.6 percentage points, from 29.6 mained adequately capitalized with min- percent in 2024 to 26.0 percent in 2026 as imum capital adequacy ratio at 21.2 per- the government addresses supply side cent, well above the floor of 10 percent. constraints, stimulates growth and job Non-performing loans as share of total Outlook creation, and takes measures to combat loans also declined to from 16.4 percent food insecurity and climate vulnerabili- to 11.2 percent, slightly above the tolera- Liberia’s medium-term growth prospects ties by mitigating rising food prices and ble levels of 10 percent. are positive on balance. The economy is ex- tightening macroeconomic policy to re- Liberia’s fiscal deficit remained high, at pected to expand by 5.4 percent in 2024 duce inflationary pressures. around 5.5 percent of GDP due to declines and average of 5.9 percent in 2024–26. However, the outlook is not without sig- in revenue and grants and increase in con- Medium-term growth prospects require nificant risks. Inflationary pressures result- sumption spending. The fiscal deficit was maintaining macroeconomic stability, pru- ing from elevated import prices (especially mainly financed by concessional resources dent fiscal consolidation, and implementa- food and fuel), combined with potential - (i.e., budget support loans and IMF Spe- tion of ongoing structural reforms in key decrease in export prices (such as rubber, cial Drawing Rights). In March 2024, the enabling sectors. iron ore, and gold), and fiscal slippages new Government submitted a revised 2024 Tightening monetary policy will ease in- could undermine macroeconomic stability budget to the legislature for approval. flationary pressures and bring inflation and hamper the recovery in growth. TABLE 2 Liberia / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 5.0 4.8 4.7 5.3 6.2 6.3 Private consumption 4.7 3.3 3.5 3.7 3.8 3.9 Government consumption 0.2 -5.7 0.0 -6.0 -2.3 6.2 Gross fixed capital investment -7.9 9.4 12.9 11.8 12.6 9.0 Exports, goods and services 14.7 7.7 8.5 13.1 13.6 13.6 Imports, goods and services 1.8 3.1 7.0 7.3 7.5 7.5 Real GDP growth, at constant factor prices 4.8 4.8 4.7 5.3 6.2 6.3 Agriculture 3.3 5.9 1.4 5.0 5.7 5.9 Industry 13.3 6.7 13.9 6.3 7.5 7.0 Services 3.0 2.8 3.8 5.1 6.0 6.3 Inflation (consumer price index) 7.8 7.6 10.1 7.7 5.6 5.4 Current account balance (% of GDP) -17.8 -17.7 -24.4 -21.7 -21.9 -21.6 Fiscal balance (% of GDP) -2.4 -5.6 -5.5 -3.2 -3.7 -3.1 Revenues (% of GDP) 27.2 21.5 20.8 22.9 22.4 20.7 Debt (% of GDP) 53.2 53.4 54.5 55.4 55.6 53.7 Primary balance (% of GDP) -1.6 -4.6 -4.5 -2.3 -2.9 -2.3 a,b International poverty rate ($2.15 in 2017 PPP) 33.4 32.4 31.3 29.6 27.8 26.0 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 69.0 68.1 67.5 66.3 64.3 62.1 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 93.1 92.8 92.5 91.9 91.4 90.6 GHG emissions growth (mtCO2e) 3.2 3.2 3.1 3.1 3.2 3.2 Energy related GHG emissions (% of total) 6.4 6.3 6.2 6.1 5.9 5.8 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2016-HIES. Actual data: 2016. Nowcast: 2017-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 51 Apr 24 licensing, and the investment law could improve investors’ confidence, paving the MADAGASCAR Key conditions and way for higher investment and produc- tivity gains. Deepening these reforms and challenges ensuring adequate governance and finan- cial sustainability of state-owned enter- Table 1 2023 Persistently low economic growth and prises should be prioritized. Population, million 30.3 rapid population growth have resulted in GDP, current US$ billion 16.5 declining income per capita and a high GDP per capita, current US$ 545.5 poverty rate. Madagascar’s 2023 real GDP International poverty rate ($2.15) a 80.7 per capita represents only about 56 percent Recent developments a 92.4 of its level in 1960. The international pover- Lower middle-income poverty rate ($3.65) a 98.2 ty rate (US$2.15 per person per day at 2017 Economic growth remained unchanged at Upper middle-income poverty rate ($6.85) Gini index a 42.6 PPP) has stagnated at around 80 percent 3.8 percent in 2023, driven by tourism, School enrollment, primary (% gross) b 138.2 over the past decade, positioning the coun- with arrivals nearly doubling from 2022 b 64.5 try among the most impoverished global- and high demand for telecommunications Life expectancy at birth, years ly. Weak governance, distortionary policies, and the food industry. Hence, domestic ex- Total GHG emissions (mtCO2e) 41.8 and low investment in physical and human penditure has driven growth, while the Source: WDI, Macro Poverty Outlook, and official data. capital have led to low productivity growth contribution to growth from net exports a/ Most recent value (2012), 2017 PPPs. b/ Most recent WDI value (2021). and slow structural transformation. Most of has been marginal. Although mineral ex- the workforce remains engaged in low-pro- port volumes (nickel, cobalt) have been ductivity activities, and 80 percent of the moderately strong and gold export has re- Economic growth is estimated to have population still relies on agriculture as their sumed after suspension in 2020, lower de- primary source of income. mand and prices for key Malagasy exports remained unchanged at 3.8 percent in Furthermore, Madagascar’s vulnerability such as textiles, vanilla, and spices have 2023 due to sluggish export perfor- to climate and natural shocks, including dampened overall export performance. mance linked to the global economic cyclones and droughts, contributes to Inflation has been declining since Q2 2023 slowdown and unfavorable export price higher growth volatility and weighs on po- due to high base effects related to the fuel tential growth. On average, four cyclones price hike in July 2022 and a tighter mon- management. It is projected to pick up hit Madagascar each year, damaging infra- etary policy stance. The central bank in- to 4.6 percent over 2024-26, driven by structure and agricultural fields, while the creased its deposit and marginal lending the recovery of international trade and south is increasingly exposed to drought. facility rates twice since early 2023 for a cu- tourism and increased investments in To reduce poverty, Madagascar needs ro- mulative increase of 90 basis points. Con- the telecommunications and mining sec- bust and sustained growth, along with currently, headline inflation decreased improved resilience to shocks. Sustained from a peak of 12.4 percent (yoy) in March tors. The elevated poverty rate is pro- reforms are vital to ensure dependable 2023 to 7.5 percent in December 2023. Core jected to abate slightly. Risks remain and affordable access to infrastructure, inflation, which excludes food and energy substantial, including fiscal pressures develop human capital, and enhance gov- price hikes, declined from 7.9 percent in stemming from state-owned enterprises. ernance. Recent reforms introduced in the December 2022 to 6.3 percent in December mining code, telecommunications sector 2023. Despite an estimated rise of 8 percent FIGURE 1 Madagascar / Real GDP growth and contributions FIGURE 2 Madagascar / Actual and projected poverty rates to real GDP growth and real GDP per capita Poverty rate (%) Real GDP per capita (constant LCU) 100 840000 90 820000 80 800000 70 780000 60 760000 50 740000 40 720000 30 20 700000 10 680000 0 660000 2010 2012 2014 2016 2018 2020 2022 2024 2026 International poverty rate Lower middle-income pov. rate Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see Table 2. MPO 52 Apr 24 in domestic rice production in 2023, rice This depreciation was influenced by high The current account deficit is projected prices remained high due to market dis- inflation and heightened investor risk to remain stable at around 4.7 percent tortions. Lower international energy prices aversion, partly due to uncertainties relat- of GDP over 2024-26, mainly reflecting have not impacted local prices owing to ed to the presidential elections. a narrowing goods and services trade the government’s price controls. deficit, in line with rising exports from The fiscal deficit is estimated to have de- mining and tourism and decreasing crude clined from 6.4 percent of GDP in 2022 to oil prices. The current account deficit is 4.9 percent in 2023. The tax-to-GDP ratio is Outlook expected to be financed mainly by foreign estimated to have increased from 9.5 per- direct investments and external financing cent in 2022 to 12.6 percent in 2023, mainly Growth is expected to accelerate to an av- for the public sector. due to the one-off impact related to the re- erage of 4.6 percent over 2024-26, driven The fiscal deficit is projected to narrow to covery of petroleum tax arrears accumu- by favorable base effects, enhanced trade an average of 3.1 percent of GDP over lated in 2022 (equivalent to 1.8 percent of and tourism opportunities, and a new 2024-26, driven by increased revenue col- GDP). Nonetheless, the tax-to-GDP ratio impetus for private investment follow- lection, notably from the mineral sector, as remains below the 12.9 percent budget tar- ing impactful structural reforms in piv- mining projects ramp up production after get. Government expenditure increased otal sectors such as mining, digital tech- the enactment of the new mining code. The from 17.2 percent of GDP in 2022 to 19.6 nology, and the investment climate. The public debt-to-GDP ratio is expected to re- percent in 2023 and included a large trans- potential extension of the United States’ main high but sustainable, averaging 57 fer to the public water and electricity utili- African Growth and Opportunity Act percent of GDP over 2024-26. ty, JIRAMA. The budget deficit was mainly could positively impact economic activi- Risks to the outlook include recurring natur- financed by concessional external financ- ties, particularly investment in the textile al hazards, ongoing international conflicts, ing. External and overall public debt dis- industry. Nevertheless, the poverty rate is and a global economic slowdown. Domestic tress risks remain moderate. projected to stay at about 79.7 percent in downside risks include the financial stress The current account deficit narrowed from 2024, as job creation is expected to remain of state-owned enterprises, particularly JI- 5.4 percent of GDP in 2022 to an estimated limited compared to population growth. RAMA and Madagascar Airlines, and delay 4.5 percent in 2023, with goods imports de- Hence, about 24.8 million people are pro- in implementing key structural reforms. clining faster than exports. Despite this im- jected to remain poor, a number larg- The enactment of a new mining code and the provement, the ariary depreciated by 8.2 er than the total population of Burundi resumption of major investment projects percent on average against the US dollar and South Soudan altogether, where the represent upside risks that could signifi- and 11 percent against the euro in 2023. poverty rates also are very high. cantly boost economic growth. TABLE 2 Madagascar / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 5.7 3.8 3.8 4.5 4.6 4.7 Private consumption 3.0 2.5 2.6 2.9 3.0 3.1 Government consumption 0.2 -8.0 2.3 3.0 3.6 4.0 Gross fixed capital investment 12.7 -19.1 6.2 7.1 7.5 8.0 Exports, goods and services 55.0 27.5 2.4 12.6 15.8 16.3 Imports, goods and services 12.7 19.8 1.7 10.7 14.1 15.1 Real GDP growth, at constant factor prices 6.5 3.7 3.8 4.5 4.6 4.7 Agriculture -1.6 0.9 2.2 2.3 2.3 2.3 Industry 19.7 10.9 7.6 10.2 10.3 10.4 Services 7.3 3.1 3.4 3.7 3.8 3.9 Inflation (consumer price index) 5.8 8.2 9.9 7.8 7.3 6.9 Current account balance (% of GDP) -5.0 -5.4 -4.5 -4.8 -4.7 -4.7 Net foreign direct investment inflow (% of GDP) 1.7 2.1 1.6 2.3 2.4 2.5 Fiscal balance (% of GDP) -2.8 -6.4 -4.9 -3.8 -3.2 -2.4 Revenues (% of GDP) 11.1 10.8 14.7 13.3 13.5 14.1 Debt (% of GDP) 52.3 56.9 57.6 57.1 56.4 57.4 Primary balance (% of GDP) -2.2 -5.8 -4.0 -2.9 -2.2 -1.6 a,b International poverty rate ($2.15 in 2017 PPP) 81.0 80.6 80.2 79.7 79.1 78.4 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 92.6 92.4 92.2 91.9 91.7 91.4 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 98.2 98.1 98.1 98.0 97.9 97.8 GHG emissions growth (mtCO2e) 1.2 1.3 1.3 2.4 2.8 2.9 Energy related GHG emissions (% of total) 11.9 12.3 12.1 12.3 12.5 12.8 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2012-ENSOMD. Actual data: 2012. Nowcast: 2013-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2012) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 53 Apr 24 expenditure. With limited availability of external financing and high levels of do- MALAWI Key conditions and mestic borrowing, public debt continues to rise, resulting in debt servicing require- challenges ments in excess of 35 percent of revenues. The prevalence of poverty remains high, Table 1 2023 Vulnerabilities in the Malawian economy with rates exceeding 70 percent - one of Population, million 20.9 continue to be exacerbated by weather- the highest in the world. The continued GDP, current US$ billion 14.1 and climate-related shocks paired with high rate of poverty is exacerbated by a GDP per capita, current US$ 672.9 scarcity of foreign exchange that con- sluggish economic recovery and persistent a 70.1 International poverty rate ($2.15) strains the importation of raw materials. food shortages following a series of weath- a 89.1 Recurring floods and prolonged dry spells er shocks, high susceptibility to fluctua- Lower middle-income poverty rate ($3.65) a 97.3 compounded by limited availability of tions in food prices, and ongoing rapid Upper middle-income poverty rate ($6.85) Gini index a 38.5 agricultural inputs and weak domestic population growth. School enrollment, primary (% gross) b 126.4 and regional market integration keep b 62.9 agricultural output below its potential. Life expectancy at birth, years Persistent liquidity challenges and distor- Total GHG emissions (mtCO2e) 21.2 tions in foreign exchange markets contin- Recent developments Source: WDI, Macro Poverty Outlook, and official data. ue to constrain the importation of raw a/ Most recent value (2019), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy materials for the production process, fur- The impact of Tropical Cyclone Freddy and (2021). ther undermining growth. the limited availability of agriculture inputs A lack of trade dynamism and low levels of weighed on agricultural production in 2023. investment persist. Lower agricultural out- While low liquidity and persistent unavail- Economic growth rose slightly to 1.5 per- put and slow implementation of policies to ability of foreign exchange constrained im- cent in 2023 from 0.9 percent in 2022. support crop diversification and economic portation of raw materials for production, transformation constrain exports, as does the early resumption of electricity produc- This was supported by the resumption of the widespread presence of non-tariff barri- tion at Kapichira supported improved eco- electricity production at the Kapichira hy- ers, strict capital controls, and high trade nomic activity in industry and services, dro-electric plant, but the unavailability costs. These in turn affect the accumulation contributing to an estimated economic of production inputs and the impact of of foreign exchange reserves. With contin- growth rate of 1.5 percent in 2023. ued high import demands, the current ac- Weak export recovery amidst high imports Tropical Cyclone Freddy constrained the count deficit remains elevated, placing ad- and low foreign investment has resulted in a recovery. Growth is estimated at 2.0 per- ditional pressure on reserves. current account deficit of 16.1 percent of cent in 2024. This has been impacted by a Fiscal imbalances have been a central chal- GDP.Grossofficialreservesremainedbelow prolonged dry spell and the continued lenge to reducing inflation, following years 1 month of import cover throughout 2023. scarcity of foreign exchange. High infla- of an expansionary fiscal policy. Slow im- To help restore foreign exchange reserves in plementation of public financial manage- late 2023, the Reserve Bank of Malawi (RBM) tion and food shortages will impact announced the 44 percent adjustment of ment reforms, paired with growing statu- household welfare, increasing the poverty tory expenditure requirements continue kwacha-US dollar exchange rate, together rate to 72 percent in 2024. to exert upward pressure on government with several measures to increase the FIGURE 1 Malawi / Fiscal balance and public debt as FIGURE 2 Malawi / Actual and projected poverty rates and percent of GDP real GDP per capita Percent of GDP Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 14 90 120 390000 12 70 380000 10 100 8 50 370000 6 30 80 4 360000 2 10 60 350000 0 -10 -2 340000 -30 40 -4 330000 -6 -50 20 -8 320000 -70 -10 0 310000 -12 -90 2010 2012 2014 2016 2018 2020 2022 2024 2026 2010 2012 2014 2016 2018 2020 2022 2024 2026 International poverty rate Lower middle-income pov. rate Fiscal Balance (lhs) Public Debt (rhs) Upper middle-income pov. rate Real GDP pc Sources: Ministry of Finance, Economic Planning and Development, and World Bank. Source: World Bank. Notes: see Table 2. MPO 54 Apr 24 kwacha flexibility. The exchange rate premi- with food shortages, this has exacerbated Revenue is projected at 21.5 percent of um significantly narrowed at the end of food insecurity and pushed many into GDP in FY2024/25. This outcome as- 2023, from 60 to around 10 percent. poverty in 2023. The proportion of people sumes the achievement of ambitious tax Inflation remains high. Despite the RBM’s living on less than $2.15 per day increased revenue targets as well as increased dis- efforts to tackle mounting inflation by to 71.7 percent in 2023. bursements of grants which are expected tightening monetary policy, persistently to reach 5.4 percent of GDP, the highest high food prices owing to shortages on the in the last decade. Expenditure is ex- domestic market, coupled with the de- pected to slightly moderate to 28.4 per- layed depreciation of the Malawi kwacha, Outlook cent of GDP, thus translating to a pro- resulted in substantial inflationary pres- jected fiscal deficit of 6.6 percent of GDP sures. With money supply growth increas- Malawi’s economy is projected to grow by in FY2024/25. Failure to attain ambitious ing, driven mainly by the revaluation ben- 2.0 percent in 2024 – a contraction in per revenue targets and overspending would efits on foreign currency denominated de- capita terms given 2.6 percent population widen the deficit further, which will add posits, inflation has remained at around growth. Limited availability of agricultural to an already high and unsustainable 33.5 percent since February 2024. inputs and the impact of prolonged dry public debt burden. Supported by exchange rate gains on trade spells during the growing season will re- Imports are expected to continue rising, taxes, disbursements of grants, and remit- sult in reduced agricultural output. Con- driven in particular by the need for in- tance of dividends, revenue collection in- tinued liquidity challenges in foreign ex- creased food imports to address domestic creased to 17.2 percent of GDP in fiscal change markets are expected to continue shortages. While exports are also projected year (FY) 2023/24. However, higher-than- affecting the importation of raw materials to recover, the impact of prolonged dry planned expenditures, reaching 29.0 per- and productions inputs, constraining eco- spells on agricultural production may con- cent of GDP in FY 2023/24, will partially nomic activity in industry and services. strain export growth. The current account offset improved revenue performance, Headline inflation is expected to remain deficit is projected to remain high at 20 pushing the fiscal deficit to 11.7 percent high and average 27.4 percent in 2024. The percent of GDP. of GDP. This has predominantly been fi- disinflationary impact of tightening mon- With heightened food insecurity, both nanced by the incurrence of domestic liabil- etary policy will be offset by lower agri- from high food prices and shortages owing ities, mostly from the banking sector, in turn cultural output and resultant pressures on to anticipated lower agriculture output, crowding out credit to the private sector. food prices. The adjustment of energy and poverty is expected to worsen in 2024. The The continuous rise in prices, especially other utility prices necessitated by the ad- proportion of people living below the for food and transportation, has adversely justment of the kwacha and planned for poverty line of $2.15 a day will increase affected household consumption. Coupled 2024 will add to inflationary pressures. slightly to 72 percent in 2024. TABLE 2 Malawi / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 2.8 0.9 1.5 2.0 3.9 4.1 Private consumption 2.6 0.6 3.8 4.0 4.8 5.1 Government consumption -1.1 -5.8 14.8 6.9 -2.3 6.9 Gross fixed capital investment 6.5 12.4 -15.0 -2.5 6.3 -9.4 Exports, goods and services 2.5 3.1 3.5 8.8 6.7 6.0 Imports, goods and services 2.5 3.9 3.9 9.6 6.3 3.9 Real GDP growth, at constant factor prices 2.8 0.9 1.5 2.0 3.9 4.1 Agriculture 5.2 -1.0 0.6 -1.2 3.7 3.0 Industry 1.9 0.9 1.6 2.2 3.3 3.1 Services 2.0 1.8 1.9 3.2 4.2 4.8 Inflation (consumer price index) 9.3 20.9 28.7 27.4 20.8 16.7 Current account balance (% of GDP) -15.2 -17.3 -16.1 -20.0 -19.6 -17.9 Net foreign direct investment inflow (% of GDP) 0.8 1.6 1.5 2.1 2.3 2.5 Fiscal balance (% of GDP) -6.9 -8.9 -10.3 -11.8 -7.3 -7.3 Revenues (% of GDP) 14.7 15.0 15.3 17.2 21.1 17.7 Debt (% of GDP) 60.6 76.7 81.4 80.7 79.8 76.4 Primary balance (% of GDP) -3.1 -3.6 -3.9 -7.1 -1.1 -2.3 a,b International poverty rate ($2.15 in 2017 PPP) 70.6 71.3 71.7 72.0 71.4 70.9 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 89.4 89.5 89.7 89.8 89.6 89.4 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 97.4 97.5 97.5 97.5 97.5 97.4 GHG emissions growth (mtCO2e) 1.5 1.4 1.4 1.4 1.3 1.4 Energy related GHG emissions (% of total) 7.6 7.6 7.7 7.7 7.7 7.7 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2019-IHS-V. Actual data: 2019. Nowcast: 2020-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2019) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU. MPO 55 Apr 24 MALI Key conditions and Recent developments challenges GDP growth stabilized at 3.5 percent in 2023, less than initial projections, due to Table 1 2023 Mali’s economy has experienced little lower food agricultural production, which Population, million 23.3 structural change over the last three was impacted by insecurity and unfavor- GDP, current US$ billion 21.8 decades. Agriculture and low-produc- able weather conditions. The second major GDP per capita, current US$ 936.3 tivity services dominate the economy; contributor was the electricity crisis start- a 20.8 International poverty rate ($2.15) manufacturing remains limited and con- ing in August 2023 with shortages due to a a 56.1 centrated in agro-industries and cotton large accumulation of arrears to suppliers Lower middle-income poverty rate ($3.65) a 85.9 ginning. Exports are dominated by gold disrupting manufacturing. Industrial out- Upper middle-income poverty rate ($6.85) Gini index a 35.7 and cotton and vulnerable to commod- put was also dampened by the effects of School enrollment, primary (% gross) b 72.6 ity-price and climatic shocks. GDP the 2022 unsuccessful cotton season on b 58.9 growth per capita stagnated during the ginning industries. The service sector re- Life expectancy at birth, years last decade limiting poverty reduction, mained resilient, supported by telecom- Total GHG emissions (mtCO2e) 48.0 while human development indicators munications and public services. On the Source: WDI, Macro Poverty Outlook, and official data. show mixed results. demand side, growth was supported by a/ Most recent value (2021), 2017 PPPs. b/ Most recent WDI value (2021). Insecurity, a weakened social contract, public and private consumption, in con- and the absence of the State in remote trast to public investment and net exports, areas, and limited investment are key which underperformed. The terms of trade bottlenecks for inclusive growth. Polit- improved in 2023 as commodity prices of ical instability following the two coup energy and food imports eased. This was GDP growth stabilized at 3.5 percent d’états in 2020 and 2021 has also be- offset by lower exports as cotton exports (0.6 percent per capita) in 2023, below come a significant growth constraint. declined 13.5 percent on the back of lower expectations, due to lower agricultural In September 2023, Burkina Faso, Mali, production in 2022, and the recovery of im- output and an electricity crisis, result- and Niger formed the Alliance of Sa- port demand after the lifting of the 2022 hel States (AES), a security and mili- ECOWAS sanctions. As a result, the cur- ing in limited poverty reduction with tary pact with political and economic rent account deficit remained high at an extreme poverty rate of 20.2 percent aims. On January 28, 2024, in a joint 6.8 percent of GDP. in 2023. Growth is projected to weaken communiqué, the three countries an- After surging to a record high of 9.7 per- slightly in 2024. The outlook is subject nounced their ‘immediate’ withdrawal cent in 2022, inflation declined to 2.1 per- to downside risks from rising insecuri- from ECOWAS. According to the re- cent in 2023, due to strong 2022 agricul- vised ECOWAS Treaty, a notification tural production and the easing of interna- ty, increasing financing costs, impacts period of one year is required to tional commodity prices. As a result, the of the announced ECOWAS withdrawal, leave ECOWAS. These developments extreme poverty rate has decreased by 0.8 and climate-related shocks. have increased political and policy percentage point to 20.2 percent in 2023. uncertainty, including the timetable However, the humanitarian situation re- for elections in Mali. mains serious, with over 350,000 internally FIGURE 1 Mali / Real GDP growth, current account and FIGURE 2 Mali / Actual and projected poverty rates and real fiscal balances GDP per capita Percent, percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 6 100 270000 4 90 260000 80 2 70 250000 0 60 50 240000 -2 40 -4 230000 30 20 -6 220000 10 -8 0 210000 2018 2019 2020 2021 2022 2023e 2024p 2025p 2026p 2009 2011 2013 2015 2017 2019 2021 2023 2025 Fiscal balance Current account balance International poverty rate Lower middle-income pov. rate Real GDP growth Upper middle-income pov. rate Real GDP pc Sources: Malian government and World Bank. Source: World Bank. Notes: see Table 2. MPO 56 Apr 24 displaced persons due to insecurity, in continued to increase and crowd out pub- gradually decline over 2025-26 with the addition to an estimated 715,000 peo- lic investment (4.2 percent of GDP). The coming onstream of lithium production. ple facing severe food insecurity as of fiscal deficit was financed predominantly Due to the weak growth in GDP per capita, December 2023. by the increasingly expensive regional particularly in agriculture and service sec- To counter inflation across WAEMU coun- bond market, where Mali’s average yields tors, the extreme poverty rate is expected tries, the Central Bank of West African States on 12-month treasuries reached 9.4 percent to decline only slightly - by 0.9 ppt over (BCEAO) raised policy interest rates by a cu- in February 2024. 2023-2026 - and will result in nearly 76,500 mulative 150 basis points since mid-2022 to additional extreme poor per year. 3.5 percent for liquidity calls and 5.5 percent The outlook remains subject to significant for the marginal lending facility. However, downside risks, including rising insecurity inflation in the region (3.7 percent in 2023) Outlook from the exit of the 13,000 MINUSMA was still above the 1-3 percent target range peacekeeping force in 2023 and the end and foreign exchange reserves have been on Growth is projected to weaken slightly to of the Algiers peace accord, a persistent a downward trend, estimated at 3.5 months 3.1 percent in 2024 and average 4 percent electricity crisis, climatic shocks, and the of imports at end-2023, down from over 2025-26 – below the long-term poten- withdrawal from ECOWAS. An unnego- 4.3 months at end-2022. tial rate for the economy of 5 percent – re- tiated ECOWAS withdrawal with disrup- The fiscal deficit stabilized at 4.8 percent flecting the combined effects of the electric- tions to transport, transit and free move- of GDP in 2023, while public debt slightly ity crisis and the expected impacts of an ment of goods, services, capital, and labor increased to 52.1 percent of GDP. Though orderly ECOWAS withdrawal: lower trade could exacerbate negative impacts due to the risk of debt distress remains moderate, with non-WAEMU ECOWAS states, higher spillovers onto WAEMU trade. The there are increasing fiscal risks from the investors’ risk premia, and increased re- BCEAO may need to continue monetary electricity sector with contingent liabilities gional financing costs. tightening in 2024 to bring inflation under (arrears) of 4.6 percent of GDP. Tax rev- The fiscal deficit is expected to decline to 4.1 control and in the context of increased enues recovered in 2023, supported by dig- percent of GDP in 2024, before gradually risks from the withdrawal of Niger, Mali, italization reforms, and higher indirect col- converging towards the WAEMU ceiling of and Burkina Faso from ECOWAS. A fur- lections, boosted by the recovery of trade 3 percent by 2026, as the government consol- ther increase in the cost of financing could flows. Public wages (8.8 percent of GDP) idates in the face of high financing costs. The lead to Mali further cutting investment ex- and security spending (6.4 percent of GDP) current account deficit is expected to penditure to reduce its borrowing needs. TABLE 2 Mali / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 3.1 3.5 3.5 3.1 3.5 4.5 Private consumption 3.0 4.0 3.9 3.8 3.9 4.1 Government consumption 5.8 7.6 16.7 -0.2 0.8 -1.0 Gross fixed capital investment 4.8 1.0 -3.6 4.7 4.5 9.2 Exports, goods and services -1.0 18.1 -3.9 2.8 4.3 5.1 Imports, goods and services 14.1 0.7 2.3 3.9 4.3 4.3 Real GDP growth, at constant factor prices 3.0 4.3 3.4 3.1 3.5 4.5 Agriculture 1.4 2.4 2.3 3.6 4.5 4.5 Industry 1.0 3.7 2.0 3.0 3.5 3.5 Services 5.1 5.8 4.9 2.8 2.8 4.9 Inflation (consumer price index) 4.0 9.7 2.1 2.5 2.3 2.0 Current account balance (% of GDP) -7.7 -7.0 -6.8 -6.0 -5.8 -4.8 Net foreign direct investment inflow (% of GDP) 3.0 2.6 2.4 3.0 2.9 2.7 Fiscal balance (% of GDP) -4.9 -4.8 -4.8 -4.1 -3.2 -2.9 Revenues (% of GDP) 22.0 19.8 20.8 20.8 21.9 20.5 Debt (% of GDP) 50.4 51.8 52.1 52.6 52.8 53.4 Primary balance (% of GDP) -3.5 -3.4 -3.1 -2.2 -1.4 -1.2 a,b International poverty rate ($2.15 in 2017 PPP) 20.8 21.0 20.2 20.1 19.9 19.3 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 56.1 56.4 54.7 54.6 54.2 53.5 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 85.9 86.1 84.3 84.1 84.1 83.8 GHG emissions growth (mtCO2e) 4.0 3.3 2.7 3.6 4.0 4.2 Energy related GHG emissions (% of total) 8.5 9.0 8.6 8.4 8.3 8.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2021-EHCVM. Actual data: 2021. Nowcast: 2022-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 57 Apr 24 MAURITANIA Key conditions and Recent developments challenges Economic growth is estimated at 3.4 per- cent in 2023 (0.7 percent in per capita Table 1 2023 Owing to its wealth of natural re- terms) down from 6.4 percent in 2022 (3.7 Population, million 4.9 sources, consisting of iron ore, gold, percent in per capita terms) reflecting a GDP, current US$ billion 10.6 crude oil, and copper, per capita significant contraction in fish production GDP per capita, current US$ 2170.6 GDP tripled over the last two on the supply side and lower public invest- a 5.4 International poverty rate ($2.15) decades to stand at USD 2,170.6 plac- ment and fish exports on the demand side. a 25.8 ing Mauritania among the World’s Inflation decreased driven by lower food Lower middle-income poverty rate ($3.65) a 68.0 Lower Middle-Income Countries. and oil prices, reaching 1.6 percent (y/y) in Upper middle-income poverty rate ($6.85) Gini index a 32.0 Nevertheless, the economy confronts December 2023, compared with 11 percent School enrollment, primary (% gross) b 86.7 structural challenges as underscored (y/y) in December 2022. b 64.4 by the slow post-pandemic recovery. The US$3.65-a-day poverty rate is expect- Life expectancy at birth, years The heavy dependence on extrac- ed to slightly increase from 27.7 percent in Total GHG emissions (mtCO2e) 14.9 tives, low capacity to implement 2022 to 27.9 percent in 2023 due to a de- Source: WDI, Macro Poverty Outlook, and official data. public investment projects, a chal- cline in per capita agriculture growth (-2.7 a/ Most recent value (2019), 2017 PPPs. b/ WDI for School enrollment (2020); Life expectancy lenging business environment, and percentage points (pp)) counterbalanced (2021). high vulnerability to climate shocks by a decline in inflation (-4.6 pp). The num- weigh on Mauritania’s growth and ber of poor is also expected to increase development prospects. The poorest by 44,000 people. are exposed to high risk of food inse- The fiscal balance recorded a deficit of 2.5 Real GDP growth slowed in 2023 to 3.4 curity due to climate shocks on local percent of GDP in 2023, compared with 3.7 food production which contributes 20 percent of GDP in 2022. This improvement percent from 6.4 percent in 2022. Mone- percent of food consumption. was driven by a fall in capital expenditure tary policy tightening and lower interna- Overcoming these challenges will re- to 6.7 percent of GDP in 2023 from 11.3 tional food and energy prices eased infla- quire greater reliance on the private percent of GDP in 2022, offsetting the de- tion and improved the current account sector to stimulate productivity cline in commodity revenues and higher growth, increase job creation, and wages and compensation resulting from balance. The fiscal deficit narrowed due to raise the income of the poor. Main- the public sector salary increase in January under-executed capital spending. The taining strong macroeconomic funda- 2023. The debt-to-GDP ratio rose by 1.3 pp poverty rate (US$3.65-a-day) is expected mentals will be key to creating and to 48.6 percent of GDP in 2023, due to low- to slightly increase from 27.7 percent in preserving the fiscal space needed for er nominal growth and the depreciation 2022 to 27.9 percent in 2023. The medi- growth and climate-friendly invest- of the exchange rate at the end of 2023. ments. Strengthening the resilience to The December 2023 WB/IMF Debt Sus- um-term outlook remains favorable albeit climate shocks remains a priority that tainability Analysis suggests that external subject to downside risks. will involve policies and investment in debt remains sustainable, and the risk of adaptation and mitigation. debt distress moderate. FIGURE 1 Mauritania / Evolution of main macroeconomic FIGURE 2 Mauritania / Actual and projected poverty rates indicators and real GDP per capita Percent Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 8 0 80 90000 -2 80000 6 70 -4 70000 60 4 -6 60000 50 -8 50000 2 40 -10 40000 0 -12 30 30000 -14 20 20000 -2 -16 10 10000 -4 -18 0 0 2021 2022 2023e 2024p 2025p 2026p 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 International poverty rate Lower middle-income pov. rate GDP growth (lhs) Primary fiscal balance (lhs) Current account balance (rhs) Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see Table 2. MPO 58 Apr 24 The current account deficit (CAD) im- around 5.4 percent in 2025-2026. The donors, are expected to remain the main proved to 10 percent of GDP in 2023, re- launch of gas production in the second half sources of external financing. flecting an improved trade balance due to of 2025 will boost growth while providing The fiscal deficit should decrease to 2 per- lower imports of capital goods, oil and sufficient fiscal margin to finance develop- cent of GDP in 2024, supported by lower food in turn driven by a 17 percent and ment projects and support social protec- current transfers, and higher tax revenues. 9 percent decrease in international prices tion reforms. Higher private investments, In 2026, the fiscal balance is projected to of oil and food, respectively. The Mauri- an improved net external position, and turn into a surplus of 0.1 percent of GDP tanian Central Bank's foreign exchange re- sustained private demand will also sup- with gas revenue bringing about 0.5 per- serves rose from 4.5 months of goods im- port growth. Average inflation will fall fur- cent of GDP of yearly additional fiscal rev- ports in 2022, to 6 months in 2023. ther and reach 2.5 percent in 2024, as exter- enue. Debt should gradually decline to The central bank of Mauritania pursued nal pressures ease, and stabilize around 2 46.3 percent of GDP in 2026. a restrictive monetary policy to contain percent in 2025 and 2026. Risks to the outlook remain elevated. A inflation in 2023. After raising the key The US$3.65-a-day poverty rate is expect- slowdown in Foreign Direct Investment interest rate to 8 percent in December ed to remain largely unchanged at 28.3 inflows due to a delay in the second and 2022, it increased the reserve require- percent in 2024-2025 and to decline to 25.9 third phases of the gas extraction pro- ment ratio from 6 to 8 percent in July percent in 2026 largely due to low growth ject and the tightening of global financing 2023. It also conducted open market op- in agriculture and declining food inflation. conditions would weigh on medium-term erations to dry up excess liquidity and Low inflation and strong agriculture per- growth, fiscal and external prospects. limit its impact on prices. formance in 2026 are expected to lead to a Mauritania is exposed to various climatic decline in the number of poor by 125,000 shocks such as drought and floods, which people from 2025 to 2026. adversely affect human capital, household The CAD should improve, reaching 8.5 incomes, and agricultural production. Re- Outlook percent of GDP in 2024 and average 5.5 gional insecurity in the Sahel remains a percent of GDP in 2025-2026, driven by gas risk. Presidential elections scheduled for The medium-term outlook is positive with exports, lower imports in the extractive in- June 2024 could exacerbate spending growth projected at 3.8 percent in 2024 (1.1 dustry, and lower import prices. FDI pressures, leading to a deterioration in percent in per capita terms) and to hover linked to the extractive industry, and the fiscal situation. TABLE 2 Mauritania / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 0.7 6.4 3.4 3.8 4.5 6.3 Private consumption 3.4 2.7 2.5 2.6 2.7 2.8 Government consumption 26.8 22.3 8.3 7.3 6.0 4.7 Gross fixed capital investment 12.1 -7.3 -4.6 5.9 3.1 3.3 Exports, goods and services -12.9 39.9 3.0 3.6 6.7 10.1 Imports, goods and services -3.3 15.8 -0.5 4.0 3.9 3.6 Real GDP growth, at constant factor prices 0.0 8.0 3.4 3.8 4.5 6.3 Agriculture -2.9 12.7 1.2 2.8 2.0 5.5 Industry -11.5 12.0 6.1 6.3 7.7 8.9 Services 11.0 3.1 2.6 2.5 3.3 4.6 Inflation (consumer price index) 3.6 9.6 5.0 2.5 2.0 2.0 Current account balance (% of GDP) -8.5 -16.6 -10.0 -8.5 -6.7 -4.3 Net foreign direct investment inflow (% of GDP) 11.5 14.3 7.4 5.0 2.7 2.5 Fiscal balance (% of GDP) 2.3 -3.7 -2.5 -2.0 -1.4 0.1 Revenues (% of GDP) 23.0 24.1 22.1 22.6 23.0 23.5 Debt (% of GDP) 52.4 47.3 48.6 47.7 47.5 46.3 Primary balance (% of GDP) 3.1 -2.9 -1.5 -1.0 -0.5 1.0 a,b International poverty rate ($2.15 in 2017 PPP) 6.3 5.9 5.7 5.8 5.8 5.3 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 27.3 27.7 27.9 28.4 28.3 25.9 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 69.0 70.1 70.5 71.1 71.1 69.0 GHG emissions growth (mtCO2e) 2.8 2.9 3.2 3.2 3.4 0.0 Energy related GHG emissions (% of total) 31.3 31.6 32.2 32.8 33.7 33.7 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2019-EPCV. Actual data: 2019. Nowcast: 2020-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 59 Apr 24 poverty is projected to have increased by over 5 percentage points (reaching 16 per- MAURITIUS Key conditions and cent) and to have retreated to around nine percent by 2024. challenges Increasing productivity requires prioritiz- ing skills availability and development, Table 1 2023 Mauritius has experienced a remarkable improving labor market institutions, and Population, million 1.3 growth trajectory. The economy transi- fostering women’s participation. Safe- GDP, current US$ billion 14.8 tioned from a low-income monocrop pro- guarding the integrity and trust of the GDP per capita, current US$ 11665.2 ducer of sugar cane to an upper-middle- country’s financial services is crucial for a 1.8 Lower middle-income poverty rate ($3.65) income investment and tourism hub. Per continuing to attract foreign investments. a 13.5 capita GDP surged from US$260 in 1968 to Additional efforts are needed to further Upper middle-income poverty rate ($6.85) a 36.8 US$9,063 in 2021. After it briefly reached bolster macroeconomic resilience, includ- Gini index School enrollment, primary (% gross) b 102.9 high-income status in 2020, the severe 14.5 ing rebuilding fiscal buffers, increasing Life expectancy at birth, years b 73.7 percent contraction in real GDP caused by revenue, improving efficiency in social Total GHG emissions (mtCO2e) 7.6 the COVID-19 pandemic pushed the coun- spending, and improving quality in ed- try back into the upper-middle-income cat- ucation and innovation. Policies to Source: WDI, Macro Poverty Outlook, and official data. a/ Most recent value (2017), 2017 PPPs. egory. Yet, Mauritius has demonstrated strengthen resilience against natural haz- b/ Most recent WDI value (2021). resilience, recovering strongly after the ards and climate change are fundamental pandemic and weathering external to supporting sustained growth. shocks well, and is on track to return to high-income status. However, addressing structural challenges Mauritius sustained strong growth of and macroeconomic vulnerabilities is Recent developments nearly 6 percent in 2023, supported by needed for Mauritius to achieve and sus- tourism and aggregated demand, particu- tain high-income status. Labor and skills Real GDP grew by an estimated 6.8 per- larly household consumption and invest- shortages have contributed to declines in cent in 2023, supported by a strong re- ment. Medium-term growth is expected manufacturing export competitiveness bound in tourism, construction activi- and constrained private sector growth and ties, and financial services. Gross fixed to be supported by public infrastructure, diversification. Reliance on imported fossil capital formation increased by 23 per- social spending, and residential invest- fuels, as well as high exposure to climate cent in 2023Q3 (yoy), supported by so- ments. The poverty rate is projected to shocks, are key sources of vulnerability. cial housing and infrastructure pro- decline from ten percent in 2023 to sev- An aging population and social spending grams. Meanwhile, consumption spend- commitments limit fiscal space to support ing grew modestly by 2.2 percent due en percent by 2026. However, the out- growth and implement countercyclical to a lower government wage bill. look faces substantial downside risks, policies. Poverty (upper-middle-income The labor market has recovered signifi- including fiscal pressures related to country threshold of US$6.85 a day, 2017 cantly, with the unemployment rate de- elections, weather shocks, and a weaker PPP) fell from 19 percent to 11 percent be- clining to 6.3 percent in Q3, below the tween 2012 and 2019. However, given the pre-pandemic level. To meet the high de- global economic outlook. dramatic contraction of GDP in 2020, mand for labor and skilled professionals, FIGURE 1 Mauritius / Real GDP growth and sectoral FIGURE 2 Mauritius / Actual and projected poverty rates contributions to real GDP growth and real GDP per capita Percent Poverty rate (%) Real GDP per capita (constant LCU) 12 25 500000 450000 8 20 400000 4 350000 15 300000 0 250000 10 200000 -4 Agriculture 150000 Industry 5 100000 -8 Services 50000 Gross value added at basic prices -12 0 0 2012 2014 2016 2018 2020 2022 2024 2026 -16 Lower middle-income pov. rate Upper middle-income pov. rate 2019 2020 2021 2022 2023e 2024f 2025f 2026f Real GDP pc Source: World Bank estimates. Source: World Bank. Notes: see Table 2. MPO 60 Apr 24 the government has relaxed rules for VAT revenues. As a result, the gross oper- the 11 percent recorded between 2020 and hiring foreign workers. ating deficit in H1 widened to 3.6 percent 2022. High foreign exchange demand for Lower commodity prices, higher agricul- of GDP from 3.2 percent during the same imports could put additional pressure on ture and fisheries exports, a higher net sur- period in 2022. Financing needs were cov- international reserves, which are projected plus in the service, and net income flow ered by domestic and external borrowing to decline to eight months of import cov- from abroad improved the external posi- as the new BOM Act prohibits direct trans- erage over the medium term as the BOM tion. Along with the net direct investment fers to the budget. Public debt decreased is expected to continue to intervene in the flow, these developments helped maintain from 91 percent of GDP in 2020-21 to an foreign exchange market. adequate levels of gross official interna- estimated 80 percent in 2023, driven by Higher universal pension spending and tional reserves, with an import coverage of strong GDP growth and the transfer of Air spending to mitigate the impact of Cyclone 11 months as of December 2023. Mauritius debt to the MIC. Belal and the dengue outbreak are expect- Headline inflation fell from 11.8 percent ed to contribute to a widening in the pri- in January 2023 to 5.2 percent in January mary deficit to 3.3 percent of GDP in FY23/ 2024, primarily because of lower imported 24 (from 2 percent in FY22/23) and further prices. The import price index declined by Outlook to 3.6 percent in FY24/25. Tax revenue col- 5.5 percent in 2023Q3 compared with the lection is expected to increase moderately same period in 2022 and the Bank of Mau- Real GDP growth is expected to moderate over the medium term along with moder- ritius (BOM) intervened in the FX market to 4.7 percent in 2024, reflecting the end of ating GDP growth. Public debt is expected to contain the rupee’s depreciation. How- the post-pandemic recovery and leveling to remain at about 80 percent of GDP over ever, the monetary policy stance is gener- off in international travels. Public invest- the medium term, but a gradual fiscal con- ally accommodative and underpinned by a ments in infrastructure, residential con- solidation, including a pension reform, is policy rate that has been unchanged since structions, and tourism are expected to dri- needed to stabilize it. December 2022 and added by domestic in- ve growth this year. Average inflation is Risks to the outlook are mostly to the vestments of the Mauritius Investment projected between 4.7 and 5.2 percent in downside. Higher global freight costs Corporation (MIC), a sovereign wealth the medium term, driven by stable com- and weather shocks from an intense cy- fund of the BOM. modity prices and a cooling economy. clone season pose a risk for inflation. The Current government expenditures in- Poverty is projected to fall to about seven softening of global economic growth also creased by 12.6 percent in the first half percent in 2026. represents a downside risk for merchan- of FY23/24 (H1), driven by higher in- Lower commodity prices, steady tourist dise exports and tourist arrivals. On the terest payments, subsidies, and social arrivals, and earnings repatriation are like- upside, higher social spending and sus- spending. Revenue increased by 11 per- ly to keep the current account deficit below tained direct investment flows may further cent, driven by corporate income tax and 6 percent of GDP until 2025, lower than support growth. TABLE 2 Mauritius / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f a Real GDP growth, at constant market prices 3.4 8.9 6.8 4.7 4.0 3.3 Private consumption 3.0 3.3 2.0 2.6 2.5 1.7 Government consumption -2.2 6.4 -1.1 1.2 -0.4 1.8 Gross fixed capital investment 14.0 7.8 9.9 14.4 10.3 8.1 Exports, goods and services 11.5 40.2 1.7 1.6 1.6 1.5 Imports, goods and services 7.3 10.2 7.6 1.2 0.7 0.7 Real GDP growth, at constant factor prices 4.1 9.4 6.8 4.7 4.0 3.4 Agriculture 7.3 5.5 0.8 1.5 1.5 1.5 Industry 10.9 6.8 2.6 2.1 2.1 2.1 Services 2.3 10.3 8.2 5.4 4.5 3.7 Inflation (consumer price index) 4.0 10.8 7.1 5.2 4.7 4.2 Current account balance (% of GDP) -11.9 -8.6 -4.8 -3.8 -4.4 -4.9 Net foreign direct investment inflow (% of GDP) 21.1 -8.2 -3.2 -4.6 -2.2 -2.9 b Fiscal balance (% of GDP) -10.6 -5.1 -5.8 -6.5 -5.4 -5.2 Revenues (% of GDP) 23.3 25.0 22.8 24.5 24.8 25.1 b Debt (% of GDP) 91.9 85.9 80.9 80.6 81.6 81.5 b Primary balance (% of GDP) -6.9 -2.5 -2.9 -3.2 -1.9 -1.8 c,d Lower middle-income poverty rate ($3.65 in 2017 PPP) 2.1 1.7 1.3 1.1 0.9 0.7 c,d Upper middle-income poverty rate ($6.85 in 2017 PPP) 15.3 12.7 10.5 9.2 8.1 7.4 GHG emissions growth (mtCO2e) 7.4 6.9 3.3 2.5 2.3 2.3 Energy related GHG emissions (% of total) 60.7 62.2 62.3 62.2 62.1 62.0 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Historical demand-side data is being revised due to a consistency problem. b/ Fiscal balances are reported in fiscal years (July 1st - June30th). c/ Calculations based on 2017-HBS. Actual data: 2017. Nowcast: 2018-2023. Forecasts are from 2024 to 2026. d/ Projection using neutral distribution (2017) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 61 Apr 24 and facilitating greater private sector partic- ipation in labor-intensive sectors such as MOZAMBIQUE Key conditions and agriculture and services are crucial. Consid- ering the fiscal constraints, it is critical challenges to enhance spending efficiency and debt management practices to improve fiscal Table 1 2023 Mozambique faces substantial develop- discipline and establish credibility within Population, million 33.9 ment challenges, including limited structur- financial markets. The benefits from fu- GDP, current US$ billion 21.4 al transformation and widespread poverty, ture LNG revenues can be maximized GDP per capita, current US$ 632.5 which affected roughly 74.4 percent of the through a robust fiscal framework, in- a 74.5 International poverty rate ($2.15) population in 2019 [when measured by the cluding the sound use of the recently es- a 88.6 US$2.15 per day poverty line (2017 PPP)]. tablished Sovereign Wealth Fund, to en- Lower middle-income poverty rate ($3.65) a 96.1 Most of the labor force is employed in low- sure effective resource management and Upper middle-income poverty rate ($6.85) Gini index a 50.5 productivity agriculture and services sec- promote long-term economic resilience. School enrollment, primary (% gross) b 121.2 tors. The main drivers of growth are capital- b 59.3 intensive megaprojects, with limited Life expectancy at birth, years spillovers to the rest of the economy. Total GHG emissions (mtCO2e) 106.1 Fiscal space is significantly constrained. Recent developments Source: WDI, Macro Poverty Outlook, and official data. With over 90 percent of tax revenues in a/ Most recent value (2019), 2017 PPPs. b/ Most recent WDI value (2021). 2021-22 absorbed by the wage bill and The economy grew by 5 percent in 2023, debt-service costs, the country allocates primarily driven by the start of LNG pro- only limited resources to public invest- duction at the Coral South offshore facility. Economic recovery gained momentum in ment and social spending. Additional con- Strong growth in agriculture and services, straints to financing Mozambique’s large particularly transport, also contributed to 2023, with real GDP growth reaching 5 development needs include lack of access the expansion of the economy, offsetting percent, largely driven by liquefied natur- to international financial markets, high the impact of lower manufacturing and al gas (LNG) production. The country is risk of sovereign debt distress, a shallow construction activity. Inflation, which had grappling with substantial fiscal pres- domestic financial market, and lending reached a five-year high of 9.8 percent in rates that are among the highest in Sub- 2022, moderated to 7.1 percent in 2023. sures arising from the high public sector Saharan Africa. These challenges are com- This moderation supported a 3-percent- wage bill and increasing debt service cost. pounded by fragility and conflict and high age-point drop in poverty to 73.4 percent Growth is projected to remain at 5 per- vulnerability to climate shocks. in 2023. Despite the 100-basis-point cut in cent over the medium term, while poverty Mozambique has the opportunity to imple- the monetary policy rate to 16.3 percent in is projected to decline from 73.4 percent ment reforms to broaden its economic base January 2024, the overall monetary policy and job creation sources, with a focus on sus- stance remains tight, with high statutory in 2023 to 70.9 percent in 2026. Down- tainable growth. The private sector’s growth reserves (39 percent). side risks include volatility in global mar- could be fostered by improving access to Fiscal pressures remain elevated, as mea- kets, natural disasters, and the conflict in capital, and adequate infrastructure, and by sures to reduce the wage bill only had a northern Mozambique. addressing regulatory challenges. Strength- limited impact in 2023. The primary deficit ening fiscal management and governance improved from 2 percent of GDP in 2022 to FIGURE 1 Mozambique / Real GDP growth and sectoral FIGURE 2 Mozambique / Actual and projected poverty contributions to real GDP growth rates and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 12 100 30000 10 90 8 25000 80 6 70 20000 4 60 2 50 15000 0 40 10000 -2 30 -4 20 5000 -6 10 2014 2016 2018 2020 2022 2024f 2026f 0 0 Agriculture Extractives Manufacturing 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Private services Public Services Tax International poverty rate Lower middle-income pov. rate GDP Upper middle-income pov. rate Real GDP pc Source: World Bank estimates. Source: World Bank. Notes: see Table 2. MPO 62 Apr 24 an estimated 0.2 percent in 2023. Total ex- covering four months of imports if measures to reduce the wage bill. These in- penditures in 2023Q3 surged by 14 percent megaprojects imports are excluded. clude limiting hiring in non-priority sec- due to pressures from the wage bill, inter- tors, reducing the 13th-month salary est payments, and election-related spend- bonus, and auditing the public sector ing. Total revenue growth was low at 6 workforce. Public debt is projected to sta- percent in the first three quarters of 2023 Outlook bilize at about 92 percent of GDP in the because of lower value-added tax (VAT) medium term, but Mozambique is expect- collection after the VAT rate was cut to GDP growth is projected to average 5 per- ed to remain at high risk of debt distress in 16 percent from 17 percent previously. cent over 2024-26, supported by increasing the short term. Public debt declined from 95 percent of offshore LNG production, the resumption The current account deficit is projected GDP in 2022 to an estimated 91 per- of the Total-led LNG project, and dy- to widen sharply, averaging 44.1 percent cent in 2023, even though domestic debt namism in agriculture and services. The of GDP over 2024-26, mainly driven by stood at 27 percent of GDP in 2023, up stabilization of global commodity prices LNG-related imports. Financing is pro- from 22 percent in 2020, indicating ris- could help contain inflation, enabling fur- jected to come from trade credits and for- ing financing needs amid limited access ther easing of monetary policy. Growth is eign direct investment. Gross reserves are to international capital markets. expected to support a decline in the nation- expected to remain at adequate levels of The current account deficit narrowed from al poverty rate, from 73.4 percent in 2023 about US$3.5 billion, which is equivalent US$5.8 billion in the first three quarters of to 70.9 percent by 2026. However, the ab- to nearly four months of imports when 2022 to US$1.1 billion over the same period solute number of Mozambicans living in excluding megaprojects. in 2023 due to a combination of lower im- poverty is projected to increase by 1 mil- The outlook is subject to substantial ports for megaprojects, lower fuel prices, lion people during the same period, given downside risks from extreme climate and an increase in LNG exports. The the fast population growth. events, waning commitment to fiscal re- deficit was primarily financed through The fiscal balance is projected to decline forms in the run-up to elections, and un- trade credits and foreign direct invest- from 3.4 percent of GDP in 2023 to an av- certainty around the security situation in ments in the extractive sector, which to- erage of 1.6 percent over 2024-26, partly the north. On the fiscal side, the high taled US$1.5 billion by September 2023. As driven by higher revenues linked to LNG public sector wage bill and increasing a result, gross international reserves in- revenue. Expenditure is projected to de- debt service will continue to limit the fiscal creased from US$2.8 billion in December crease from 31.3 percent of GDP in 2023 space, increasing the risks of refinancing 2022 to US$3.2 billion in November 2023, to 26.5 percent in 2026 due to consolidation and debt rollover. TABLE 2 Mozambique / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 2.3 4.2 5.0 5.0 5.0 4.4 Private consumption 17.3 3.0 3.1 9.8 7.5 6.1 Government consumption -7.8 17.2 -25.4 -3.5 -8.1 -8.1 Gross fixed capital investment 32.5 -6.4 10.1 4.9 8.4 8.6 Exports, goods and services 23.8 10.2 19.5 3.0 2.0 2.0 Imports, goods and services 37.2 1.9 3.3 6.0 5.0 5.0 Real GDP growth, at constant factor prices 2.2 4.2 5.0 5.0 5.0 4.4 Agriculture 3.7 4.4 6.0 4.0 4.0 4.0 Industry 1.6 3.8 7.6 8.2 8.1 8.1 Services 1.6 4.3 3.4 4.2 4.2 3.0 Inflation (consumer price index) 6.4 10.3 7.1 5.7 5.6 5.3 Current account balance (% of GDP) -22.3 -32.9 -16.0 -38.4 -42.0 -44.1 Net foreign direct investment inflow (% of GDP) 31.6 10.3 4.4 13.6 14.5 12.7 a Fiscal balance (% of GDP) -4.6 -4.9 -3.4 -2.3 -1.6 -0.8 Revenues (% of GDP) 27.4 27.4 27.9 26.4 25.8 25.7 Debt (% of GDP) 105.0 95.2 91.9 94.4 92.0 81.6 a Primary balance (% of GDP) -1.9 -2.0 -0.2 0.6 1.1 1.5 b,c International poverty rate ($2.15 in 2017 PPP) 76.1 75.6 73.3 72.5 71.6 70.9 b,c Lower middle-income poverty rate ($3.65 in 2017 PPP) 89.3 89.1 88.1 87.7 87.3 87.0 b,c Upper middle-income poverty rate ($6.85 in 2017 PPP) 96.5 96.4 95.9 95.7 95.6 95.4 GHG emissions growth (mtCO2e) 0.8 0.7 0.7 0.9 1.0 0.9 Energy related GHG emissions (% of total) 8.1 8.4 8.5 9.0 9.5 9.9 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Figure includes once-off capital gains revenues in 2017, estimated at 2.7 percent of GDP. b/ Calculations based on 2019-IOF. Actual data: 2019. Nowcast: 2020-2023. Forecasts are from 2024 to 2026. c/ Projection using neutral distribution (2019) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 63 Apr 24 growth model based on extractives and a large state presence in the economy, which NAMIBIA Key conditions and limits competition, export diversification, and creates inefficiencies. challenges While the public sector continues to face fiscal constraints, given high public debt Table 1 2023 Since 1990, Namibia has made significant levels, there are opportunities to improve a 2.6 Population, million progress on economic and social indi- spending efficiency. Recent developments GDP, current US$ billion 12.4 cators. Over the two decades to 2015, in the mineral and energy sector provide GDP per capita, current US$ 4740.3 GDP growth averaged 4.5 percent, sup- Namibia with opportunities to develop b 15.6 International poverty rate ($2.15) ported by sound macroeconomic policies new drivers of growth and employment b 33.3 and the commodity super cycle, which through economic diversification and val- Lower middle-income poverty rate ($3.65) b 57.3 spurred mining investment. The country ue chain development. The realization of Upper middle-income poverty rate ($6.85) Gini index b 59.1 attained middle-income status in 2009, these opportunities hinges on structur- School enrollment, primary (% gross) c 133.0 and the poverty rate declined. Natural re- al reforms that reduce the costs of do- c 59.3 source revenues allowed for an increase ing business and promote international Life expectancy at birth, years in public spending, including on social trade and investment. Total GHG emissions (mtCO2e) 25.0 programs to support households, and on Source: WDI, Macro Poverty Outlook, and official data. increased access to public services, in- a/ Latest official estimates. Preliminary results from the 2023 census suggest a population of 3.0 million vs the 2.6 cluding education and health. Despite million used here. b/ Most recent value (2015), 2017 PPPs. this progress, many social indicators con- Recent developments c/ WDI for School enrollment (2022); Life expectancy tinue to lag peers, and there are signif- (2021). icant spatial and gender disparities. Al- Namibia’s recent economic performance though demand for services has marked- was stronger than expected. The econo- ly increased, job creation outside the ex- my grew by 4.2 percent in 2023, driven Namibia’s economy grew by 4.2 percent tractive sectors has been insufficient. by the mining sector, including invest- Consequently, unemployment has re- ments in oil exploration. The expansion in 2023. GDP growth is expected to re- mained stubbornly high, exacerbated by was also generated by sustained growth main above 3 percent over the medium skills shortages. Most of the working in private consumption. The economy term, subject to high uncertainty around population is engaged in low-skilled has recovered its pre-pandemic level, but the possible implementation of large-scale work in the informal sector. The country many key sectors, including job-rich con- energy projects. Fiscal policy over the remains among the most unequal in the struction and financial services, continue world (Gini index at 59.1 in 2015). to lag. Due to stronger GDP growth in medium term is expected to be centered The immediate years leading up to the both 2022 and 2023, poverty is estimated around maintaining primary budget sur- COVID-19 pandemic in 2020 were marked to have improved but remains high at 17.8 pluses to support the stabilization of the by a recession, driven by the end of the percent based on the US$2.15 per day in- public debt ratio. Poverty (at the $2.15 commodity cycle, the completion of major ternational poverty line (IPL; 2017 PPP). investment projects, a severe drought, and Investments in the extractive industries line) is expected to improve but remain fiscal consolidation. This underscored the has shaped not only Namibia’s recent high at 17.2 percent in 2024. need for a structural shift from the current growth trajectory but also the balance of FIGURE 1 Namibia / Mining activity and real GDP growth FIGURE 2 Namibia / Actual and projected poverty rates and real GDP per capita Real index (2018Q1 = 100) Poverty rate (%) Real GDP per capita (constant LCU) 140 80 70000 70 60000 125 60 50000 110 50 40000 95 40 30000 30 80 20000 20 65 10 10000 0 0 50 2009 2011 2013 2015 2017 2019 2021 2023 2025 2018Q1 2018Q4 2019Q3 2020Q2 2021Q1 2021Q4 2022Q3 2023Q2 International poverty rate Lower middle-income pov. rate Real GDP Mining Non-mining Upper middle-income pov. rate Real GDP pc Sources: National Statistics Agency and World Bank staff estimates. Source: World Bank. Notes: see Table 2. MPO 64 Apr 24 payments. Despite strong export growth, in the medium term. However, fiscal con- the current account deficit remained large solidation is expected to be slower than in 2023 as services imports rose sharply. Outlook budgeted for in the medium term, im- The wide current account deficit was suf- pacted by increased expenditure commit- ficiently financed by rising foreign direct Namibia’s economic growth is projected to ments and lower SACU revenues from investment inflows. To facilitate the devel- moderate to about 3-3.8 percent per year 2025. The large public sector wage bill opment of a large-scale green hydrogen in- over 2024-26. This projection is subject to is expected to continue to constrain fiscal dustry, the government is developing a high uncertainty as the economy could be space. Given high debt levels and high- roadmap for the sector that aims to allow impacted by the speed of implementation interest payment costs, fiscal policy the domestic economy to benefit from the of several large-scale projects in the energy should remain prudent to ensure a sus- development of related value chains. and mining sectors. If these projects move tained decline in the debt-to-GDP ratio The overall fiscal deficit balance im- into the construction phase during this pe- over the medium term. The budget plan proved from 5.2 percent to 3.7 percent riod, the growth rate of the economy could to retire two-thirds of the US$750 million of GDP between 2022 and 2023 due to substantially accelerate through a combi- Eurobond maturity in October 2025, us- the GDP recovery and the significant nation of foreign direct investment inflows ing accumulated savings from the sinking rebound in SACU revenues, which in- and spillovers to the local economy. fund, should support a faster reduction creased by 72 percent. These additional Growth in the non-mineral economy is ex- in the debt-to-GDP ratio. revenues were largely absorbed into pected to gain traction, especially in sec- Namibia’s economic outlook is favorable, higher expenditure commitments, in- tors that have been severely set back by but there are significant downside risks on cluding higher interest payments, the pandemic, including tourism. House- the horizon. Dependent on the attainment drought relief, and one-off costs related hold consumption growth is expected to of final investment decisions, Namibia’s to the population census. strengthen, benefiting from improved in- economy could experience a sizable invest- Monetary policy remained restrictive, come growth and lower inflation, which is ment boost in the mining and energy sec- broadly in line with the stance of the projected to reduce to 5.0 percent in 2024. tors over the coming years, which would South African Reserve Bank. Credit The poverty rate under the IPL is projected redefine its growth trajectory. However, growth remains subdued, and the cur- to decrease to 17.2 percent in 2024. the recovery faces major downside risks rent stance helped to curb headline infla- After the stimulus, driven by the increase from global geopolitical tensions, which tion, which decreased to 5.3 percent in in SACU revenue in FY2023/24, budget could undermine global economic activity, December 2023. expenditure growth is expected to slow and climate shocks. TABLE 2 Namibia / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 3.6 5.3 4.2 3.4 3.6 3.8 Private consumption 14.6 9.5 4.7 4.8 5.2 5.3 Government consumption 1.3 0.6 1.0 1.3 0.7 0.6 Gross fixed capital investment 18.0 10.0 69.3 8.3 9.6 9.6 Exports, goods and services -2.1 22.9 14.1 4.1 4.4 4.7 Imports, goods and services 20.2 23.0 22.7 6.1 6.8 6.8 Real GDP growth, at constant factor prices 1.5 4.6 4.0 3.4 3.6 3.8 Agriculture 1.6 1.7 -3.4 0.5 2.0 2.0 Industry 0.5 11.3 9.2 6.6 6.7 6.9 Services 1.9 2.2 2.7 2.2 2.2 2.3 Inflation (consumer price index) 3.6 6.1 5.9 5.0 4.7 4.6 Current account balance (% of GDP) -11.2 -12.9 -11.1 -10.4 -10.2 -9.9 Net foreign direct investment inflow (% of GDP) 6.7 8.4 17.9 9.4 9.4 9.4 Fiscal balance (% of GDP) -8.5 -5.2 -3.7 -3.9 -4.6 -4.3 Revenues (% of GDP) 29.9 30.9 33.2 32.4 29.1 28.4 a Debt (% of GDP) 73.1 72.8 70.2 67.9 66.7 64.9 Primary balance (% of GDP) -4.2 -0.7 1.4 1.0 0.1 0.4 b,c International poverty rate ($2.15 in 2017 PPP) 19.7 18.3 17.3 17.0 16.5 16.1 b,c Lower middle-income poverty rate ($3.65 in 2017 PPP) 38.0 36.6 35.6 35.1 34.7 33.9 b,c Upper middle-income poverty rate ($6.85 in 2017 PPP) 62.3 60.8 59.7 59.2 58.6 58.0 GHG emissions growth (mtCO2e) 0.5 2.1 1.1 2.4 3.2 3.4 Energy related GHG emissions (% of total) 14.9 15.1 15.8 15.9 16.2 16.5 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Refers to Public and Publicly Guaranteed debt. b/ Calculations based on 2015-NHIES. Actual data: 2015. Nowcast: 2016-2023. Forecasts are from 2024 to 2026. c/ Projection using neutral distribution (2015) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 65 Apr 24 NIGER Key conditions and Recent developments challenges Prior to the crisis, GDP growth had been projected at 6.9 percent in 2023 and to rise Table 1 2023 Niger’s economy is agriculture dependent to 12 percent in 2024, on the back of large- Population, million 27.2 and highly vulnerable to climate shocks, scale oil exports through the pipeline start- GDP, current US$ billion 16.6 leading to volatile growth. With limited im- ing by end 2023. However, the sanctions GDP per capita, current US$ 611.3 provements in productivity and high popu- and border closures delayed this start. a 50.6 International poverty rate ($2.15) lation growth, over half the population lives Government spending fell due to the a 83.1 in extreme poverty, aggravated by gender freezing of government assets, the loss Lower middle-income poverty rate ($3.65) a 96.3 disparities, with some of the weakest human of access to the WAEMU regional bond Upper middle-income poverty rate ($6.85) Gini index a 32.9 capital development indicators globally. market, and a significant reduction in ex- School enrollment, primary (% gross) b 64.8 With the completion of the Niger-Benin ternal financing. Private investment also b 61.6 pipeline, oil production is expected to rise fell sharply due to the uncertainty and Life expectancy at birth, years from 20,000 to 110,000 barrels per day by a liquidity crisis in the banking sector, Total GHG emissions (mtCO2e) 52.5 2025, increasing the importance of the oil brought on by the financial sanctions. Source: WDI, Macro Poverty Outlook, and official data. sector in exports, revenues, and GDP. Formal trade volumes fell - exports by a/ Most recent value (2021), 2017 PPPs. b/ Most recent WDI value (2021). Since 2011, Niger had been a source of po- 8.1 percent and imports by 12 percent. litical stability in the Sahel, benefiting from On the supply side, manufacturing, con- a significant increase in international de- struction, and trade-related services were velopment assistance and investment in re- heavily impacted and total agricultural cent years. This changed with the military production fell due to inadequate rainfall, The political crisis: the coup d’état, fol- coup on July 26, 2023, which led to heavy pests, and insecurity. That GDP growth lowed by sanctions and a severe reduction ECOWAS and WAEMU commercial and fi- remained positive demonstrates re- in financing, together with weak agricul- nancial sanctions and border closures last- silience, for example, the continuation of ture production, is estimated to have low- ing nearly 7 months, and a pause in de- public-sector salary payments and the velopment assistance. In September 2023, ramping up of local electricity production ered GDP growth in 2023 to 1.2 percent Burkina Faso, Mali, and Niger formed the in response to the cut-off of electricity (2.5 percent per capita) and increased the "Alliance of Sahel States” (AES) - a security imports from Nigeria. extreme poverty rate to 52 percent. With and military pact with political and econom- The annual average inflation remained sta- sanctions lifted, growth could rebound to ic aims. On January 28, 2024, in a joint com- ble at 3.7 percent in 2023, after being sub- 6.9 percent, boosted by large-scale oil ex- muniqué, the three countries announced dued in H1-2023 (average 1.2 percent), their ‘immediate’ withdrawal from ECOW- then rising sharply in H2-2023 (average 6.3 ports. Significant downside risks are the AS. According to the revised ECOWAS percent) due to food inflation caused by announced ECOWAS withdrawal, fi- Treaty, a notification period of one year is re- import disruptions. nancing conditions and climatic shocks. quired to leave ECOWAS. These develop- The 2023 budget was revised, cutting ments have further increased political and capital expenditures, and reducing the policy uncertainty. deficit to 3.9 percent of GDP (compared FIGURE 1 Niger / Real GDP growth and contributions to real FIGURE 2 Niger / Actual and projected poverty rates and GDP growth real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 20 100 350000 15 90 300000 80 10 70 250000 5 60 200000 0 50 40 150000 -5 30 100000 -10 20 50000 -15 10 2021 2022 2023 2024 2025 2026 0 0 Gov. cons. Exports GFCF 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 Inventories Private cons. Imports International poverty rate Lower middle-income pov. rate Statistical disc. GDP Upper middle-income pov. rate Real GDP pc Source: World Bank estimates. Source: World Bank. Notes: see Table 2. MPO 66 Apr 24 to 6.8 percent in 2022). Due to the financial The extreme poverty rate is projected to sanctions, Niger missed several debt re- slightly decrease by 0.8 ppt to 51.2 percent payments to government bond holders Outlook by 2026 assuming solid growth in service and international financial institutions. Ac- and agriculture sectors and policies that cording to UEMOA-Titres, CFAF 314 bil- With sanctions lifted in February 2024, uses oil revenues for the population. The lion (USD$512 million or 3.1 percent of growth could rebound to 6.9 percent (2.9 number of absolute poor is projected to GDP) is owed to bondholders as of Feb- percent per capita) in 2024 and average 4.5 reach nearly 15.6 million people by 2026. ruary 19, 2024. Moody’s has downgraded percent over 2025-26, boosted by large-scale The outlook remains subject to significant Niger's credit rating from B3 to Caa3. Pub- oil exports, while the non-oil industry and downside risks, including a deterioration lic debt is expected to reach 54.5 percent of service sectors face a challenging recovery. in the security situation, terms of trade GDP, including arrears. Growth prospects are weakened by the ex- shocks, climatic shocks, difficult financing The decline in overall and agriculture GDP pected impacts of an orderly ECOWAS conditions, and the withdrawal from per capita and rise in food prices is ex- withdrawal: lower non-WAEMU ECOWAS ECOWAS. An unnegotiated ECOWAS pected to increase the poverty rate by 2 trade, namely with Nigeria, higher in- withdrawal with disruptions to transport, percentage points to 52.0 percent in 2023. vestors’ risk premia, and increased regional transit and free movement of goods, ser- 2.3 million (8.9 percent of the population) financing costs. The fiscal sector will remain vices, capital, and labor could exacerbate were estimated to be food insecure in constrained by financing, as its resumption negative impacts due to spillovers onto Q4-2023, 13 percent higher than Q4 2022, depends on the clearance of arrears and re- WAEMU trade. The BCEAO may need to due to food inflation and pockets of food establishing engagements. Inflation is ex- continue monetary tightening in 2024 to deficits. There are also estimated around pected to stay above 3 percent 2024-26 as the bring inflation under control and in the 300,000 internally displaced persons due resumption of large-scale imports from the context of increased risks from the with- to insecurity and an equal number of region is counterbalanced by higher im- drawal of Niger, Mali, and Burkina Faso refugees from Nigeria, Mali, and Burkina port costs from exiting the ECOWAS free from ECOWAS. A further increase in the Faso. The crisis and border closures have trade area. With the onset of oil exports, cost of financing on the regional market led to severe disruptions in the delivery of the current account deficit is projected to could lead to Niger cutting investment ex- humanitarian aid. narrow to 8.4 percent of GDP. penditure to reduce its borrowing needs. TABLE 2 Niger / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 1.4 11.5 1.2 6.9 4.8 4.3 Private consumption -0.2 7.0 3.5 3.8 4.4 4.1 Government consumption 9.8 -1.2 -11.1 2.2 4.1 3.3 Gross fixed capital investment 7.7 21.1 -10.9 3.1 4.0 3.7 Exports, goods and services 6.7 14.4 -8.1 82.5 9.8 8.7 Imports, goods and services 6.9 6.5 -12.0 22.5 5.5 5.5 Real GDP growth, at constant factor prices 1.0 11.6 1.2 6.9 4.7 4.3 Agriculture -5.1 27.0 -1.2 6.5 5.5 5.5 Industry 4.1 -0.9 3.9 14.9 5.6 3.4 Services 5.4 4.9 2.5 2.8 3.3 3.4 Inflation (consumer price index) 2.9 3.9 3.7 3.5 3.7 3.5 Current account balance (% of GDP) -7.8 -9.8 -9.4 -8.4 -6.3 -4.5 Net foreign direct investment inflow (% of GDP) 2.1 3.9 3.2 1.7 2.0 -2.1 Fiscal balance (% of GDP) -3.4 -6.8 -3.9 -2.4 -2.6 -2.7 Revenues (% of GDP) 18.2 14.9 10.0 11.0 11.8 12.0 Debt (% of GDP) 51.3 51.7 54.5 52.6 50.9 49.3 Primary balance (% of GDP) -2.2 -5.6 -2.9 -1.8 -2.1 -2.3 a,b International poverty rate ($2.15 in 2017 PPP) 50.6 49.9 52.0 50.9 51.1 51.2 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 83.1 82.6 83.1 82.7 82.8 82.9 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 96.3 96.0 96.0 95.7 95.7 95.8 GHG emissions growth (mtCO2e) 4.7 4.8 3.9 4.7 4.8 4.6 Energy related GHG emissions (% of total) 7.1 7.5 7.3 7.7 8.0 8.0 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2021-EHCVM. Actual data: 2021. Nowcast: 2022-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 67 Apr 24 policy and refocus the Central Bank of Nigeria (CBN) on its core mandate of NIGERIA Key conditions and maintaining price stability. challenges Table 1 2023 Nigeria’s economic growth has been insuffi- Recent developments Population, million 223.8 cient to raise living standards, weighed GDP, current US$ billion 362.8 down by weak macroeconomic fundamen- Real GDP growth slowed from 3.3 percent GDP per capita, current US$ 1621.1 tals and several structural constraints. Over- in 2022 to 2.9 percent in 2023. Agricultural a 30.9 International poverty rate ($2.15) reliance on the oil sector for fiscal revenues, output decreased due to higher input a 63.5 exports, and FX inflows led macro stability costs, sustained impact of floods, and inse- Lower middle-income poverty rate ($3.65) a 90.8 to erode with the sector’s deteriorating per- curity. Services continued to hold up non- Upper middle-income poverty rate ($6.85) Gini index a 35.1 formance in recent years. Low rev- oil sector growth, especially in finance and School enrollment, primary (% gross) b 86.7 enues—including due to a costly petrol sub- information and communication. The oil b 52.7 sidy, low tax rates, and weak tax administra- sector contracted for the fourth consecu- Life expectancy at birth, years tion—have limited state capacity and public tive year, albeit at a lower rate. Total GHG emissions (mtCO2e) 401.0 service delivery. Inflation has remained Nigeria’s chronically high inflation Source: WDI, Macro Poverty Outlook, and official data. high and escalating on the back of a relative- reached an all-time high of 29.9 percent a/ Most recent value (2018), 2017 PPPs. b/ Most recent WDI value (2021). ly loose monetary policy and exchange rate year-on-year in January 2024, driven by depreciation. Structural factors holding rising food and energy prices, loose mon- back the country’s growth potential include etary policy, and naira depreciation. Nigeria has initiated bold reforms to re- lack of adequate energy and transport infra- Nominal earnings have not kept up with structure, high domestic trade costs and for- inflation, pushing another 10 million store macroeconomic stability, but further eign trade protectionism, widespread inse- Nigerians into poverty in 2023. CBN has efforts are needed. The Government has curity, weak institutions, and low levels of started tightening monetary policy by moved forward on normalization of mone- human capital development. raising the monetary policy rate (MPR) tary policy, revenue-driven fiscal consoli- The new administration has initiated bold by 400 basis points to 22.75 percent in reforms to reestablish the macroeconomic February 2024 and by unclogging some dation, and liberalization of the foreign conditions for stability and growth. The of its transmission channels. CBN has exchange (FX) market. Translating oil petrol fiscal subsidy was eliminated, more restarted open market operations (OMOs) proceeds into fiscal revenues and FX in- than trebling petrol prices. FX reforms at yields closer to the MPR, halted new flows, and taming inflation are still major have been undertaken, leading to the uni- development finance schemes, committed challenges. Nominal earnings have not fication of FX markets and to a market-re- to stop monetization of fiscal deficits, re- flective exchange rate. To alleviate the in- moved the Standing Deposit Facility cap, kept up with inflation, pushing 10 million flationary effects of these reforms on the raised the cash reserve ratio to 45 per- additional Nigerians into poverty in 2023. most vulnerable, the government has been cent, and improved communication. Risks to the outlook include weaker reform implementing temporary cash transfers to Fiscal pressures remained high despite the momentum and popular discontent. reach 15 million households. Efforts are removal of fuel subsidy in the budget and also being made to tighten monetary naira devaluation. General government FIGURE 1 Nigeria / Oil price, exports, government FIGURE 2 Nigeria / Real GDP growth and sectoral revenues, and real GDP growth contributions to real GDP growth Percent, percent of GDP US$/bbl Percent 20 110 5 90 4 15 70 3 10 50 2 5 30 1 10 0 0 -10 -1 -5 -30 2015 2017 2019 2021 2023e 2025f -2 GDP growth (lhs) GDP growth (lhs) 2021 2022 2023e 2024f 2025f 2026f Revenues (lhs) Revenues (lhs) Agriculture Oil Industry Exports (lhs) Exports (lhs) Non-oil Industry Services Oil price (rhs) Oil price (rhs) GDP (factor prices) Sources: Nigerian National Bureau of Statistics, WDI, and World Bank. Sources: Nigerian National Bureau of Statistics and World Bank. MPO 68 Apr 24 fiscal deficit in 2023 is estimated at 5.3 Nigeria to reap the reforms’ benefits. The fiscal deficit is expected to drop percent of GDP, 0.4 percentage points The economy is projected to grow by to 4.3 percent of GDP on average be- (pp) higher than in 2022. While oil rev- 3.5 percent on average between 2024 tween 2024-2026, and debt servicing enues improved on the back of the naira and 2026, 0.9 pp higher than the pop- to fall from 97 percent of revenues unification, gains from the removal of sub- ulation growth. The dissipation of the in 2024 to 61 percent of revenue in sidy did not materialize as expected due reforms’ initial shock and the stabi- 2026. Exchange rate depreciation will to low remittances from the Nigerian Na- lization of macroeconomic conditions also reduce imports, including gaso- tional Petroleum Corporation (NNPC) to will instill a sustained but still slow line, leading to a CAB of 1.2 percent the federation and the emergence of an im- growth in the non-oil economy, while of GDP on average between 2024-2026. plicit FX petrol subsidy. Non-oil revenues the oil sector is expected to stabilize Foreign investments will follow increased by 0.7 percentage points to 5.6 with some recovery in production and macroeconomic stabilization. percent of GDP in 2023, but expenditures slightly lower prices. Higher growth Risks to Nigeria’s outlook are substan- picked up too, especially on capital goods rates will require structural reforms. tial, especially if reforms lose momen- and interest payments. The current ac- Inflation will remain elevated at 24.8 tum or are reversed. Relatively weak count balance (CAB) is estimated to have percent on average in 2024 but is ex- monetary policy tightening would be recorded a surplus of 0.7 percent of GDP pected to progressively moderate to insufficient to rein in inflation and at- in 2023, driven by lower interest payments 15.1 percent by 2026 on the back of tract foreign capital inflows, raising and imports. Gross reserves dropped by 11 monetary policy tightening and ex- the risks of an inflation-exchange rate percent to US$ 33bn in 2023 and net errors change rate stabilization. As a re- depreciation spiral. Failure to address and omissions remained high. sult, poverty rates are expected to in- imbalances in petrol pricing and to crease in 2024 and 2025 before stabi- raise non-oil revenues would jeopar- lizing in 2026. dize the reforms’ revenue gains, Exchange rate liberalization is expect- which, in turn, would lead to con- Outlook ed to contribute to both fiscal and ex- tinued high fiscal deficit and risks of ternal balances. Fiscal pressure is ex- its monetization. Rising insecurity, ad- The continuation of an ambitious re- pected to moderate over the outlook verse climate shocks, and popular form program centered around macro- due to higher dollar-denominated rev- discontent with inflation would dent economic stabilization is essential for enues and improved non-oil revenues. economic recovery. TABLE 2 Nigeria / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 3.6 3.3 2.9 3.3 3.5 3.7 Real GDP growth, at constant factor prices 3.4 3.1 2.7 3.2 3.4 3.6 Agriculture 2.1 1.9 1.1 1.7 1.9 2.2 Industry -0.5 -4.6 0.7 1.8 1.6 1.7 Services 5.6 6.7 4.2 4.4 4.7 4.9 Inflation (consumer price index) 17.0 18.8 24.7 24.8 18.5 15.1 Current account balance (% of GDP) -0.7 0.2 0.7 2.2 0.9 0.5 Net foreign direct investment inflow (% of GDP) -0.3 0.0 -0.1 -0.4 -0.5 -0.5 Fiscal balance (% of GDP) -6.6 -4.9 -5.4 -4.6 -3.7 -3.8 Revenues (% of GDP) 6.7 6.7 7.8 8.7 9.6 9.6 Debt (% of GDP) 39.0 40.0 48.9 50.9 46.6 45.1 Primary balance (% of GDP) -3.9 -1.5 -1.9 -1.0 -0.1 -0.1 a,b International poverty rate ($2.15 in 2017 PPP) 34.6 35.3 38.9 40.7 42.3 42.5 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 66.2 67.1 69.8 70.9 71.7 71.4 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 90.6 91.3 91.9 91.9 91.8 91.2 GHG emissions growth (mtCO2e) 2.3 3.0 3.1 3.4 3.2 3.5 Energy related GHG emissions (% of total) 35.1 35.4 35.6 36.1 36.5 37.0 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2018-LSS. Actual data: 2018. Nowcast: 2019-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 69 Apr 24 enhancing competition, building firms’ ca- pabilities, increasing access to finance, fos- RWANDA Key conditions and tering development and diffusion of infor- mation and communication technologies, challenges and innovation. Table 1 2023 In the decade up to 2019, Rwanda’s GDP Population, million 14.1 per capita increased steadily at a rate of GDP, current US$ billion 13.7 4.5 percent per year, surpassed only by Recent developments GDP per capita, current US$ 974.4 Ethiopia among SSA economies. Rwanda a 52.0 International poverty rate ($2.15) has also achieved substantial gains in Rwanda’s economy achieved significant a 78.0 poverty reduction, educational attainment, growth in 2023, estimated at 8.2 percent, Lower middle-income poverty rate ($3.65) a 92.2 health services delivery, and access to ba- despite lower global prices for its main ex- Upper middle-income poverty rate ($6.85) Gini index a 43.7 sic services. However, the economy faces ports and flooding that disrupted crop School enrollment, primary (% gross) b 134.9 severe constraints. The heavy emphasis on production. This performance was sup- b 66.1 public investment has neither generated ported by stronger services sector and ro- Life expectancy at birth, years sufficient jobs nor resulted in rapid gains bust domestic demand, fueled by sizable Total GHG emissions (mtCO2e) 8.4 in productivity. The Human Capital Index investment projects. The information and Source: WDI, Macro Poverty Outlook, and official data. places Rwanda at 160th out of 174 coun- communications industry made the largest a/ Most recent value (2016), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy tries. High public debt levels, vulnerability contribution to GDP growth, benefiting (2021). to climate change, and the accelerating from increased internet and mobile sub- degradation of natural assets will hinder scriptions, followed by manufacturing, the achievement of Rwanda’s targets of be- transport services, and construction. coming an upper middle-income country The National Bank of Rwanda’s tighter by 2035 and a high-income country by monetary stance, along with improve- 2050. The highest food inflation in 15 years ments in domestic food production and Rwanda’s strong economic momentum (63 percent in March 2023) triggered by in- lower commodity prices, have contained continued in 2023, with 8.2 percent sufficient rainfall, highlighted the impor- inflationary pressures. NBR hiked the pol- growth in 2023—led by services, manu- tance of increasing the persistently low icy rate by an additional 50 basis points in facturing, and construction. Inflationary productivity in agriculture to increase in- August 2023 to 7.5 percent (Figure 1). In- comes of rural households and to improve flation fell gradually to 4.9 percent in Feb- pressures have eased due to improvements food security and availability. Overcoming ruary 2024 from the peak of 22.7 percent in domestic food production, lower com- these challenges will require greater re- in November 2022. After experiencing 18 modity prices, and the tight monetary liance on private sector investment to en- months of the highest monthly food infla- policy stance by the central bank. Real hance productivity growth, raise incomes, tion in the last 15 years starting in May GDP growth is projected at 7.6 percent and provide the necessary financing need- 2022, much lower food inflation at 6.3 per- ed to address infrastructure shortfalls. cent in February 2024 eased the pressure on average in 2024–2025. on household budgets, especially for poor Critical areas, which would need to progress faster and drive rapid private sec- households. To counteract the effect of a tor investment growth in Rwanda, include sharp depreciation of the franc against the FIGURE 1 Rwanda / Headline and core inflation and central FIGURE 2 Rwanda / Actual and projected poverty rates and bank rate real private consumption per capita Percent Poverty rate (%) Real private consumption per capita (constant LCU) 25 100 700000 90 600000 20 80 70 500000 15 60 400000 50 40 300000 10 30 200000 5 20 100000 10 0 0 0 Jan-22 May-22 Sep-22 Jan-23 May-23 Sep-23 Jan-24 2010 2012 2014 2016 2018 2020 2022 2024 2026 International poverty rate Lower middle-income pov. rate Inflation (CPI) Core inflation Central bank rate Upper middle-income pov. rate Real priv. cons. pc Source: World Bank staff estimates. Source: World Bank. Notes: see Table 2. MPO 70 Apr 24 U.S. dollar—about 18. percent in 2023—on agriculture is expected to rebound due to state-owned enterprises while safeguard- inflation, the NBR has doubled its dollar favorable weather. Growth will also be ing fiscal space for human capital spend- sales to commercial banks to US$10 million supported by continued growth in global ing. The government also intends to im- per week from US$5 million. tourism demand, construction, and manu- prove revenue administration and cut tax The FY24 budget envisages a temporary fis- facturing activities supported by the Man- rates while broadening the tax base cal expansion to cushion the effects of recent ufacture and Build to Recover Program. through measures in the Medium-Term floods. Total reconstruction spending is esti- Driven by growth in private consumption Revenue Strategy. Under this baseline, mated at around 3 percent of GDP over the of 4.5 percent a year in 2024-2026, poverty public debt would peak at 78 percent of next five years, of which two-thirds will be is projected to decline from 48.4 percent in GDP in 2024 before gradually improving disbursed in FY24–FY25. The resulting cre- 2024 to 47 percent in 2026. The current ac- over the medium term. ation of jobs in construction is expected to count deficit is projected to remain wider The outlook is subject to substantial down- benefit lower-income households. Despite in 2024 due to increased imports required side risks. Even though Rwanda has lim- this, the government remains committed to for the post-flood reconstruction and the ited direct trade and financial links to the fiscal prudence through improved domestic large airport construction project. Sus- Middle East, an intensification of the con- revenue mobilization, spending rational- tained strong FDI inflows and concessional flict in the region could lead to further dis- ization, and increased transparency and ef- financing will cover external financing ruptions to the global trade and economy, ficiency. Relying largely on concessional needs. Inflation is expected to gradually thus affecting Rwanda mainly through a loans to finance the deficit, Rwandan’s pub- return within NBR’s target of 5±3 percent. reduced global demand for its main export lic debt is sustainable despite increases in The government is committed to prudent products. Limited access to concessional the stock, which is estimated at 71.6 percent fiscal management. In the FY24–FY26 bud- resources and lower external demand fu- of GDP in 2023. get framework, the government projects eled by monetary tightening in advanced spending cuts largely through streamlin- economies pose further downside risks. ing and gradually reducing subsidies par- The main risk on the domestic front ticularly those related to energy and fuel. is linked to the increasing frequency of Outlook It is critical to reduce energy subsidies in weather and climate shocks, which could a way that keeps electricity affordable for disrupt agricultural output again nega- Rwanda’s GDP is projected to grow at low-income households. The authorities tively affecting incomes and food secu- 7.6 percent on average in 2024–26. After are also planning to strengthen the over- rity for rural households, and reigniting weak performance in the last two years, sight, governance, and risk management of inflationary pressures on food. TABLE 2 Rwanda / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 10.9 8.2 8.2 7.6 7.8 7.5 Private consumption 6.0 12.1 8.0 4.5 6.8 6.8 Government consumption 13.7 10.6 3.1 14.6 10.1 8.1 Gross fixed capital investment 9.6 -12.6 4.5 15.0 10.7 7.2 Exports, goods and services 2.4 29.4 25.8 13.1 11.2 11.2 Imports, goods and services 2.7 17.9 14.4 12.6 10.9 8.9 Real GDP growth, at constant factor prices 10.6 7.8 8.6 7.6 7.8 7.5 Agriculture 6.4 1.6 1.7 6.6 5.5 5.4 Industry 13.3 5.0 10.2 9.5 9.3 9.0 Services 11.9 12.2 11.2 7.3 8.3 7.9 Inflation (consumer price index) 1.1 12.1 15.4 6.8 5.0 5.0 Current account balance (% of GDP) -11.1 -9.7 -11.9 -11.3 -10.1 -10.2 Net foreign direct investment inflow (% of GDP) 2.1 2.4 3.3 3.9 4.4 4.5 Fiscal balance (% of GDP) -9.8 -9.2 -8.5 -6.8 -5.6 -5.9 Revenues (% of GDP) 24.8 23.5 22.9 23.1 23.3 23.2 Debt (% of GDP) 74.4 69.9 73.0 78.0 77.6 75.2 Primary balance (% of GDP) -8.0 -7.3 -6.3 -4.9 -4.0 -4.6 a,b International poverty rate ($2.15 in 2017 PPP) 51.1 49.6 48.7 48.4 47.7 47.0 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 77.5 76.5 76.0 75.8 75.3 74.9 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 92.0 91.7 91.6 91.5 91.4 91.2 GHG emissions growth (mtCO2e) 6.4 2.5 1.4 2.4 2.9 3.2 Energy related GHG emissions (% of total) 31.1 30.7 29.8 30.0 30.2 30.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2010-EICV-III and 2016-EICV-V. Actual data: 2016. Nowcast: 2017-2023. Forecasts are from 2024 to 2026. b/ Projection using average elasticity (2010-2016) with pass-through = 0.25 based on private consumption per capita in constant LCU. MPO 71 Apr 24 mobilization, and high expenditure rigid- ity limited spending on human capital. SÃO TOMÉ AND Key conditions and Thus, with limited access to basic services and social protection, the poorest bear the challenges PRÍNCIPE brunt of economic and climate shocks, fac- ing increased difficulty in meeting their São Tomé and Príncipe (STP) is a remote daily needs given the rising living costs. and small island nation with untapped Nonetheless, the new government has Table 1 2023 natural wealth. STP is home to pristine committed to implementing the needed Population, million 0.2 rainforests, a rich and unique biodiver- structural reforms to restore macroeco- GDP, current US$ billion 0.6 sity, and a humid tropical climate with nomic stability and promote growth, GDP per capita, current US$ 2651.6 abundant rainfall. Given its vast natural particularly energy reforms. Fiscal re- International poverty rate ($2.15) a 15.7 wealth, agriculture, fisheries, and tourism forms have been initiated, including the a 45.0 have significant potential to accelerate introduction of the value-added tax Lower middle-income poverty rate ($3.65) a growth in STP. However, STP's economic (VAT). The reform agenda is expected to Upper middle-income poverty rate ($6.85) 79.7 a and social development has been con- be backed by a forthcoming IMF pro- Gini index 40.7 strained by its small productive base, gram, which should also help mobilize b 109.6 School enrollment, primary (% gross) weak private sector, institutional fragility, further concessional financing. b 67.6 Life expectancy at birth, years and high vulnerability to climate shocks, Total GHG emissions (mtCO2e) 0.4 coupled with underdeveloped infrastruc- Source: WDI, Macro Poverty Outlook, and official data. ture, such as an unreliable power sector a/ Most recent value (2017), 2017 PPPs. b/ Most recent WDI value (2021). and limited connectivity. Recent developments In the past, growth in STP was supported by large inflows of external concessional Real GDP is estimated to have contracted financing and grants, which have fueled by 0.5 percent in 2023 due to the aggravat- Crisis in the electricity sector and uncer- a public investment-led growth model. ed energy crisis and fuel shortage that halt- tainty in external concessional financing However, this growth model has become ed economic activity for two weeks, and pushed the economy into recession. GDP is unsustainable due to the structural de- delays in external financing disburse- cline and volatility of grants. As a result, ments, partly explained by the longer- estimated to have contracted by 0.5 percent. growth has slowed in recent years, fur- than-expected discussions on the upcom- Poverty rate is estimated at 15.8 percent. ther undermined by recurrent energy ing IMF program. However, the recession GDP growth is projected to recover in the crises, climate shocks, and surging com- was mitigated by a strong recovery in medium term, supported by tourism, agri- modity prices due to escalating global tourism: tourist arrivals peaked at 35,817 culture, infrastructure, and renewed exter- geopolitical tensions. in 2023, above pre-pandemic levels. Consequently, slow growth has hindered The current account deficit is estimated to nal financing. Risks result from delays in progress in poverty reduction by restrict- have remained around 15.4 percent of concluding IMF program discussions, ing job opportunities and exacerbating GDP in 2023, due to a due to higher im- slow energy reforms, weather-related the vulnerability of the poorest. More- ports bill and wider trade deficit. shocks, and global geopolitical tensions. over, excessive reliance on external con- Inflationary pressures eased despite the cessional financing, low domestic revenue introduction of VAT, as the Central Bank FIGURE 1 São Tomé and Príncipe / Real GDP growth and FIGURE 2 São Tomé and Príncipe / Actual and projected contributions to real GDP growth poverty rates and real GDP per capita Percent (y/y) Poverty rate (%) Real GDP per capita (constant LCU) 8 100 19000 6 90 18500 4 80 18000 2 70 17500 0 -2 60 17000 -4 50 16500 -6 40 16000 -8 30 15500 -10 20 15000 -12 10 14500 -14 0 14000 2019 2020 2021 2022 2023f 2024f 2025f 2026f 2010 2012 2014 2016 2018 2020 2022 2024 2026 Agriculture Industry International poverty rate Lower middle-income pov. rate Services Real GDP growth rate Upper middle-income pov. rate Real GDP pc Sources: São Tomé and Príncipe authorities' data, IMF and World Bank staff estimates. Source: World Bank. Notes: see Table 2. MPO 72 Apr 24 of STP (BCSTP) tightened liquidity con- (in 2017 PPP terms) is estimated to have A tight monetary policy stance and lower ditions and issued certificates of deposit slightly increased to 15.8 percent in 2023, global commodity prices are expected to in May 2023, coupled with higher interest from 15.6 percent in the previous year. reduce inflation to 12.1 percent in 2024. rates on T-bills, and subdued domestic The resumption of externally financing demand. Inflation declined from 25.2 per- disbursements, an expected IMF-support- cent in 2022 to 21.2 percent in 2023, and ed fiscal consolidation, and the full impact the monetary base (M0) contracted by Outlook of VAT implementation would improve 11.6 percent. However, delays in external STP’s fiscal position in 2024. These mea- financing disbursements and high fuel- Real GDP growth is expected to recover sures are projected to contribute to an im- related import demand depleted net in- to 2.5 percent in 2024 and then 3.6 per- provement in the domestic primary bal- ternational reserves, threatening the cur- cent in 2026. Growth over the medi- ance deficit from -2.7 percent in 2023 to 1.4 rency’s peg to the euro. The BCSTP re- um term is supported by a stronger percent of GDP in 2024 and 1.6 percent of sponded by entering into a non-conces- agricultural sector, including palm oil GDP in 2026. sional foreign exchange swap agreement and cocoa exports, continued tourism Risks to the outlook come from delays for about US$30 million with Afrexim- rebound, foreign investments, including in the new IMF program discussion, and bank to boost reserves, of which US$12 for increased electricity capacity and re- relatedly delayed external financing dis- million was disbursed. Although further newable energy projects, and resump- bursements, slow implementation of en- disbursement of grants supported net in- tion of externally funded infrastructure ergy reforms, and weather-related events. ternational reserves, the latter remain be- projects, such as the rehabilitation of the Adverse developments in global com- low one month of imports. The fiscal bal- Marginal Road. modity prices due to geopolitical ten- ance remained in deficit, estimated at -3.6 The current account deficit is projected sions are also a risk factor. In addition, percent of GDP in 2023 primarily due to to improve from 15.4 percent in 2023 the outlook for poverty alleviation in STP reduced grant disbursements, despite the to 12.6 percent in 2024 and 10.8 percent remains uncertain and the share of peo- introduction of the VAT in June 2023 to in 2026 as the trade deficit narrows ple living in extreme poverty is project- support revenue mobilization. with the drop in the cost of commodi- ed to stagnate in the short term, with a As a result of these adverse macro-fiscal ties (fuel and food), tourism contin- slight decline in the medium-term. While conditions, the livelihoods of the poorest ues to recover, and fiscal consolidation economic recovery is projected in 2024, deteriorated. The share of people that weighs on the twin deficit of fiscal and the benefits may not reach the most vul- were living on less than US$2.15 per day external balances. nerable without concerted efforts. TABLE 2 São Tomé and Príncipe / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 1.9 0.1 -0.5 2.5 3.1 3.6 Real GDP growth, at constant factor prices 3.1 2.5 -0.5 2.5 3.1 3.6 Agriculture -0.3 -13.6 -12.4 2.0 2.8 2.8 Industry -6.4 6.4 -13.5 1.5 2.0 2.0 Services 5.6 3.1 3.1 2.7 3.3 3.9 Inflation (consumer price index) 9.5 25.2 21.2 12.1 7.4 7.0 Current account balance (% of GDP) -19.2 -14.6 -14.1 -10.9 -9.6 -8.5 Net foreign direct investment inflow (% of GDP) 3.5 23.3 3.5 5.0 5.7 7.0 Fiscal balance (% of GDP) -3.9 -4.5 -3.3 -0.1 0.2 0.6 Revenues (% of GDP) 19.8 25.4 23.5 21.6 21.6 21.3 Debt (% of GDP) 77.8 68.5 57.5 52.7 47.7 41.3 Primary balance (% of GDP) -3.7 -4.0 -2.4 1.3 1.0 1.2 a,b International poverty rate ($2.15 in 2017 PPP) 15.4 15.6 15.8 15.7 15.6 15.5 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 44.6 44.8 45.1 45.0 44.9 44.7 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 79.0 79.3 79.8 79.7 79.5 79.2 GHG emissions growth (mtCO2e) 1.2 0.6 0.4 0.9 1.4 1.7 Energy related GHG emissions (% of total) 35.7 35.6 35.8 36.3 36.9 37.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Projection using point to point elasticity at regional level with pass-through = 0.7 based on GDP per capita in constant LCU. b/ Actual data: 2017. Nowcast: 2018-2023. Forecasts are from 2024 to 2026. MPO 73 Apr 24 sectors, including ICT, trade, and trans- port. As a result, the services sector de- SENEGAL Key conditions and celerated from 5.1 percent in 2022 to 3.3 percent in 2023. Gold production declined challenges by 15.5 percent (year-on-year) due to low- er demand, reserve depletion, and labor Table 1 2023 Senegal’s socioeconomic development strikes. Challenges in the extractive in- Population, million 17.8 challenges are heightened by rising un- dustry led to a slower-than-expected per- GDP, current US$ billion 31.1 certainty. Declining yet high inflation and formance in the industry sector despite GDP per capita, current US$ 1753.3 unfavorable global and domestic financial strong cement sales. Headline inflation a 9.9 International poverty rate ($2.15) conditions combined with high debt lev- averaged 6.1 percent in 2023 as food and a 36.3 els undermine macro-fiscal stability. energy prices continued their downward Lower middle-income poverty rate ($3.65) a 75.6 Structural vulnerabilities, such as low trends – although remaining well above Upper middle-income poverty rate ($6.85) Gini index a 36.2 productivity, limited human capital, high the regional Central Bank’s target band School enrollment, primary (% gross) b 83.3 informality, and youth emigration, persist of 1-3 percent. Poverty incidence (using b 67.1 and are exacerbated by external shocks, the $3.65 per capita per day in 2017 PPP Life expectancy at birth, years as seen during the COVID-19 pandemic international poverty line) remained sta- Total GHG emissions (mtCO2e) 36.4 and Russia’s invasion of Ukraine. Despite ble at 36.4 percent in 2023, from 36.5 per- Source: WDI, Macro Poverty Outlook, and official data. the emphasis on industrialization in the cent in 2022. While rising prices eroded a/ Most recent value (2021), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy action plan PAP3 of the government’s the purchasing power of households this (2021). Plan Senegal Emergent, the transition to was mitigated by growth in the agricul- a more diversified economy with a larger ture sector, which employs most of the industrial base remains limited, with the poor. The national poverty trend is the re- economy remaining heavily reliant on sult of a slight increase in urban areas, Economic growth slowed slightly to 3.7 agriculture and services. The onset of hy- while the poverty rate slightly decreased drocarbon production offers an oppor- in rural areas. percent in 2023 due to social unrest and tunity to accelerate equitable investment The fiscal deficit is expected to remain delayed hydrocarbon production. The fis- in human capital, provided that related at 6.6 – above the 4.9 percent of cal deficit and debt remained high, fu- resources are managed within a strong GDP objective set in the 2023 Budget eled by energy subsidies and frontloaded governance framework. Law – driven by lower tax collection and persistently high energy subsidies. financing. Inflation averaged 6.1 per- The former declined to 17.3 percent of cent, eroding household purchasing GDP – about 1 percentage point be- power, but poverty remains unchanged. Recent developments low its 2022 level – owed to lower rev- Economic activity is set to rebound in enue collection on international trade. the medium term, supported by hydro- Economic growth remained broadly Public expenditure declined to 25.7 stable around 3.7 percent in 2023 (1.1 percent of GDP from 26.6 percent, carbon production. Political uncertainty, percent per capita) as political tensions thanks to a decline in current spend- hydrocarbon production delays, and and social unrest disrupted consumer ing. Fiscal measures to support pur- geopolitical tensions threaten the outlook. spending and delayed investment in key chasing power (0.6 percent of GDP) FIGURE 1 Senegal / Evolution of main macroeconomic FIGURE 2 Senegal / Actual and projected poverty rates and indicators real GDP per capita Percent Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 10 0 100 1200000 8 90 -5 1000000 6 80 70 4 -10 800000 60 2 50 600000 0 -15 40 400000 -2 30 -20 -4 20 200000 10 -6 -25 2015 2017 2019 2021 2023e 2025p 0 0 GDP growth (lhs) 2011 2013 2015 2017 2019 2021 2023 2025 International poverty rate Lower middle-income pov. rate Primary fiscal balance (lhs) Current account balance (rhs) Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see Table 2. MPO 74 Apr 24 and energy sector subsidies encompassing Projected growth, including in agriculture, outstanding arrears (4.2 percent of GDP the expansion of cash transfers, and de- end-September 2023) continue to hinder Outlook clining food prices are expected to affect fiscal consolidation efforts. Public debt re- household well-being positively. Conse- mains at moderate risk of debt distress, Economic growth is projected to average quently, poverty is expected to resume a with limited margins to absorb future 7.5 percent in 2024-2026 (4.8 percent per downward trend in 2024. shocks. The current account deficit is esti- capita) and be broad based, driven by hy- Fiscal consolidation efforts, including re- mated at 14.5 percent in 2023 from 20 per- drocarbon production from mid-2024, and duced energy subsidies and increased tax cent in 2022, driven by lower service im- a rebound in the mining sector spurred by revenues, should enable the fiscal deficit to ports related to hydrocarbon services, in- the discovery of new gold and phosphate decline toward the WAEMU convergence creased export prices, and the resumption mines as well as agriculture and services. criteria of 3 percent of GDP by 2025. Under of trade with Mali. It was financed by for- Aggregate demand will be supported by a benign base case, public debt is expected eign direct investments, portfolio invest- private consumption. The baseline as- to decline gradually to 67.2 percent in 2026. ments, remittances, and external credits. sumes favorable rainfall and fading polit- However, extreme weather shocks or in- To counter inflation across WAEMU coun- ical uncertainty. Inflation is forecasted to creases in security spending could delay tries, the Central Bank of West African decelerate to 2 percent by 2025 as food and the necessary fiscal adjustment and exac- States (BCEAO) raised policy interest rates energy prices maintain downward trends. erbate debt sustainability risks. The CAD by a cumulative 150 basis points since The BCEAO may need to continue monetary is projected to narrow significantly from mid-2022 to 3.5 percent for liquidity calls tightening in 2024 to bring inflation under 9.5 percent of GDP in 2024 to an average and 5.5 percent for the marginal lending control and in the context of rising uncer- 4.7 percent in 2025-6 as hydrocarbon ex- facility. However, inflation in the region tainties over the withdrawal of Niger, Mali, ports begin, although a potential risk re- (3.7 percent in 2023) was still above the and Burkina Faso from ECOWAS and po- mains as the Alliance of Sahel States with- 1-3 percent target and foreign exchange re- tential spillovers to WAEMU. These uncer- drawal from ECOWAS will impact exports serves have been on a downward trend, tainties are likely to increase investors’ risk to Mali. Regional uncertainties could lead estimated at 3.5 months of imports at perceptions leading to tighter financing to further tightening of financing condi- end-2023, down from 4.3 months at the conditions and putting additional strain on tions and put additional strain on already end of 2022. already low foreign exchange reserves. low foreign exchange reserves. TABLE 2 Senegal / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 6.5 3.8 3.7 7.1 9.7 5.7 Private consumption 3.4 3.5 2.3 3.1 3.6 3.7 Government consumption 14.4 1.5 -7.1 14.7 7.7 4.5 Gross fixed capital investment 15.8 11.0 12.5 6.0 8.8 8.6 Exports, goods and services 22.5 3.5 6.7 14.3 20.1 3.4 Imports, goods and services 16.0 12.4 6.0 5.4 4.9 3.1 Real GDP growth, at constant factor prices 6.3 3.6 3.7 7.1 9.7 5.7 Agriculture 0.8 0.3 6.2 6.3 6.4 6.5 Industry 7.1 2.6 2.9 16.8 23.4 3.9 Services 7.7 5.1 3.3 3.2 4.0 6.5 Inflation (consumer price index) 2.2 9.7 6.1 3.0 2.0 2.0 Current account balance (% of GDP) -12.1 -20.0 -14.5 -9.5 -4.8 -4.6 Fiscal balance (% of GDP) -6.3 -6.6 -6.6 -4.8 -3.0 -3.0 Revenues (% of GDP) 19.5 20.0 19.2 20.8 21.8 22.3 Debt (% of GDP) 73.4 76.1 79.5 72.4 67.5 67.2 Primary balance (% of GDP) -4.3 -4.4 -3.9 -2.2 -0.8 -1.1 a,b International poverty rate ($2.15 in 2017 PPP) 9.9 10.0 9.8 8.7 7.2 6.4 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 36.3 36.5 36.4 33.9 30.9 29.5 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 75.6 75.9 76.3 74.1 71.1 69.5 GHG emissions growth (mtCO2e) 3.1 1.1 0.5 3.8 5.5 5.1 Energy related GHG emissions (% of total) 24.2 24.5 24.0 24.2 24.5 23.8 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2021-EHCVM. Actual data: 2021. Nowcast: 2022-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 75 Apr 24 than 4 percent of the Seychelles’ budget al- located to climate resilience. SEYCHELLES Key conditions and Further improvements to the business en- vironment and a renewed focus on em- challenges ployment are needed to maintain inclusive growth. Labor earnings have been central Table 1 2023 The Seychelles is a high-income country to reducing poverty, yet labor and skills Population, million 0.1 with the highest GDP per capita in Sub-Sa- shortages and a growing rate of drug and GDP, current US$ billion 2.1 haran Africa but is highly vulnerable to ex- alcohol addiction constrain further ad- GDP per capita, current US$ 20446.9 ternal shocks. Tourism accounts for 31 per- vances. Labor shortages were partly ad- a 0.5 International poverty rate ($2.15) cent of GDP and 41 percent of exports. Over dressed through migration, with migrants a 1.2 90 percent of production inputs are import- representing 22 percent of the working-age Lower middle-income poverty rate ($3.65) a 6.7 ed, making the country highly vulnerable to population. The 2023 Enterprise Survey in- Upper middle-income poverty rate ($6.85) Gini index a 32.1 global commodity shocks and pandemics. dicates that firms identified a low supply School enrollment, primary (% gross) b 97.6 In 2020, during the COVID-19 pandemic, of skilled labor (20 percent of firms) and b 73.4 the economy shrunk by 8.5 percent, and the limited land (25 percent of firms) as major Life expectancy at birth, years fiscal deficit widened to 16.4 percent of GDP, obstacles in doing business. Total GHG emissions (mtCO2e) 1.0 while poverty rates based on the upper-mid- Source: WDI, Macro Poverty Outlook, and official data. dle-income line of US$6.85 per person per a/ Most recent value (2018), 2017 PPPs. b/ Most recent WDI value (2021). day rose to 8.0 percent. Moreover, the Sey- chelles is vulnerable to climate shocks. The Recent developments heavy rains and the explosion that occurred in December 2023 highlight the country's Growth was an estimated 3.3 percent in 2023 vulnerability to climate change. compared to 8.9 percent in 2022, driven by Economic growth is expected to reach 3.5 Prudent macroeconomic management has modest increases in tourism, particularly percent in 2024, supported by tourism and helped the Seychelles manage shocks and from key markets in Europe impacted by the rebuilding of infrastructure damaged sustain growth. Measures implemented to tight monetary conditions and the war in by extreme weather and the blast at an ex- mitigate the pandemic supported a quick Ukraine. Furthermore, geopolitical issues in recovery and were subsequently phased Israel affected tourist arrivals from Asia. In plosives depot in 2023. Despite these out. The government has implemented fis- 2023Q3, employment decreased by 0.2 per- shocks, average earnings have increased by cal consolidation since 2021 and has taken cent, while average earnings saw a 4.8 per- 4.8 percent and the poverty rate remained measures to improve the resilience of the cent increase compared with the same quar- stable at 5.9 percent in 2023. The govern- economy while also addressing the effect ter in 2022 due to an upward revision to pub- ment has prioritized support for vulnera- of external shocks. Adaptation invest- lic sector wages. Heavy rainfall, landslides, ments to strengthen climate resilience use and floods in the north of Mahé island, ble groups and investments to enhance mostly concessional financing, comple- coupled with a massive explosion in a key climate resilience while maintaining its mented by private sector efforts. Fiscal industrial zone, damaged commercial commitment to fiscal prudence. measures such as the 2023 tourism envi- buildings, houses, and public infrastruc- ronmental sustainability levy help raise re- ture at the end of 2023. This incident has sources for climate initiatives, with more impacted growth and increased household FIGURE 1 Seychelles / Real GDP growth and sectoral FIGURE 2 Seychelles / Actual and projected poverty rates contributions to real GDP growth and real GDP per capita Percent Poverty rate (%) Real GDP per capita (constant LCU) 10 12 300000 8 10 250000 6 4 8 200000 2 6 150000 0 -2 4 100000 Agriculture -4 Industry 2 50000 -6 Services Gross value added at basic prices 0 0 -8 2013 2015 2017 2019 2021 2023 2025 -10 International poverty rate Lower middle-income pov. rate 2019 2020 2021 2022 2023e 2024f 2025f 2026f Upper middle-income pov. rate Real GDP pc Sources: National Bureau of Statistics and World Bank staff calculations. Source: World Bank. Notes: see Table 2. MPO 76 Apr 24 vulnerability. Consequently, the govern- This is expected to contribute to an in- ment has provided support to households crease in public debt to 62 percent of and businesses to rebuild and re-occupy Outlook GDP. However, the government remains their premises. committed to containing public debt in Inflation remained low, prompting the Cen- The economy is expected to grow by 3.5 the medium term and developing the tral Bank of Seychelles to maintain the mon- percent in 2024, supported by tourism government securities market by issuing etary policy rate at 2 percent. In 2023, appre- and increases in flight seat capacity to bonds to reduce refinancing risk. In the ciation of the rupee and moderation in glob- the islands. Additionally, with 450 new context of low inflation expectations, the al commodity prices contributed to declin- hotel rooms expected to become avail- monetary authority is expected to main- ing domestic prices, with year-end inflation able during the year, tourism receipts tain the monetary policy rate at 2 per- of -2.71 percent. The primary fiscal balance are projected to increase. However, cent in 2024. More robust tourism earn- was 1.4 percent of GDP, as revenue in- weak trade and commerce within the ings are expected to contribute to a sta- creased, led by strong business and proper- Providence industrial zone due to the ble rupee, even though the current ac- ty tax collections, despite higher govern- gradual recovery from last year’s explo- count deficit is projected to widen as ment expenditure due to higher public sec- sion are expected to weigh on growth. imports increase for consumption and tor wages and the establishment of the Fiscal measures and reconstruction ef- reconstruction efforts. Home Care Agency. Although the budget forts to restore businesses’ operationali- The country’s reliance on the European allocated to capital expenditure was higher ty by end-2024 are expected to support tourist market is a risk, and delays in than in 2022, project under-execution of 32 the economic recovery beyond 2024. the opening of new and renovated ho- percent resulted in budget savings. Public Following the December incidents, the tels could also result in a lower-than-ex- debt declined to 60.1 percent of GDP due to government’s priorities are to support pected yield from tourism in 2024. Ad- repayments of external debt. The current ac- vulnerable groups whose homes were ditionally, attacks on commercial ves- count deficit narrowed to an estimated at 5.6 damaged and to invest in strengthening sels in the Red Sea could increase in- percent of GDP. The deficit is financed by resilience to climate events, including flation through higher import prices, foreign direct investments, equivalent to building and maintaining structures like which may disproportionally affect the 13.8 percent of GDP, primarily from invest- bridges, watersheds, canals, retaining poor. Lastly, climate shocks pose a sig- ments in hotels and resorts. Foreign ex- walls, and coastal blockades. Additional nificant risk, underscoring the impor- change reserves increased to US$681 million spending beyond already planned in- tance of sustainable growth and poverty in 2023, covering 3.8 months of imports. vestments is needed to rebuild better. reduction strategies. TABLE 2 Seychelles / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 2.5 8.9 3.3 3.5 3.4 3.4 Private consumption 1.3 6.6 6.4 1.4 6.5 3.7 Government consumption 4.3 2.5 6.0 5.5 5.2 5.0 Gross fixed capital investment 0.4 2.7 34.3 8.6 -1.2 2.1 Exports, goods and services 6.2 9.1 5.7 8.7 6.2 6.0 Imports, goods and services 4.7 3.1 15.0 9.4 5.4 5.5 Real GDP growth, at constant factor prices 2.5 9.0 3.3 3.5 3.4 3.4 Agriculture 0.8 -1.0 4.2 2.1 2.1 2.1 Industry -4.9 3.3 5.1 -1.5 3.5 4.5 Services 4.2 10.5 2.9 4.5 3.4 3.2 Inflation (consumer price index) 7.9 2.5 -2.7 3.4 2.8 2.3 Current account balance (% of GDP) -8.9 -7.1 -6.9 -7.4 -7.2 -6.4 Net foreign direct investment inflow (% of GDP) 9.3 11.3 13.6 11.2 10.2 9.9 Fiscal balance (% of GDP) -5.8 -1.5 -1.3 -1.4 -0.9 0.1 Revenues (% of GDP) 33.0 31.2 32.6 35.1 35.7 35.2 Debt (% of GDP) 73.1 63.6 60.1 62.0 60.1 57.2 Primary balance (% of GDP) -2.9 0.7 1.7 1.0 1.1 1.6 a,b International poverty rate ($2.15 in 2017 PPP) 0.7 0.5 0.5 0.5 0.4 0.4 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 1.7 1.2 1.1 1.1 1.0 0.9 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 8.4 6.4 5.9 5.9 5.6 5.4 GHG emissions growth (mtCO2e) 6.9 10.0 11.5 11.9 12.1 11.9 Energy related GHG emissions (% of total) 78.4 79.6 81.0 82.3 83.4 84.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2018-HBS. Actual data: 2018. Nowcast: 2019-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2018) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 77 Apr 24 coup attempt, has eroded households’ pur- chasing power and constrained private SIERRA LEONE Key conditions and consumption and investment. However, amidst these challenges, the mining sector challenges performed well, buoyed by strong iron ore production and exports, and promising Table 1 2023 Economic development has been con- agricultural output. Population, million 8.8 strained by the country's susceptibility to Inflationary pressures intensified, with GDP, current US$ billion 3.5 external shocks, often been compounded some tentative signs of moderation in the GDP per capita, current US$ 394.1 by weak macroeconomic management. last quarter of 2023. Headline inflation av- a 26.1 International poverty rate ($2.15) During the last decade, growth has aver- eraged 47.6 percent during 2023 – the sec- a 64.3 aged 4 percent (8 percent in the previous ond highest in Africa after Sudan – driven Lower middle-income poverty rate ($3.65) a 89.9 decade) with high volatility marked by by a combination of supply side factors Upper middle-income poverty rate ($6.85) Gini index a 35.7 episodes of boom and bust. The country’s (high food and fuel inflation), a depreci- School enrollment, primary (% gross) b 151.7 concentrated economic structure– heavy ated currency, and continued fiscal domi- b 60.1 reliance on low-value-added agriculture, nance. Food inflation averaged 57 percent. Life expectancy at birth, years mining, a sizable informal services sector In response, the central bank raised rates Total GHG emissions (mtCO2e) 9.7 – lends itself to volatility. Policy slippages by a cumulative 525 basis points in 2023 Source: WDI, Macro Poverty Outlook, and official data. with regard to macroeconomic manage- to 22.25 percent by year-end. However, the a/ Most recent value (2018), 2017 PPPs. b/ Most recent WDI value (2021). ment have aggravated the impact of exter- efficacy of monetary policy is limited by nal shocks. In addition to low growth, this shallow financial markets, and fiscal dom- has caused debt levels to rise markedly, inance. Inflation showed some signs of ranking among the highest in the region, moderating after peaking at 54.6 percent and headline inflation to increase to a two- (y-o-y) in October, down to 47 percent by decade high in 2023. Economic growth has January 2024. The economy continues to face signifi- been held back by structural factors such The fiscal position improved marginally cant challenges as policy missteps have as low private sector participation and in- in 2023 but fell short of the year’s targets. aggravated the impact of external vestments, inadequate human capital, The fiscal deficit narrowed to 8 percent – poor infrastructure, and weak institutions. 1.3 percentage points lower than in 2022 shocks, resulting in high and stubborn but 2.2pp higher than the budgeted tar- inflation, pressures on the currency, get. Expenditures were 2.6pp lower than high risk of debt distress and inadequate in 2022, with cuts in wages and salaries growth to support poverty reduction. Recent developments (1pp), subsidies (1pp) and capex (0.6pp). Despite some efforts in 2023, further Domestic revenue performance, although Economic activity slowed due to subdued 1pp below target, improved by 0.4pp due corrective fiscal and monetary measures aggregate demand and socio-political in- to partial implementation of policy mea- are urgently needed to address high in- stability. GDP growth is estimated at 3.1 sures introduced in 2023, and improve- flationary pressure and the worsened percent in 2023, marking the second consec- ments in tax compliance. Public debt de- food insecurity situation. utive year of a slowdown. High and persis- clined to 87 percent of GDP from 93 per- tent inflation, compounded by a recent cent in 2022, but liquidity and solvency FIGURE 1 Sierra Leone / Real GDP growth and contributions FIGURE 2 Sierra Leone / Actual and projected poverty rates to real GDP growth and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant million LCU) 50 100 1.6 40 90 1.4 30 80 1.2 20 70 10 60 1.0 0 50 0.8 -10 40 0.6 -20 30 0.4 -30 20 -40 10 0.2 2001 2004 2007 2010 2013 2016 2019 2022 2025 0 0.0 Gov. cons. Exports GFCF 2011 2013 2015 2017 2019 2021 2023 2025 Inventories Private cons. Imports International poverty rate Lower middle-income pov. rate Statistical disc. GDP Upper middle-income pov. rate Real GDP pc Sources: Statistics Sierra Leone and World Bank. Source: World Bank. Notes: see Table 2. MPO 78 Apr 24 risks to debt sustainability remain elevat- measures identified in the Medium-Term ed. External debt, mainly owed to mul- Revenue Strategy and near-term expendi- tilateral organizations, constitutes two- Outlook ture consolidation, especially on wages thirds of the total, while the remaining is and subsidies. Monetary policy tightening short-term domestic debt. Growth is projected to recover slowly to should be complemented with reduced The trade and current account balances 3.5 percent in 2024 against a backdrop of central bank interventions and developing improved slightly due to stronger iron high inflation and continued fiscal consol- the money market. ore exports and subdued import de- idation, before converging to its long-term Pace of poverty reduction is expected to mand. Capital inflows improved largely average of 4-4.5 percent in the medium- pick-up as inflation subsides in the medi- on account of higher project grants. term. The projected recovery will be sup- um term. The international poverty rate However, official reserves declined ported by (i) continued growth in iron (PPP$2.15 /day) is expected to decline to nonetheless to barely three months of mining with planned expansion at major 22.7 percent by 2026, supported by recov- import cover due to external debt ser- mines, (ii) resilience in agricultural pro- ering growth and moderating inflation. vice, currency interventions, and foreign duction as it trends closer to its long-term This outlook is subject to several down- currency payments to diplomatic mis- average of 3.2 percent growth, and (iii) side risks. Deviating from fiscal consoli- sions overseas. The currency depreciated gradual service sector improvements. In- dation may jeopardize stability, as debt by 18 percent (40 percent in 2022). flation will be influenced by global com- sustainability risks remain elevated. Ad- Decline in poverty slowed down in 2023. modity prices and monetary tightening verse global developments (including Extreme poverty rate is (PPP$ 2.15/day) es- and is expected to moderate to 15 percent slowing growth in China) can impact timated at 25.3 percent in 2023, compared by 2026. Elevated prices will continue to commodity prices and exports. Climate to 25.7 in the previous year. Rising food impact consumption and investment ap- vulnerabilities and inflation could in- price increases will continue to have a dis- petite, while fiscal consolidation will affect crease food insecurity and aggravate so- proportionate impact on the poor. WFP es- aggregate demand. cial tensions. The risk of political insta- timates high prevalence of insufficient Upholding fiscal and monetary policy bility remains high, following a disput- food consumption, affecting 55 percent of tightening is pivotal for macroeconomic ed general election and an attempted the population. stability. Fiscal outlook relies on revenue coup, that affected policy momentum. TABLE 2 Sierra Leone / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 4.1 3.5 3.1 3.5 4.0 4.3 Private consumption 36.7 -0.7 5.1 6.4 7.4 8.0 Government consumption 0.6 10.2 2.4 2.3 3.8 5.3 Gross fixed capital investment -30.0 -2.8 2.7 3.1 4.9 5.6 Exports, goods and services 1.9 5.0 20.0 19.5 18.0 15.0 Imports, goods and services 46.6 -0.3 10.5 12.0 13.0 13.0 Real GDP growth, at constant factor prices 4.0 3.6 3.1 3.5 3.9 4.3 Agriculture 2.5 3.0 2.7 3.2 3.3 3.3 Industry 17.4 8.2 5.0 6.0 6.6 6.6 Services 2.8 3.2 3.0 3.1 4.1 5.0 Inflation (consumer price index) 11.9 27.0 46.7 30.5 20.0 14.6 Current account balance (% of GDP) -8.7 -9.3 -7.8 -5.1 -4.6 -3.6 Net foreign direct investment inflow (% of GDP) 8.5 8.2 5.8 8.8 9.8 12.6 Fiscal balance (% of GDP) -7.6 -9.3 -8.0 -5.0 -3.1 -2.6 Revenues (% of GDP) 21.1 18.9 18.1 20.1 20.1 20.5 Debt (% of GDP) 84.7 93.0 87.0 76.6 65.4 60.9 Primary balance (% of GDP) -4.2 -6.0 -3.9 -0.5 1.0 1.0 a,b International poverty rate ($2.15 in 2017 PPP) 26.2 25.7 25.3 24.5 23.7 22.7 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 65.0 64.6 64.1 63.5 62.7 61.4 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 90.8 90.5 90.4 90.2 89.7 89.2 GHG emissions growth (mtCO2e) 1.6 2.4 0.4 0.3 0.3 0.3 Energy related GHG emissions (% of total) 11.3 11.0 10.9 10.9 10.9 10.9 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2018-SLIHS. Actual data: 2018. Nowcast: 2019-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 79 Apr 24 COVID-19 pandemic, protracted 15-month electoral impasse, prolonged and severe SOMALIA Key conditions and drought, floods, locusts’ infestation, higher international commodity prices, and in- challenges creased insecurity and conflict. As the government’s fiscal space remains limited Table 1 2023 Somalia continues to contend with fre- for development priorities and to re- a 16.1 Population, million quent shocks in the context of widespread spond to recurrent shocks, this debt relief b 11.7 GDP, current US$ billion fragility, conflict, and violence. Recurrent is expected to facilitate access to critical GDP per capita, current US$ 727.7 climate-related shocks such as cycles of additional financial resources needed to c 37.0 Gini index droughts, floods, locusts’ infestation, strengthen the economy, reduce poverty, c 25.0 volatile international commodity prices, as and promote job creation. School enrollment, primary (% net) d 55.3 well as increased insecurity and conflict Life expectancy at birth, years Total GHG emissions (mtCO2e) 43.7 have interrupted the country’s growth tra- jectory and slowed the transition from Source: WDI, Macro Poverty Outlook, and official data. a/ Estimates based on 2013 population estimates by UNF- fragility. Growth has been modest and Recent developments PA and assume an average annual population growth of does not generate the jobs needed to re- 2.8%. b/ Somalia released new GDP series (2017-22) in June duce poverty. It averaged only 2 percent The economy is rebounding gradually 2023, rebasing the old series. annually in 2019–23 with an average neg- with improved weather conditions con- c/ Somalia Integrated Household Budget Survey 2022 ative real GDP per capita growth of 0.8 tributing to the continued reversal of the (SNBS, 2023). d/ Most recent WDI value (2021). percent. Labor force participation rates are impacts of the prolonged 2020/23 severe exceptionally low with large gender gaps. drought. Favorable rains in 2023 led to Only one-third of men and 12 percent of improved agricultural production, re- women participate in the labor market. duced food insecurity, and supported Poverty is high and widespread, with re- private consumption. Exports recovery The economy continues its recovery as current shocks increasing the risk of more was faster than that of imports, as ex- improved weather conditions boost agri- people falling into poverty. ports of livestock rebounded. Neverthe- culture production, private consump- Somalia achieved a historic HIPC Comple- less, net exports continue to be a drag tion, and exports. GDP is estimated to tion Point (CP) milestone on December 13, on growth as the economy is heavily 2023. Following the CP, Somalia received reliant on imports. Private sector credit have grown at 3.1 percent in 2023, up full and irrevocable debt relief for the growth contributed to strengthening of from 2.4 percent in 2022. Supported by country of US$4.5 billion. As a result, So- construction, real estate, and investment favorable rains and declining global malia’s external debt is estimated at less as growth in remittances remained mut- prices, inflation eased in 2023 but re- than 6 percent of GDP in 2023, from 64 ed. Real GDP is estimated to have grown at percent in 2018. The country achieved this 3.1 percent in 2023, at par with population mained sticky. Nevertheless, recurrent milestone under a very challenging and growth, up from 2.4 percent in 2022. shocks such as the ongoing floods are fragile environment—the key structural Inflationary pressures eased in 2023, increasing the susceptibility of more reforms were implemented at a time when supported by better agriculture perfor- people falling into poverty. the country was plagued by multiple mance and declining commodity prices. shocks and challenges including the global Overall inflation, however, remained FIGURE 1 Somalia / Federal government revenue FIGURE 2 Somalia / Actual and projected poverty rates and real GDP per capita Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 8 100 710 7 90 700 80 6 70 690 5 60 680 4 50 670 40 3 30 660 2 20 650 1 10 0 640 0 2017 2019 2021 2023 2025 2018 2019 2020 2021 2022 2023 International poverty rate Lower middle-income pov. rate Tax revenue Non-tax revenue Grants Real GDP pc Sources: Somalia authorities and World Bank estimates. Source: World Bank. Notes: see Table 2. MPO 80 Apr 24 sticky, averaging 6.1 percent in 2023 com- Poverty remains high. Projections based Real GDP growth is projected to ex- pared to 6.8 percent in 2022. Favorable on GDP per capita growth suggest poverty pand from 3.7 percent in 2024 to 4 per- rains in 2023 boosted agricultural produc- has increased from 71 percent in 2017 to cent in 2026. Economic reforms and in- tion, easing local staple food prices. Food in- 73 percent in 2023, based on the 2017 creased public investment with HIPC flation averaged 0.7 percent in 2023, com- poverty line. According to the 2022 Inte- CP dividends will boost investor con- pared to 13.9 percent in 2022. The easing of grated Household Budget Survey, while fidence and attract foreign direct in- global commodity prices has led to lower fu- poverty rates are highest among the no- vestment (FDI) encouraging increased el and energy prices locally, though still high madic population, due to Somali’s high ur- broad-based private sector activity. compared to pre-2022 levels, contributing to banization, the largest share of the poor Moreover, the recovery of agricultural the stickier overall inflation. are in urban areas. While the international production and exports is expected to The Federal Government of Somalia (FGS) community has provided support in the continue with improving weather con- ran a small surplus in 2023 but the fiscal form of food assistance, an expansion of ditions. This, coupled with further eas- situation remains challenging due to low social safety net programs, and support to ing of the global commodity prices, domestic resource mobilization (Figure 1). informal settlers in urban areas, people re- is expected to keep inflation low. Domestic revenue mobilization improved main vulnerable to falling below the Nonetheless, the outlook is subject to in 2023 to 2.8 percent of GDP, from 2.5 per- poverty line. Somalia remains vulnerable significant risks including climatic cent in 2022 but remained well below the to shocks, particularly climatic ones, un- shocks, security threats, and global development needs of the country. Pub- derscoring the importance of strengthen- economic shocks. lic expenditures are dominated by person- ing resilience through advancing reforms The poverty rate is projected to de- nel costs, while investments in human cap- to support growth, food security, and the crease between 2024 and 2026, reach- ital are largely financed by grants and in- provision of basic services. ing 71 percent in 2026, although still vestments in infrastructure are negligible. very high. Accelerating the pace of To improve fiscal sustainability and main- poverty reduction will require policy tain prudent fiscal policy, the government interventions and public investments will need to fast-track the numerous efforts Outlook that raise productivity, strengthen re- underway to increase domestic revenue as silience, create jobs, and expand pro- well as constrain its wage bill and its re- Medium-term recovery is projected to poor programs that focus on women liance on external donor funds. be modest as risks remain significant. and youth. TABLE 2 Somalia / Macro poverty outlook indicators (percent of GDP unless indicated otherwise) a 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 3.3 2.4 3.1 3.7 3.9 4.0 CPI inflation, annual percentage change 4.6 6.8 6.1 3.9 3.7 3.5 Current account balance -7.3 -8.0 -9.6 -8.6 -8.8 -10.4 Trade balance -50.9 -61.2 -58.8 -58.5 -57.7 -56.9 Private remittances 21.5 20.6 20.3 20.4 20.6 21.0 Official grants 23.0 33.0 29.3 29.8 28.6 25.9 b Fiscal balance -0.8 -0.1 0.2 -0.4 -1.2 -1.8 Domestic revenue 2.3 2.5 2.8 2.8 3.0 3.3 External grants 1.5 4.4 3.5 4.3 3.0 1.5 Total expenditure 4.7 7.0 6.2 7.5 7.1 6.6 Compensation of employees 2.5 2.5 2.5 2.6 2.5 2.5 External debt 39.9 36.7 5.4 5.0 5.7 7.2 c,d International poverty rate ($2.15 in 2017 PPP) 72.6 72.8 72.7 72.1 71.6 71.0 c,d Lower middle-income poverty rate ($3.65 in 2017 PPP) 91.3 91.4 91.3 91.0 90.7 90.4 c,d Upper middle-income poverty rate ($6.85 in 2017 PPP) 99.8 99.9 99.8 99.5 99.1 98.8 GHG emissions growth (mtCO2e) 0.0 0.0 0.2 0.3 0.3 0.2 Energy related GHG emissions (% of total) 1.5 1.5 1.5 1.5 1.5 1.5 Source: World Bank, IMF, and FGS. Emissions data sourced from CAIT and OECD. Notes: e = estimate; f = forecast. a/ GDP baseline estimates 2021-22 are by Somalia National Bureau of Statistics (SNBS, June 2023). b/ Federal Government of Somalia (FGS). c/ Calculations based on Takamatsu et al. (2022) “Rapid Consumption Method and Poverty and Inequality Estimation in Somalia Revisited.” Actual data: 2017. Nowcast: 2021–23. Forecasts: 2024–26. d/ Projection using neutral distribution (2017) with pass-through = 1 (High) based on GDP per capita in constant LCU. MPO 81 Apr 24 with the South African Reserve Bank’s price stability mandate. SOUTH AFRICA Key conditions and The political economy is complex. Amid growing discontent with eco- challenges nomic prospects and dismal public service delivery, the African National Table 1 2023 South Africa’s economy remains crippled Congress (ANC) is set to face highly Population, million 60.5 by multiple structural constraints, includ- contested general elections this year. GDP, current US$ billion 378.0 ing electricity shortages, transport bottle- Hence, there is uncertainty around the GDP per capita, current US$ 6248.5 necks (ports and freight rail), and a high economic policies the new government a 20.5 International poverty rate ($2.15) crime rate. Reforms to address them con- will prioritize. a 40.0 tinue to advance at a slow pace due to Lower middle-income poverty rate ($3.65) a 61.6 declining state implementation capacity Upper middle-income poverty rate ($6.85) Gini index a 63.0 and a lack of political consensus. Social School enrollment, primary (% gross) b 98.1 indicators remain dismal. Poverty is high Recent developments b 62.3 – estimated at 62.7 percent in 2023 when Life expectancy at birth, years using the upper-middle-income poverty Real GDP growth slowed from 1.9 per- Total GHG emissions (mtCO2e) 580.1 line – and inequality remains among the cent in 2022 to 0.6 percent in 2023. On Source: WDI, Macro Poverty Outlook, and official data. highest in the world. Progress on extend- the spending side, private investment a/ Most recent value (2014), 2017 PPPs. b/ Most recent WDI value (2021). ing access to basic services (such as wa- in alternative energy supported growth, ter, electricity, and refuse collection) is but a drawdown on inventories and stalling. Vulnerability to hunger has in- weak net export performance had a neg- South Africa’s economic growth slowed to creased since the COVID-19 pandemic. ative impact on growth. Domestic con- An estimated 12.9 percent of the popu- sumption remained constrained by poor 0.6 percent in 2023, undermined by con- lation was at risk of hunger in 2022, de- labor market outcomes and fiscal ex- straints on products and input markets spite the expansion of social grants. penditure restraint. On the sectoral side, and a broad-based decline in public ser- In the absence of structural reforms, the mining and manufacturing were affect- vice delivery (electricity supply, transport impact of fiscal policy on output (the fis- ed by power outages and transport bot- cal multiplier) has been low and declin- tlenecks. The services sectors performed and logistics, public safety). As this weak ing, reflecting inefficiencies in the alloca- better. Extreme weather events, includ- growth trailed population growth, per tion of resources and deteriorating state ing floods, severe storms, and droughts capita income contracted by 0.4 percent. capacity. Social spending has mitigat- in several provinces negatively affected The unemployment rate remains above 30 ed hardship, but weak job creation has agricultural output and had significant percent amid limited labor demand. hampered progress in reducing poverty. human and social costs. Higher public sector wages and transfers The unemployment rate averaged 32.4 Ahead of general elections in May, the to poorly performing state-owned enter- percent in 2023, with the rate for those 2024 Budget further extended social sup- prises have crowded out public invest- aged 15-34 at 44.9 percent. Even though port introduced during the pandemic ment, contributing to the erosion of the more jobs were created in 2023 – about while maintaining plans to stabilize debt. country’s public capital stock. Monetary 790,000 jobs – the pace of job creation is policy is sound, credible, and consistent not keeping up with the growing labor FIGURE 1 South Africa / Government financing FIGURE 2 South Africa / Actual and projected poverty rates and real GDP per capita Poverty rate (%) Real GDP per capita (constant LCU) 70 82000 60 80000 50 78000 40 76000 30 74000 20 10 72000 0 70000 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 International poverty rate Lower middle-income pov. rate Upper middle-income pov. rate Real GDP pc Sources: National Treasury and World Bank. Source: World Bank. Notes: see Table 2. MPO 82 Apr 24 force, resulting in rising numbers of un- account deficit is expected to widen to employed people. 2.8 percent of GDP in 2024 and to 3 per- Consumer inflation, supported by sound Outlook cent of GDP by 2026. Nonetheless, it is monetary policy and lower global com- projected to remain financed by foreign modity prices, declined from 6.9 percent Persistent structural constraints limit capital inflows. in 2022 to 6.0 percent in 2023. The South South Africa’s economic potential. Real The fiscal trajectory is projected to im- African Reserve Bank left the key in- GDP growth is projected to average 1.3 prove gradually over the medium term. terest rate unchanged at 8.25 percent percent over 2024-26, as energy sector re- However, spending allocations remain since May 2023. Yet, high food and fu- forms are expected to improve electricity tilted toward current expenditure. Public el prices disproportionately affected the supply gradually. To accelerate the growth capital spending is projected below 3 per- most vulnerable people: the poorest 20 trajectory, broad-based reforms and faster cent of GDP over 2024-26 due to limited percent of households faced an inflation implementation are urgently needed. fiscal space. The government is planning rate of 9.3 percent. Inflation is expected to continue to decline, to draw down about US$8 billion from The current account deficit widened from easing the cost-of-living pressures on the Gold and Foreign Exchange Contin- 0.5 percent of GDP in 2022 to 1.6 percent households. The labor market is expected gency Reserve Account (GFECRA) – an of GDP in 2023, due to deteriorating to remain weak, driven by subdued pri- account at the central bank recording for- terms of trade (-4.8 percent in 2023), vate sector activity, skills mismatches, and eign exchange valuation changes in and logistics constraints on exports. Low- cumbersome labor regulations. This will rand–over the next three years to reduce er global commodity prices for South translate into unemployment rates in the its borrowing requirements, which is ex- Africa’s key exports contributed to weak- order of 32 percent over 2024-26. The weak pected to translate into slower debt ac- er fiscal revenue and, together with rising labor market will continue to weigh on cumulation. Public debt is projected to debt-service payments and persistent households’ consumption and progress on reach about 78 percent of GDP in 2026. spending pressures, negatively impact- social outcomes. The upper-middle-in- However, pressures on public wages and ed fiscal outcomes. The fiscal deficit come poverty rate is projected to remain state-owned enterprises, the extension of reached an estimated 6 percent of GDP high, at 62.5 percent in 2026. the COVID-19 social relief of distress in 2023/24, and public debt reached Less favorable terms of trade and persis- grant, persistently high interest rates, and an estimated 73.9 percent of GDP over tent transport bottlenecks are expected to high risks to growth and revenue could the same period. weigh on external balances. The current put fiscal consolidation at risk. TABLE 2 South Africa / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 4.7 1.9 0.6 1.2 1.3 1.5 Private consumption 5.8 2.5 0.7 1.4 1.4 1.4 Government consumption 0.5 1.0 2.1 -0.8 -0.3 -0.4 Gross fixed capital investment 0.6 4.8 4.2 4.2 4.0 4.0 Exports, goods and services 9.1 7.4 3.5 2.2 2.5 3.0 Imports, goods and services 9.6 14.9 4.1 3.8 3.0 3.0 Real GDP growth, at constant factor prices 4.4 1.9 0.6 1.2 1.3 1.5 Agriculture 7.4 0.9 -12.2 12.7 2.0 2.0 Industry 6.2 -2.5 -0.1 0.3 1.1 1.6 Services 3.8 3.4 1.3 1.1 1.3 1.4 Inflation (consumer price index) 4.5 6.9 6.0 4.9 4.5 4.5 Current account balance (% of GDP) 3.7 -0.5 -1.6 -2.8 -3.0 -3.0 Net foreign direct investment inflow (% of GDP) 9.7 1.6 2.0 1.5 1.5 1.5 a Fiscal balance (% of GDP) -4.6 -3.6 -6.0 -5.9 -6.0 -4.5 Revenues (% of GDP) 27.8 28.2 27.3 27.3 27.3 27.4 Debt (% of GDP) 67.8 70.9 73.9 74.5 76.9 78.0 Primary balance (% of GDP) -0.4 0.9 -1.0 -0.6 -0.6 1.1 b,c International poverty rate ($2.15 in 2017 PPP) 21.7 21.5 21.5 21.5 21.4 21.4 b,c Lower middle-income poverty rate ($3.65 in 2017 PPP) 41.4 41.1 41.1 41.1 41.1 40.9 b,c Upper middle-income poverty rate ($6.85 in 2017 PPP) 62.8 62.6 62.7 62.6 62.6 62.5 GHG emissions growth (mtCO2e) 3.2 3.7 -1.1 0.7 1.0 1.4 Energy related GHG emissions (% of total) 78.3 78.8 78.4 78.4 78.4 78.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ The Eskom debt-relief arrangement is reported above the line, in expenditures. b/ Calculations based on 2014-LCS. Actual data: 2014. Nowcast: 2015-2023. Forecasts are from 2024 to 2026. c/ Projection using neutral distribution (2014) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 83 Apr 24 South Sudan’s economy faces vulnerabil- ities, including its dependence on non- SOUTH SUDAN Key conditions and concessional financing and limited fiscal space to respond to adverse global oil challenges and food price developments. The con- flict in Sudan presents acute macroeco- Table 1 2023 A decade after independence, South Su- nomic risks if oil pipeline routes through Population, million 11.1 dan’s development prospects remain con- the country are disrupted. GDP, current US$ billion 4.4 strained by fragility amid localized/inter- Implementing the 2018 peace deal and GDP per capita, current US$ 392.8 communal conflict. The 2018 peace agree- holding credible elections in December a 67.3 International poverty rate ($2.15) ment ended five years of civil war; how- 2024 is essential for domestic peace and a 86.5 ever, the transition period needed for its continued growth. Urgent implementation Lower middle-income poverty rate ($3.65) a 96.6 full implementation has been extended to of macroeconomic, governance, and trans- Upper middle-income poverty rate ($6.85) Gini index a 44.1 2025. Oil accounts for nearly all exports parency reforms is necessary to ensure School enrollment, primary (% gross) b 81.9 and about 90 percent of government rev- scarce resources are spent on development b 55.0 enues. Historic floods and the COVID-19 needs and to facilitate a sustainable and Life expectancy at birth, years pandemic upended a modest economic inclusive economic recovery. Reforms and Total GHG emissions (mtCO2e) 73.4 recovery in 2019. investments are especially critical in agri- Source: WDI, Macro Poverty Outlook, and official data. International Monetary Fund (IMF)-sup- culture, which supports livelihoods for 80 a/ Most recent value (2016), 2017 PPPs. b/ Most recent WDI value (2021). ported reforms initiated since 2021 have percent of the population; these will help helped improve macroeconomic and price to support diversification away from the stability and supported a recovery in the oil sector, create jobs, and build resilience Better harvests and a partial recovery in non-oil private sector. Higher oil prices fol- to climate change. lowing the war in Ukraine have lifted fiscal oil production following flooding-related revenues, although expenditures have also disruptions are lifting overall growth. increased. Poverty remains dire, with 7 in However, food insecurity and extreme 10 people living in extreme poverty. Some Recent developments poverty remain high because of climate 8.9 million people, 78 percent of the pop- ulation, face severe food insecurity, made GDP growth contracted by an estimated and external shocks, declining official de- worse by higher global food prices and 1.3 percent FY2022/23 due to a fourth velopment assistance, structurally weak domestic floods. In addition, 2 million consecutive year of flooding that dragged governance, inadequate service delivery, people are internally displaced (55 per- on oil production and higher food infla- and localized conflict. The conflict in Su- cent of whom are women and girls), tion due to the war in Ukraine and the dan presents acute risks to macroeconom- and 2.1 million remain refugees in neigh- lingering impacts of the COVID-19 pan- boring countries. Since the start of the demic. Nevertheless, a sustained recov- ic stability amid growing fiscal pressures conflict in Sudan, over half a million ery in private sector activity is evident, and pressing humanitarian needs; a loss Sudanese refugees and returnees from supported by improvements in macro- of momentum in the political transition South Sudan have registered in the coun- economic stability due to reforms an- could amplify these risks. try, compounding already severe domestic chored by IMF programs, higher govern- humanitarian needs. ment spending enabled by a recovery in FIGURE 1 South Sudan / Exchange rate developments FIGURE 2 South Sudan / Actual and projected poverty rates and real GDP per capita SSP/USD Spread, percent Poverty rate (%) Real GDP per capita (constant LCU) 1400 300 100 3500 1200 90 250 3000 80 1000 70 2500 200 60 2000 800 150 50 600 40 1500 100 30 1000 400 20 200 50 500 10 0 0 0 0 2009 2011 2013 2015 2017 2019 2021 2023 2025 Oct-20 Apr-21 Oct-21 Apr-22 Oct-22 Apr-23 Oct-23 International poverty rate Lower middle-income pov. rate Spread (rhs) Official XR (lhs) Parallel XR (lhs) Upper middle-income pov. rate Real GDP pc Sources: Bank of South Sudan and World Bank. Source: World Bank. Notes: see Table 2. MPO 84 Apr 24 oil prices, an increased flow of credit to However, the government has accumulat- exports in recent months. Over the medi- firms, and a steady expansion in harvest- ed salary arrears since the start of the fis- um term, growth should remain close to ed areas as localized improvements in cal year and reverted to deficit moneti- 4 percent as oil output levels recover and peace and high crop prices encouraged zation. Data for FY24Q2 show continued non-oil activity improves, supported by farmers to expand planting. overdrafts at the central bank and the use moderating inflation and higher govern- Inflation has increased significantly in re- of oil advances to finance the budget. ment outlays on critical public invest- cent months, rising from 13.3 percent in Public financial management reforms to ments, health, and education. This outlook 2023H1 to 31.9 percent in January 2024 due strengthen expenditure controls and cash is predicated on prudent monetary and fis- to the weakening currency. The onset of management have been initiated. Howev- cal policies that anchor macroeconomic the conflict in Sudan and the recent Red er, there is limited transparency on oil rev- stability, progress on governance, trans- Sea crisis have impacted the oil revenue enues, including servicing of non-conces- parency, and structural reforms, and cred- flows, causing foreign exchange reserves sional external debt. South Sudan remains ible elections in 2024 that help to sustain to drop from 0.5 months of import cov- at a high risk of both external and domestic peace. The pressure on the current account erage in June 2023 to 0.2 months in De- debt distress. Despite a good trade deficit, is expected to increase due to higher debt- cember 2023. Amid increasing recourse to the overall current account deficit has service obligations, a decline in oil prices, deficit monetization, the official exchange gradually narrowed and shifted into a and a decline in international aid. rate has depreciated by 42 percent since small surplus due to large net transfers, Extreme poverty is expected to remain the start of 2024, and the premium in par- mainly remittances, reflecting increased stagnant at around 70 percent in the medi- allel markets has widened to 13.7 percent. confidence in the economy following the um term as real growth prospects are lim- Fiscal pressures proved more significant exchange rate reforms. ited. Addressing this reinforces the ur- than anticipated in FY2022/23. Higher oil gency of fiscal and public financial man- prices and non-oil revenue administration agement reforms that generate budgetary reforms increased overall revenues by resources to increase social expenditures. 42 percent. Expenses exceeded planned Outlook While efforts to modernize tax administra- outlays by 29 percent, with overall tion using digital solutions and to expand spending increasing by 41.9 percent, Growth is expected to rebound to 2 per- the tax base could help, fiscal pressures are mainly due to higher operational and cent in FY2023/24, supported by a sus- expected to remain substantial given siz- capital expenditures. The FY2023/24 bud- tained recovery in the non-oil sector and able debt-service obligations, a reduction get further raised capital expenditures, expanding crop planting. The recovery in in legacy arrears, and increasing social and increased public sector salaries by 130 oil production from the impacts of flood- humanitarian expenditures. It is thus al- percent to protect against the impacts of ing of oil fields has been partially offset so vital to strengthen the management and inflation, and raised transfers to regions. by a temporary decline in production and transparency of oil revenues. TABLE 2 South Sudan / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices -5.1 -2.3 -1.3 2.0 3.8 4.0 Real GDP growth, at constant factor prices -5.1 -2.3 -1.3 2.0 3.8 4.0 Agriculture -4.0 -1.8 -1.7 1.7 2.8 3.0 Industry -2.3 -4.8 -4.3 0.5 3.3 3.0 Services -9.7 1.7 3.6 4.1 4.7 5.6 Inflation (consumer price index) 43.1 22.0 18.0 35.0 22.0 12.4 Current account balance (% of GDP) -5.5 -1.6 5.0 4.2 5.7 6.4 Net foreign direct investment inflow (% of GDP) 0.9 1.0 0.8 0.7 0.6 0.6 Fiscal balance (% of GDP) -6.8 -6.1 1.9 2.0 2.0 1.9 Revenues (% of GDP) 30.9 30.1 30.6 32.0 31.8 31.5 Debt (% of GDP) 57.6 59.5 42.9 36.9 32.4 27.5 Primary balance (% of GDP) -4.4 -4.0 3.0 2.7 2.8 2.6 a,b International poverty rate ($2.15 in 2017 PPP) 67.5 68.8 69.5 70.1 70.0 69.9 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 86.6 87.6 88.0 88.3 88.2 88.2 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 96.7 97.1 97.2 97.3 97.3 97.3 GHG emissions growth (mtCO2e) 2.1 0.8 0.9 1.3 1.4 1.5 Energy related GHG emissions (% of total) 2.7 2.7 2.7 2.7 2.9 3.0 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2016-HFS-W3. Actual data: 2016. Nowcast: 2017-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2016) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 85 Apr 24 limited basis. As of end-March 2024, the ex- change rate stood at SDG 1150 in official SUDAN Key conditions and banks and SDG 1350 in the parallel market, a stark contrast to the pre-war rates of SDG challenges 580. Exports now take alternative routes to established channels due to decreased pro- Table 1 2023 The armed conflict that erupted in April duction. Smuggling has become common in Population, million 48.1 2023 has caused severe and long-lasting evading high duties, resulting in export rev- GDP, current US$ billion 109.3 damage to the economy, the industrial base, enues remaining outside Sudan’s official GDP per capita, current US$ 2272.5 education, and health facilities. It has also banking system. a 15.3 International poverty rate ($2.15) led to a collapse in domestic demand and a 49.7 economic activity (including commerce, fi- Lower middle-income poverty rate ($3.65) a 86.2 nancial, and information and communica- Upper middle-income poverty rate ($6.85) Gini index a 34.2 tions technology services) and is eroding Recent developments School enrollment, primary (% gross) b 77.8 state capacity. Fighting has spread across b 65.3 the country and reignited hostilities in tra- Amid the ongoing conflict, productive Life expectancy at birth, years ditionally restive regions, such as Darfur capacity has suffered drastically, and Total GHG emissions (mtCO2e) 126.6 and Kordofan. This in turn is impacting both private and government consump- Source: WDI, Macro Poverty Outlook, and official data. agriculture and trade, and exacerbating tion have plummeted. Export volumes a/ Most recent value (2014), 2017 PPPs. b/ WDI for School enrollment (2018); Life expectancy food insecurity and displacement. shrank and major external financial sup- (2021). Decreased local crop production seriously port and investment has been cut off. As threatens food availability. Direct fighting, a result, the economy is expected to con- displacement of civilians, and looting are tract for a seventh consecutive year in affecting farming and harvesting activities. 2024, by 3.5 percent, after an estimated Real GDP is expected to contract further The conflict is also exacerbating challenges contraction of 12 percent in 2023. linked to shortages of agricultural machin- Inflation has become more difficult to by 3.5 percent in 2024, after a 12 percent ery, extremely high fuel prices, and scarci- monitor. Indications are that rents have contraction in 2023, driven by wide- ty of labor. Sudan faces extreme levels of soared in safer areas, fuel costs have spread destruction of productive capacity food insecurity, with 17.7 million people soared across the country, and food prices due to the domestic conflict, and weak (37 percent of the population) experiencing have risen sharply in areas of scarcity but acute food insecurity. plummeted in pockets of oversupply as private consumption and exports. Infla- The currency has declined sharply against people have fled and sold off their pro- tion averaged 230 percent in 2023, and the US dollar, depreciating to unprecedent- duce. Inflation is estimated to have risen to the currency has depreciated by 125 per- ed levels given the high demand for foreign about 230 percent in 2023. In 2024, Sudan cent. The collapse of government institu- currency in response to both the crisis and topped the International Rescue Committee tions has disrupted public spending and related damage to the banking and payment watchlist of countries most likely to experi- systems. In particular, the electronic bank- ence a deteriorating humanitarian crisis. the exodus of people has reduced the tax The currency has significantly depreciated ing system stopped functioning for a time in base. Poverty remains widespread, and October 2023. Since then reports are that by 94 percent in the official and 125 percent food insecurity is extremely high. banking applications have operated on a in parallel markets since April 2023, and the FIGURE 1 Sudan / Real GDP growth and sectoral FIGURE 2 Sudan / Actual and projected poverty rates and contributions to real GDP growth real GDP per capita Percent Poverty rate (%) Real GDP per capita (constant LCU) 2 100 800 0 90 700 80 -2 600 70 60 500 -4 50 400 -6 40 300 -8 30 200 20 -10 10 100 Agriculture Industry 0 0 -12 Services 2009 2011 2013 2015 2017 2019 2021 2023 2025 Gross value added at basic prices International poverty rate Lower middle-income pov. rate -14 2018 2019 2020 2021 2022 2023 2024e 2025f 2026f Upper middle-income pov. rate Real GDP pc Sources: National Bureau of Statistics and World Bank staff calculations. Source: World Bank. Notes: see Table 2. MPO 86 Apr 24 premium between the parallel and official and oil. Gold mining and agriculture are rate has widened significantly, standing at expected to be the main drivers of growth 17.4 percent as of March 2024, compared to Outlook after the conflict de-escalates. 1.7 percent in March 2023. This reflects a rel- With a gradual stabilization in the po- ativeincreaseindemandforUSdollarsamid The outlook remains highly uncertain. It litical and economic situation, infla- an increasingly unregulated exchange mar- is based on a gradual cessation of conflict tion is projected to decrease further to ketaswellasforeigncurrencyshortages. over the coming year; however, it remains 80 percent in 2025 and 45 percent in The shock to the economy and public in- subject to large downside risks from pro- 2026. Sudan’s foreign currency short- stitutions, coupled with the disruption of longed conflict and tensions. Given the ages and currency depreciation are ex- budget execution has caused a contraction conflict-related economic losses and de- pected to persist throughout 2024-26, in spending and revenue. Despite the struction of infrastructure, the economy is as investment and other sources of heavy costs of the conflict, spending de- projected to contract by 3.5 percent in 2024 foreign exchange, such as aid flows, clined, as the conflict caused a marked and 0.7 percent in 2025. Inflation is forecast slowly resume. drop in subsidies and wages. The large ex- to decline to 180 percent in 2024, reflecting The fiscal deficit is expected to narrow odus of Sudanese and foreign nationals in- an adjustment of the base effect. as revenue increases (in line with a volved in commerce and business shrank Modest economic growth is expected from modest recovery, assuming the conflict the tax base. Consequently, the fiscal deficit 2026, assuming the inflows of international subsides) from 2025 onwards, backed is estimated at 3.5 percent of GDP in 2024. funding resumes. The economic recovery by reconstruction efforts. The current The current account deficit is expected to is expected to be driven by the reconstruc- account deficit is expected to widen widen to 6.9 percent of GDP in 2024 as tion of public infrastructure initially, as- throughout 2024-26, driven by an in- agricultural and mining exports were hit suming that the political upheaval begins crease in the trade deficit, given high by the fighting and both sides look to con- to ease and other macroeconomic funda- import requirements (first, due to the trol productive assets. Sudan’s external po- mentals improve from 2026. The conflict is war and later to meet reconstruction ef- sition is undermined by considerable cap- predicted to lead to a drastic reduction in forts). This should be accompanied by ital flight and disinvestment due to the economic output across all major produc- a gradual recovery in domestic demand highly uncertain political outlook. tive sectors, including mining, agriculture, and a partial recovery in exports. TABLE 2 Sudan / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices -1.9 -1.0 -12.0 -3.5 -0.7 1.2 Private consumption -0.9 -0.8 -10.6 -3.1 -0.9 1.4 Government consumption -9.6 1.9 -36.5 -14.0 -4.9 3.0 Gross fixed capital investment -2.1 1.2 -20.0 -20.0 -1.5 1.8 Exports, goods and services 8.0 12.0 -32.0 -20.0 -9.0 5.0 Imports, goods and services -0.5 8.7 -36.0 -18.0 -14.0 8.0 Real GDP growth, at constant factor prices -1.9 -1.0 -12.0 -3.5 -0.7 1.2 Agriculture -0.6 1.0 -7.9 -2.0 1.1 1.1 Industry -0.7 -0.7 -11.6 -3.0 -1.5 1.0 Services -3.9 -3.0 -16.0 -5.5 -2.0 1.6 Inflation (consumer price index) 359.7 164.2 230.0 180.0 95.0 60.0 Current account balance (% of GDP) -7.3 -6.0 -0.6 -6.9 -7.2 -7.5 Net foreign direct investment inflow (% of GDP) -1.6 -1.3 -0.7 -0.9 -0.7 -0.5 Fiscal balance (% of GDP) -0.3 -1.7 -3.8 -3.5 -3.2 -2.8 Revenues (% of GDP) 10.5 10.0 4.8 5.5 6.2 6.5 a Debt (% of GDP) 215.6 183.6 167.3 158.5 149.5 139.3 Primary balance (% of GDP) -0.3 -1.4 -3.7 -3.5 -3.2 -2.8 b,c International poverty rate ($2.15 in 2017 PPP) 25.0 26.9 34.5 37.4 39.0 39.6 b,c Lower middle-income poverty rate ($3.65 in 2017 PPP) 62.2 63.8 71.0 73.7 75.0 75.5 b,c Upper middle-income poverty rate ($6.85 in 2017 PPP) 91.2 91.8 93.8 94.4 94.7 94.9 GHG emissions growth (mtCO2e) 1.1 -0.4 -1.9 0.0 1.7 2.5 Energy related GHG emissions (% of total) 17.6 17.3 15.5 16.6 18.0 19.6 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Debt projections do not include any restructuring achieved during the HIPC process. b/ Calculations based on 2014-NBHS. Actual data: 2014. Nowcast: 2015-2023. Forecasts are from 2024 to 2026. c/ Projection using neutral distribution (2014) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU. MPO 87 Apr 24 for private sector and productive jobs cre- ation, as well as enhanced social protec- TANZANIA Key conditions and tion, human capital, and skills. challenges Table 1 2023 Tanzania’s economy has remained resilient Recent developments Population, million 67.6 amid multiple shocks, but the current GDP, current US$ billion 79.2 growth pattern is not inclusive enough. Despite the spillovers from the climate GDP per capita, current US$ 1170.8 The impact of economic growth on pover- change, Tanzania’ economic growth accel- a 44.9 International poverty rate ($2.15) ty reduction is near-zero. Increasing re- erated to 5.2 percent in 2023, from 4.6 per- a 74.3 liance on public infrastructure investments cent in 2022. The agriculture sector posted Lower middle-income poverty rate ($3.65) a 92.3 and a slowing structural transformation low growth at 3.4 percent, due largely to Upper middle-income poverty rate ($6.85) Gini index a 40.5 since 2014 led recent growth to be concen- frequent droughts and floods, while the School enrollment, primary (% gross) b 95.5 trated in modern sectors that employ few low growth in industry of 3.9 percent was b 66.2 workers from poor households. Policies due to underperformance of construction Life expectancy at birth, years designed to improve productivity and and water subsectors. Supported by buoy- Total GHG emissions (mtCO2e) 162.9 build resilience in Tanzania’s agricultural ant economic activities in financial and in- Source: WDI, Macro Poverty Outlook, and official data. sector—which produces just one-quarter surance, transport and storage, and trade a/ Most recent value (2018), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy of the country’s GDP and has employed and repair subsectors, the services sector (2021). three quarters of the poor—could help fa- remained the main driver of the economy cilitate structural transformation and re- and expanded faster by 7.3 percent in 2023. duce high and persistent poverty rates. Tanzania’s inflation continues to remain Diminishing role of Tanzania’s exports is low and stable at 3.0 percent in February Tanzania’s real GDP growth momentum another key challenge. Tanzania’s export 2024, thanks to eased global commodity to GDP ratio fell from 20.9 percent in 2012 prices, reasonably rapid fiscal subsidies, remained strong at 5.2 percent in 2023, to 14.3 percent in 2022. Main drivers be- and tightening monetary policies. with low and stable inflation. While both hind the deteriorating export competitive- Both external and fiscal balances have fiscal and current account deficit nar- ness are low productivity growth, high moderately improved. Bolstered by re- rowed, the foreign exchange challenge trade costs, as well as other tariff and non- duced domestic demand on imported tariff barriers. As a shrinking export vol- consumer goods, shrinking cost of oil persists. Over the medium term, the econ- ume will likely constrain growth in Tanza- imports, and an uptick in tourism re- omy is set to grow at around 6 percent, nia and yield fewer foreign exchange earn- ceipts, Tanzania’s current account deficit supported by increased private invest- ings, the government should implement has narrowed from 5.6 percent of GDP in ments resulting from strengthening busi- steadfast reforms to crowd in private 2022 to 3.8 percent in 2023. The improved ness environment. Major risks to the out- investment (including FDI) and reduce current-account position, combined with a trade costs to strengthen the country’s ex- relatively fast depreciation of Tanzania look are incomplete implementation of re- shilling against US dollars during the sec- port competitiveness. Priority policies in- forms, climate change, and deterioration clude active engagements in the regional ond half of 2023, partly alleviated pressure of global economy. free trade area, improving business climate on the BoT’s foreign-exchange reserves. FIGURE 1 Tanzania / Real GDP growth and sectoral FIGURE 2 Tanzania / Actual and projected poverty rates contributions to real GDP growth and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant million LCU) 7 100 2.5 6 90 80 2.0 5 70 4 60 1.5 3 50 40 1.0 2 30 1 20 0.5 0 10 2020 2021 2022 2023e 2024p 2025p 2026p 0 0.0 Agriculture Industry 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 Services Net taxes on production International poverty rate Lower middle-income pov. rate GDP at constant prices Upper middle-income pov. rate Real GDP pc Source: World Bank staff estimates and projections. Source: World Bank. Notes: see Table 2. MPO 88 Apr 24 However, the forex supply-demand imbal- challenges still loom; heavy rains experi- rapid growth of gold, services, and man- ances persist, including a parallel foreign enced at the close of 2023, which ham- ufactured exports. Increasing FDI inflows exchange market though the premium re- pered sugar cane harvesting, alongside and concessional external borrowing will mains small. Between June and December recent floods in Hanang district, under- continue to fund the current account 2023, Tanzania shilling depreciated by 7.8 score the country’s vulnerability to cli- deficit and help keep official gross re- percent against US dollars while gross re- mate-related shocks. Climate shocks serves at an adequate level. The fiscal serves rose from US$5.2 billion (4.8 months strain an already fragile agricultural sys- deficit is projected to decline to 3.6 per- of imports) to US$5.5 billion (4.5 months tem, contributing to the escalation of cent in 2024 and near 3 percent in the of imports). Fiscal deficit has narrowed to food prices. Data from the National Bu- medium term. This is on account of ex- 3.8 percent of GDP in 2023 from 3.9 percent reau of Statistics, for instance, indicates pected higher tax revenue collections as in 2022 due to a combination of increased a 12 percent surge in food and non-alco- business climate improves and stabilized domestic revenue mobilization and con- holic beverages prices since January 2022, total expenditures. The financing sources trolled expenditures. Meanwhile, the risk disproportionately impacting urban areas of the narrowing fiscal deficit are both of external debt distress remains moderate. where poverty is on the rise, particularly foreign and domestic loans. Despite the shortages in US dollars, sug- in Dar-es-Salaam. The mains risks to the macro-economic ar, and electricity, the country is poised outlook include incomplete implementa- to sustain a downward trend in poverty. tion of structural reforms particularly Poverty measured at the international those related to boosting private sector, the poverty line of $2.15 per day (2017 PPP) Outlook intensifying impacts of climate change on is estimated to have dropped slightly food security and tourism sectors, and on- from 44 percent in 2022 to 43.5 percent in Real GDP is projected to grow at 5.6 per- going geopolitical tensions. 2023. The reduction in extreme poverty cent in 2024 and its long-run potential Projections suggest a continued decrease is accompanied by improvements in oth- of about 6 percent in the medium term, in the poverty rate, anticipated to decline er non-monetary poverty measures, as supported by improving business envi- from 42.4 percent in 2025 to 41.7 percent evidenced by data from the 2022 De- ronment and the steadfast implementa- in 2026. This downward trajectory is sup- mographics and Health Survey, where tion of structural reforms. The current ported by a promising macroeconomic progress has been observed in several account deficit is set to narrow further outlook and an agriculture budget aimed SDG indicators, such as the reduction to 3.3 percent in 2024 because of the at unlocking productivity through pro- in child stunting. Despite this progress, improved trade balance, supported by moting the intensification of agriculture. TABLE 2 Tanzania / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 4.3 4.6 5.2 5.6 6.0 6.4 Private consumption 2.3 4.6 2.2 2.9 3.5 3.1 Government consumption 9.0 8.4 3.1 7.7 10.3 5.2 Gross fixed capital investment 7.8 9.6 3.8 6.2 6.9 9.4 Exports, goods and services 5.2 10.2 17.4 9.3 6.3 9.1 Imports, goods and services 9.6 23.7 2.3 4.2 4.1 6.5 Real GDP growth, at constant factor prices 4.3 4.6 5.2 5.6 6.0 6.4 Agriculture 3.7 3.8 3.4 3.8 4.8 5.5 Industry 4.1 4.3 3.9 5.6 6.2 6.3 Services 4.8 5.3 7.3 6.7 6.5 7.1 Inflation (consumer price index) 3.7 4.3 3.8 3.4 3.2 3.0 Current account balance (% of GDP) -3.2 -5.6 -3.8 -3.3 -3.2 -3.0 Net foreign direct investment inflow (% of GDP) 1.6 1.7 1.8 2.3 2.6 2.8 Fiscal balance (% of GDP) -3.8 -3.9 -3.8 -3.6 -3.4 -3.1 Revenues (% of GDP) 14.5 15.3 15.8 16.2 16.5 16.7 Debt (% of GDP) 42.0 43.6 42.2 41.0 39.7 37.3 Primary balance (% of GDP) -2.1 -2.1 -1.6 -1.5 -1.5 -1.3 a,b International poverty rate ($2.15 in 2017 PPP) 44.3 44.0 43.5 43.0 42.4 41.7 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 73.9 73.6 73.3 72.8 72.4 71.9 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 91.7 91.4 90.9 90.4 89.8 89.2 GHG emissions growth (mtCO2e) 1.3 0.6 0.8 1.1 1.2 1.2 Energy related GHG emissions (% of total) 11.1 10.9 10.9 11.0 11.0 11.1 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2013- and 2018-HBS. Actual data: 2018. Nowcast: 2019-2023. Forecasts are from 2024 to 2026. b/ Projection using point to point elasticity at regional level with pass-through = 0.7 based on GDP per capita in constant LCU. MPO 89 Apr 24 to real income per capita gains of 2.4 per- cent per annum. Growth is estimated to TOGO Key conditions and have moderated to 5.4 percent in 2023, re- flecting weakness among key trading part- challenges ners and a retrenchment in public spend- ing as part of initial consolidation efforts. Table 1 2023 Growth has been resilient to a sequence of While the extreme poverty rate (at $2.15 Population, million 9.1 shocks since the COVID-19 pandemic, but 2017 PPP) dropped to 26.6 percent in 2021, GDP, current US$ billion 9.1 vulnerable populations have been adverse- from 28.4 percent in 2018, the actual num- GDP per capita, current US$ 1008.3 ly impacted by elevated inflation, while ber of extreme poor increased. Moreover, a 26.6 International poverty rate ($2.15) significant rural-urban disparities in eco- the rural-urban gap in welfare remained a 58.8 nomic opportunities and access to basic persistently high, with 41.3 percent of the Lower middle-income poverty rate ($3.65) a 86.8 services continued to hamper progress in rural population facing extreme poverty in Upper middle-income poverty rate ($6.85) Gini index a 37.9 reducing poverty and inequality. A strong 2021, compared to an urban rate of just 7.1 School enrollment, primary (% gross) b 122.5 fiscal response explains a significant part percent. Since 2021, rising inflation impact- b 61.6 of the economic resilience in recent years ed households’ purchasing power, and de- Life expectancy at birth, years but contributed to bringing public debt to spite sustained economic growth and Total GHG emissions (mtCO2e) 10.2 record high levels, averaging 63.0 percent higher agricultural incomes, extreme Source: WDI, Macro Poverty Outlook, and official data. of GDP in 2020-22. Amid tighter financing poverty remained nearly constant at 26.7 a/ Most recent value (2021), 2017 PPPs. b/ WDI for School enrollment (2022); Life expectancy conditions, rising debt service costs, and percent in 2022, dropping slightly to 25.6 (2021). growing regional uncertainty, developing percent in 2023. This slow poverty reduc- a well calibrated fiscal consolidation strate- tion coupled with faster population gy that preserves priority investments and growth led to about 40,000 additional ex- critical social spending, and privileging ex- treme poor between 2021 and 2023. Growth is projected to moderate in 2024 ternal concessional financing over more The fiscal deficit remained elevated at 6.6 expensive regional borrowing have be- percent of GDP in 2023 but narrowed from before picking up again in 2025-26, al- come increasingly urgent. Mobilizing pri- a three-decade high of 8.3 percent in 2022. beit at a slower-than-expected pace re- vate investment, including for infrastruc- The improvement resulted from lower flecting a deteriorated external environ- ture development and in agriculture, could transfers and subsidies, restrained goods ment including ECOWAS uncertainties, help boost growth and the welfare of most and services expenditure, and increased vulnerable and poorer populations while revenues. However, elevated security and ongoing fiscal consolidation efforts. fiscal space is being restored. spending and new economic and social in- As growth strengthens, the extreme frastructure investments prevented faster poverty rate should decline to 21.5 in consolidation, causing the debt-to-GDP ra- 2026, down from an estimated 25.8 in tio to further increase to 67.2 percent of 2023. Risks of regional instability, finan- Recent developments GDP. Regarding monetary policy, the Cen- tral Bank of West African States (BCEAO) cial turbulence, and climate pressures call Despite a series of unprecedented shocks, raised policy interest rates by a cumulative for resilience-enhancing reforms com- Togo maintained a robust 4.8 percent av- 150 basis points since mid-2022 (to 3.5 per- bined with prudent fiscal policies. erage growth rate over 2020-23, equivalent cent for liquidity calls and 5.5 percent for FIGURE 1 Togo / Real GDP growth and fiscal balance FIGURE 2 Togo / Actual and projected poverty rates and real GDP per capita Percent Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 7 4 100 700000 6 2 90 600000 80 5 0 70 500000 60 400000 4 -2 50 3 -4 300000 40 30 200000 2 -6 20 100000 1 -8 10 0 0 0 -10 2011 2013 2015 2017 2019 2021 2023 2025 2010 2012 2014 2016 2018 2020 2022 2024 2026 International poverty rate Lower middle-income pov. rate Fiscal balance (rhs) UTB recap. Real GDP growth Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see Table 2. Note: World Bank projections start in 2023. MPO 90 Apr 24 the marginal lending facility) but inflation regain momentum from 2026 as fiscal con- spending and transfers on the expenditure in the region remained above the 1-3 per- solidation ends. Ongoing reforms should side, and by tax and customs reforms and cent target range and foreign exchange re- help support agriculture productivity and the rationalization of tax exemptions on serves dropped further to 3.5 months of boost private investment. The announced the revenue side. The government faces imports in 2023. exit of Mali, Niger, and Burkina Faso from difficult tradeoffs in its fiscal consolidation ECOWAS is expected to lead to relatively strategy to minimize disruptions to priori- modest trade disruptions in the short term ty investments and public services. but is heightening regional uncertainty, The growth outlook is subject to multiple Outlook which could weigh on investment senti- downside risks. Longer lasting disruptions ment, notably around the development of to global trade, commodity, and financial With global demand remaining subdued the Lome-Ouagadougou-Niamey econom- markets following a sequence of unprece- in 2024 and fiscal consolidation measures ic corridor. The BCEAO may need to con- dented shocks in recent years could have intensifying, growth in Togo is projected tinue tightening monetary policy in 2024 a significant knock-on effect on a small, to slow to 5.1 percent in 2024 (2.8 percent to bring inflation under control and pre- open, and relatively indebted economy per capita terms), before gradually vent further declines in foreign reserves. like Togo. A disorderly exit of Mali, Niger, strengthening to 5.4 percent in 2025 and 5.6 Poverty is projected to moderate gradually and Burkina Faso from ECOWAS, and pos- percent in 2026. While slower than initially in 2024 and 2025, and more substantially in sibly from WAEMU, could lead to financial expected due to faster fiscal consolidation 2026, to reach 21.2 percent. market instability in the short term and and regional uncertainties, growth will be In line with the fiscal framework agreed in trade dislocations over the medium term. supported by domestic demand with on- the context of the new IMF program and Additional downside risks stem from ris- going and planned private investment pro- WEAMU commitments, the fiscal deficit is ing insecurity in the North that could jects and a recovery in consumer spending expected to decline to 4.5 percent of GDP in weigh on investment, trade, and public fi- as inflationary pressures taper. Exports 2024 (excluding the one-off effect of the re- nances, as well as climate shocks that nega- will provide an additional boost from 2025 capitalization of the state-owned bank UTB tively impact agricultural productivity. Fi- as the global economy regains some amounting to 1.6 percent of GDP) and 3.0 nally, reforms could stall and hamper con- strength while public investment should percent in 2025 driven by a drop in capital fidence in Togo’s development trajectory. TABLE 2 Togo / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 6.0 5.8 5.4 5.1 5.4 5.6 Private consumption 9.9 1.3 4.8 6.0 5.9 5.8 Government consumption 0.2 8.8 5.6 3.1 6.1 5.9 Gross fixed capital investment -0.2 26.4 7.2 4.4 3.7 4.8 Exports, goods and services 5.3 -1.1 4.2 4.9 6.4 6.8 Imports, goods and services 6.9 5.1 3.8 4.3 5.0 5.4 Real GDP growth, at constant factor prices 5.3 6.2 5.3 5.0 5.4 5.6 Agriculture 3.4 5.0 5.1 4.1 4.5 4.2 Industry 5.7 7.3 7.1 6.4 6.8 6.9 Services 5.9 6.2 4.6 4.8 5.1 5.5 Inflation (consumer price index) 4.5 7.5 5.3 3.5 3.0 2.7 Current account balance (% of GDP) -0.9 -3.0 -3.3 -3.4 -3.0 -3.0 Net foreign direct investment inflow (% of GDP) 0.3 0.3 0.4 0.4 0.5 0.4 Fiscal balance (% of GDP) -4.7 -8.3 -6.6 -6.2 -3.0 -3.0 Revenues (% of GDP) 17.1 17.6 17.8 18.1 17.9 18.0 Debt (% of GDP) 63.0 65.8 67.1 68.8 67.0 65.0 Primary balance (% of GDP) -2.5 -5.9 -4.5 -3.8 -0.5 -0.7 a,b International poverty rate ($2.15 in 2017 PPP) 26.6 26.7 25.8 24.5 22.7 21.5 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 58.8 58.7 57.2 55.6 53.5 50.9 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 86.8 86.8 85.8 84.9 83.7 82.7 GHG emissions growth (mtCO2e) 6.4 5.4 2.9 4.0 4.4 1.2 Energy related GHG emissions (% of total) 25.7 26.9 26.4 26.4 26.4 20.2 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2023. Forecasts are from 2024 to 2026. b/ Projections using microsimulation methodology. MPO 91 Apr 24 innovative technologies. Finally, is to maintain prudent macroeconomic man- UGANDA Key conditions and agement alongside structural policies to avoid the ‘Dutch’ disease and to build re- challenges silience to climate shocks. Table 1 2023 Increased shocks and less momentum be- Population, million 48.6 hind policy reform create challenges for GDP, current US$ billion 42.0 sustaining economic growth and reducing Recent developments GDP per capita, current US$ 864.3 poverty in Uganda. Rapid population a 42.1 International poverty rate ($2.15) growth has kept a large share of the popu- Economic growth accelerated slightly to an a 71.8 lation below the poverty line, while human estimated 6.0 percent in FY24 despite exter- Lower middle-income poverty rate ($3.65) a 91.1 capital and infrastructure deficits have nal shocks. The Uganda Bureau of Statistics Upper middle-income poverty rate ($6.85) Gini index a 42.7 limited the country’s growth potential and estimates that GDP grew by 5.3 percent dur- School enrollment, primary (% gross) b 105.5 social welfare improvement. The challenge ing the first quarter of FY24. The industrial b 62.7 of creating productive jobs for the almost sector grew by 11.9 percent during this peri- Life expectancy at birth, years one million working age Ugandans enter- od, thanks to an oil-related construction Total GHG emissions (mtCO2e) 58.9 ing the labor market every year is enor- boom as FDI grew over 56 percent. Agricul- Source: WDI, Macro Poverty Outlook, and official data. mous. Although services constitute a large ture, too, accelerated despite volatile weath- a/ Most recent value (2019), 2017 PPPs. b/ WDI for School enrollment (2017); Life expectancy share of GDP, it has created a few jobs, er conditions. An uptick in private invest- (2021). mainly informal and low-skilled. Most of ments and employment growth reinforced the jobs are in the agriculture sector which domestic demand deeper into the year - de- is prone to natural disasters that climate spite a slight reduction in February 2024 to change is making more frequent and se- 51.7, Uganda’s Purchasing Managers’ Index Continued investment momentum, lower vere—and adapting to which is hampered has for the sixteenth consecutive month sig- by low adaptive capacity. naled a strengthening of private sector activ- inflation, and improved global supply To promote economic growth and reduce ity, with sustained increases in output, new conditions have supported a modest accel- poverty over the medium term, the Ugan- orders, and employment. While Uganda’s eration of GDP growth expected at 6.0 dan economy needs to structurally trans- exports surged with increased volumes of percent in FY24. A sustained fiscal con- form and shift labor into a more produc- production and improvement in terms of tive employment, ahead of oil revenue trade, resumption of gold trade, and recov- solidation will yield a primary fiscal sur- flows. The first required reform is to shift ery of tourism, imports grew stronger, sup- plus of 0.2 percent of GDP in FY26 and investments towards the private sector by ported by demand from oil investments. ease pressure on debt. GDP growth will reducing the cost of doing business and The Bank of Uganda (BoU) tightened accelerate beyond 6 percent in fostering access to finance. Second, the monetary policy in March 2024 to curb FY25–FY26, if not derailed by a global government must invest more strongly in possible passthrough of a fast-depreciat- human capital by shifting spending into ing shilling. Low inflation, averaging 2.9 slowdown, disruptions to oil production, percent during the first half of FY24 ben- social sectors, alongside measures to re- and weather shocks. Poverty will fall as duce inequality and strengthen resilience, efitted both investments and the poor incomes recover. and promoting uptake of digital and other households. During the second half of FIGURE 1 Uganda / Fiscal adjustment FIGURE 2 Uganda / Actual and projected poverty rates and real private consumption per capita Percent of GDP Percent of GDP Poverty rate (%) Real priv cons per capita (constant mil. LCU) 20 60 100 2.5 90 15 50 80 2.0 10 40 70 60 1.5 5 30 50 40 1.0 0 20 30 -5 10 20 0.5 10 -10 0 0 0.0 2019 2020 2021 2022 2023 2024e 2025f 2026f 2009 2011 2013 2015 2017 2019 2021 2023 2025 Public debt (rhs) Primary balance (lhs) International poverty rate Lower middle-income pov. rate Domestic revenue (lhs) Upper middle-income pov. rate Real priv. cons. pc Source: Ministry of Finance, Planning and Economic Development. Source: World Bank. Notes: see Table 2. MPO 92 Apr 24 FY24, inflation increased – gradually to 3.4 experience extreme weather events during The primary fiscal balance is expected to percent in February 2024, but forecast to next 12 months with higher negative ex- evolve into a surplus of 0.2 percent of GDP accelerate towards the target of 5 percent pectations among respondents from the by FY26, through more efficient spending as the Ugandan currency depreciated due poorest Northern and Eastern regions. and implementation of the Domestic Rev- to intensified portfolio outflows. Hence, on enue Mobilization Strategy. This fiscal con- March 6, 2024, BoU raised its policy rate solidation aims to continue reducing non- to 10 percent, from the 9.5 percent main- priority capital expenditures while main- tained since August 2023. Outlook taining the share of social spending, crucial The fiscal consolidation has steadily re- especially to poor households. Rationaliza- duced the primary fiscal deficit, estimated at Real GDP growth is expected to accelerate tion of exemptions and revenue adminis- 0.6 percent of GDP in FY24. While chal- to 6.6 percent by FY26, mainly driven by tration modernization to improve compli- lenged by persistent shortfalls, estimated at investments in the oil sector. With the pro- ance are expected to yield revenues of ap- about 12 percent below plans during the sev- gressed preparation of the Tilenga and proximately 0.5 percent of GDP in FY25. en months to January, government revenues Kingfisher drilling project areas, support- The reduction in the fiscal deficit will mod- share in GDP continued to increase. The ive infrastructure (including Kabaale air- estly reduce debt below 50 percent of GDP shortfall has been partially offset by under- port), and the pipeline construction, oil ex- through 2026, keep debt service manage- spending due to cuts and delays in the devel- ports are expected to commence by end of able, and reduce crowding out of private opment projects, which may have implica- 2025. However, timing may slip if the 60 sector investment. tions to growth. The fiscal deficit was mainly percent of the pipeline financing, anticipat- Accelerated growth may reduce poverty financed through external borrowing. ed from external creditors, delays. The in- (measured at the $2.15/day international Consistent with accelerated economic vestments and exports of oil will support poverty line) from 41.3 percent in 2024 to growth and low inflation, household per- government’s other promotion efforts for 40.1 percent by 2026. But given that house- ceptions on current and future economic tourism, export diversification, and agro- holds have limited adaptive capacity, the wellbeing are positive. According to the Oc- industrialization. Lower inflation will en- pace of poverty reduction will ultimately tober/November 2023 phone survey, re- able BOU to ease its stance, which com- depend on how food access and affordabil- spondents also experienced improved ac- bined with reduced fiscal pressures under ity evolve, and on the incidence of weather cess to essential products. Nevertheless, a fiscal consolidation, augurs well for both and any environmental shocks. The trick- about 41 percent of households continued foreign and domestic investment. le-down effect of oil for the poor will de- to be moderately food insecure and four Nonetheless, the slowdown of global pend on adopting the right set of policies percent were severe food insecure. About growth and disruptions in global financial and strengthening existing and setting up 40 percent respondents were certain to conditions remain major downward risks. new institutions. TABLE 2 Uganda / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 3.4 4.7 5.2 6.0 6.2 6.6 Private consumption 4.2 3.4 4.4 5.4 5.8 5.6 Government consumption 6.1 -17.4 18.3 2.0 -3.7 5.3 Gross fixed capital investment 5.1 20.1 1.8 9.5 10.6 9.9 Exports, goods and services 2.6 -18.6 7.0 7.7 8.3 8.4 Imports, goods and services 8.6 -8.9 3.2 8.6 8.7 8.8 Real GDP growth, at constant factor prices 3.4 4.7 5.2 6.0 6.2 6.6 Agriculture 3.8 4.4 4.8 4.9 5.0 5.1 Industry 3.4 5.4 3.8 6.2 6.5 6.5 Services 3.3 4.4 6.2 6.4 6.6 7.4 Inflation (consumer price index) 2.5 3.7 8.8 3.1 4.5 5.0 Current account balance (% of GDP) -10.2 -7.9 -8.2 -8.1 -7.4 -6.9 Net foreign direct investment inflow (% of GDP) 2.1 3.1 5.9 8.7 10.9 9.9 Fiscal balance (% of GDP) -9.5 -7.4 -5.5 -3.9 -3.7 -3.1 Revenues (% of GDP) 14.7 14.2 14.4 15.8 16.1 17.7 Debt (% of GDP) 49.6 50.7 49.1 48.5 47.8 41.9 Primary balance (% of GDP) -6.8 -4.6 -2.3 -0.6 -0.3 0.2 a,b International poverty rate ($2.15 in 2017 PPP) 42.2 42.1 41.8 41.3 40.7 40.1 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 71.7 71.8 72.0 72.4 72.8 73.2 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 90.9 91.0 91.5 92.3 93.2 94.1 GHG emissions growth (mtCO2e) 3.2 3.1 3.2 3.4 3.4 3.6 Energy related GHG emissions (% of total) 15.5 16.2 17.2 18.1 18.9 19.7 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2016-UNHS and 2019-UNHS. Actual data: 2019. Nowcast: 2020-2023. Forecasts are from 2024 to 2026. b/ Projection using point-to-point elasticity (2016-2019) with pass-through = 0.7 based on private consumption per capita in constant LCU. MPO 93 Apr 24 domestic and external environments, they have supported economic recovery from ZAMBIA Key conditions and the multiple and compounding crises which started in 20220. Still, maintaining challenges macroeconomic stability remains challeng- ing due to uncertainty caused by protract- Table 1 2023 Zambia is a country with vast natural re- ed debt restructuring and declining min- Population, million 20.6 sources seeking to exploit economic op- ing performance over the past three years. GDP, current US$ billion 26.4 portunities to improve livelihoods by re- The recent contraction in the mining sector GDP per capita, current US$ 1283.5 ducing poverty and inequality, which are starting in 2021 has triggered a deteriora- a 64.3 International poverty rate ($2.15) high. The vast mineral resources (mainly tion in the external sector balances and a 81.0 copper) have been exploited with little val- softened fiscal revenues, leading to large Lower middle-income poverty rate ($3.65) a 93.2 ue addition and employment creation, currency depreciation, high inflation, and Upper middle-income poverty rate ($6.85) Gini index a 51.5 making growth and revenues volatile and a sharp increase in the cost of living. With School enrollment, primary (% gross) b 94.8 contributing little to inclusive growth. The the government’s capacity to finance de- b 61.2 mainstay agriculture sector, which em- velopment significantly constrained, com- Life expectancy at birth, years ploys most of the workforce, remains un- pleting debt treatment would give Total GHG emissions (mtCO2e) 93.5 diversified and has low and declining pro- breathing space for Zambia to restore Source: WDI, Macro Poverty Outlook, and official data. ductivity, exacerbating socio-economic de- macroeconomic stability and debt sus- a/ Most recent value (2022), 2017 PPPs. b/ Most recent WDI value (2021). velopment challenges. The 2023/24 rainy tainability and support the administra- season’s drought, worsened by climate tion's ambitious reform program. change, has led to massive crop failure and Despite a protracted debt restructuring damage, affecting food security and liveli- hoods of 6.6 million people in 84 out of process and subdued copper production, 116 districts. The diminished water supply Recent developments Zambia’s economy has been recovering constraining hydroelectricity genera- since the COVID-19 recession, primarily tion—the dominant power source—is ex- Real GDP grew by 5.0 percent year-to-date driven by firmer services. In Q3:2023, re- pected to result in up to a 1000 megawatts and 5.1 percent y/y in Q3:2023, driven by annual deficit, disrupting business, espe- firmer services in transport, information al GDP grew by 5.0 percent year-to-date cially among most small and medium en- and communications, and hospitality. Cop- and 5.1 percent y/y. In 2024, a severe terprises, as blackouts intensify. per production remained below potential, drought affecting agriculture, electricity, Meanwhile, the current administration declining by 8.0 percent (y/y) due to legacy and water supply will significantly damp- continues to pursue bold fiscal and struc- operational difficulties at Mopani Copper en growth; however, an anticipated up- tural reforms to restore macroeconomic mines and Konkola Copper Mine (KCM). stability, reinvigorate growth, and increase This negatively impacted exports, with ex- turn in mining may offset some of the pro-poor spending since 2022. These re- port earnings declining amid heightened agricultural losses. Still, Zambia needs to forms followed a decade of unbalanced uncertainty arising from protracted debt re- finalize debt treatments to strengthen the fiscal expansion and unsustainable debt structuring, severely weakening Zambia’s response to drought and other shocks. accumulation that worsened distortions external balances. The current account and growth potential. Despite challenging slipped into deficit in 2023—the first time in FIGURE 1 Zambia / Selected macroeconomic indicators FIGURE 2 Zambia / Actual and projected poverty rates and real GDP per capita Percent Exchange rate Poverty rate (%) Real GDP per capita (constant LCU) 35 30 100 8400 30 90 8200 25 80 8000 25 20 70 7800 20 15 60 7600 15 50 7400 10 40 7200 10 5 30 7000 5 20 6800 0 0 10 6600 Feb-20 Aug-20 Feb-21 Aug-21 Feb-22 Aug-22 Feb-23 Aug-23 Feb-24 0 6400 6-8% target band Headline inflation 2010 2012 2014 2016 2018 2020 2022 2024 2026 Food inflation Non-Food inflation International poverty rate Lower middle-income pov. rate BOZ policy rate exchange rate (zmw/$) Upper middle-income pov. rate Real GDP pc Source: World Bank estimates. Source: World Bank. Notes: see Table 2. MPO 94 Apr 24 four years. The exchange rate depreciated revenues due to mining contraction. High- mining. This anticipated production im- by 41.8 percent against the US$ in 2023, save er non-tax revenues, better collection provement stems from a less wet rainy for short-lived appreciations in March and from non-mining, and higher grants season for open pit mining and the res- June around the news of expected break- from the development partners boosted olution of legacy operation challenges throughs in debt restructuring. overall revenue. leading to the potential realization of The sustained exchange rate depreciation significant pledged foreign direct invest- and a food price shock (due to a grain ment (FDI). Still, tight monetary policy deficit in the region) placed pressure on and elevated net domestic financing to domestic prices. Both food and non-food Outlook the government will likely constrain inflation picked up, leading to a broad- credit availability to the private sector based increase in headline inflation from A severe drought in the current rainy due to higher borrowing costs. 9.9 percent (y/y) in December 2022 to 13.5 season and cholera epidemic (with 20,577 There is substantial uncertainty surround- percent in February 2024, against the 6–8 cases and 699 deaths by end-February), ing the forecast. Firmer-than-expected cop- percent target range. Bank of Zambia which delayed the opening of schools, per prices would boost external sector per- (BoZ) raised the policy rate by 200 basis will significantly dampen growth to 2.7 formance and potentially reverse currency points (cumulatively) in 2023, with half of percent in 2024. The government de- depreciation. Finalizing a debt restructur- the increase in November amid intensify- clared the drought a national disaster ing deal would boost portfolio flows. Still, ing inflationary pressures and currency on February 29, 2024, and called for an downside risks are considerable. Copper depreciation. On February 14, 2024, the emergency response. Although crop fail- revenues may undershoot because of low- BoZ hiked the policy rate by an additional ure estimates are still preliminary, they er ore grades, delayed investments in the 150 basis points to 12.5 percent. It also suggest more than half of the planted sector, and weakening copper prices. The raised the statutory reserve ratio from 9.0 area is damaged, directly affecting pri- effects of climate change pose a risk in percent in January 2023 to 26.0 in February vate consumption. Despite the rationing terms of food security and hydropower 2024 to moderate FX demand and auc- of electricity to cushion real sector activ- generation. There could be additional in- tioned more than US$50 million in the in- ity, especially in the mines and critical flationary pressures from exchange rate terbank market, triggering a temporary ex- life support services, the power deficit pass-through effects and climate-induced change rate appreciation of 13.8 percent. is slowing down aggregate industry and events such as food shortages. Subdued The government continued the fiscal consol- services production. However, the min- global growth due to the contraction of idation launched in 2022, achieving a prima- ing sector is expected to recover in 2024 China’s economy, the primary market for ry fiscal surplus estimated at 0.2 percent of and stimulate growth in industry, ex- Zambia’s copper exports, could dampen GDP in 2023, despite underperforming ports, and services activities that support growth at home. TABLE 2 Zambia / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 6.2 5.2 4.0 2.7 6.1 5.9 Private consumption 8.0 6.0 4.6 0.5 6.7 5.7 Government consumption 5.6 2.8 9.1 12.3 8.0 9.5 Gross fixed capital investment 4.7 5.0 6.0 6.0 7.0 6.6 Exports, goods and services 4.6 5.0 2.2 2.6 3.5 4.0 Imports, goods and services 2.5 4.0 4.5 3.5 4.0 4.0 Real GDP growth, at constant factor prices 6.4 5.5 3.9 2.7 6.1 5.9 Agriculture 6.9 -11.0 10.0 -20.0 2.0 2.0 Industry 7.1 -2.2 -1.7 1.8 3.8 5.0 Services 6.0 12.1 6.1 5.7 7.4 6.6 Inflation (consumer price index) 22.1 11.1 11.0 14.3 10.1 7.0 Current account balance (% of GDP) 9.7 3.7 -0.4 0.2 0.4 0.6 Net foreign direct investment inflow (% of GDP) 3.7 1.5 1.5 3.0 3.8 3.4 Revenues (% of GDP) 22.4 20.4 21.1 21.6 20.6 20.9 Primary balance (% of GDP) -2.0 -1.5 0.6 0.2 1.6 0.8 a,b International poverty rate ($2.15 in 2017 PPP) .. 64.3 64.0 64.0 63.2 62.4 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) .. 81.0 80.8 80.8 80.2 79.6 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) .. 93.2 93.1 93.1 92.8 92.5 GHG emissions growth (mtCO2e) 0.5 0.8 1.2 1.4 1.4 1.4 Energy related GHG emissions (% of total) 9.9 10.3 11.0 11.9 12.9 13.9 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2022-LCMS-VIII. Actual data: 2022. Nowcast: 2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2022) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU. MPO 95 Apr 24 weather and global health shocks, and a weak social protection system. The nation- ZIMBABWE Key conditions and al extreme poverty rate has declined from its 2020 post-pandemic peak of 49 percent challenges to 43 percent in 2022. Yet, poverty and vul- nerability remain high, against a back- Table 1 2023 Zimbabwe’s economic performance is ground of cyclical agricultural production, Population, million 16.7 hampered by continued macroeconomic climate shocks, and elevated food prices. GDP, current US$ billion 33.5 instability and power shortages. High in- GDP per capita, current US$ 2012.0 flation, exchange rate distortions, and a a 39.8 International poverty rate ($2.15) difficult business environment raise the Lower middle-income poverty rate ($3.65) a 64.5 cost of doing business, which in turn are Recent developments a 85.0 leading to underinvestment, a rise in in- Upper middle-income poverty rate ($6.85) Gini index a 50.3 formal activity, and erosion of the fis- Driven by post-pandemic recovery, Zim- School enrollment, primary (% gross) b 96.0 cal revenue base. Jointly, this significant- babwe was one of the fastest-growing b 59.3 ly undermines the economy’s long-term SADC economies in 2022 and 2023. Real Life expectancy at birth, years growth prospects. The investment climate GDP is estimated to have grown by 5.5 in Total GHG emissions (mtCO2e) 115.8 is further hampered by inadequate elec- 2023, after a 6.5 percent growth in 2022, Source: WDI, Macro Poverty Outlook, and official data. tricity supply with power shortages esti- on the back of an expansion in agriculture, a/ Most recent value (2019), 2017 PPPs. b/ Most recent WDI value (2021). mated to cost Zimbabwe 6.1 percent of mining, and remittances-induced services GDP per annum. growth. Nevertheless, macroeconomic Zimbabwe’s external debt has rapidly in- volatility fuelled by monetary instability GDP growth is projected to slow to 3.3 creased in recent years, driven by external and substantial exchange rate distortions arrears and legacy debt. External debt has continues to keep Zimbabwe’s economic percent in 2024 after a solid post-pan- risen from US$9.5 billion in 2018 to activity below its potential. demic recovery in 2022-23. While a slow- US$17.5 billion in 2023 (an estimated in- Inflationary pressures remain high in 2024 down was expected, the growth is further crease from 26 to 95 percent of GDP). The as local currency depreciation intensified. affected by persistent macroeconomic in- increase is driven partly by debt arrears as Annually inflation increased for the fourth the GoZ stopped servicing external debt in consecutive month in February 2024, re- stability with high inflation and exchange 2000, and Zimbabwe’s external arrears ac- flecting sharp depreciation of the local cur- rate distortions, an El Niño-related cumulated to US$6.9 billion in 2023 mostly rency at both official and parallel foreign drought, and projected lower export to IFIs. The government is implementing exchange market. Annual inflation in- prices. The fiscal deficit is expected to in- arrears clearance and debt resolution strat- creased from 26.5 percent in December crease due to the transfer of RBZ’s exter- egy that is critical for debt resolution and 2023 to 47.6 percent in February 2024. The access to financial support. As part of this, official exchange rate has depreciated by nal liabilities to the treasury. Drought Zimbabwe also resumed token payments 788 percent in 2023 with the parallel mar- conditions will affect agricultural out- to multilateral creditors in 2021. ket premium estimated at 30 percent as of put and increase food insecurity and, Poverty has been elevated, on account of February 2024. Meanwhile, the Minister of potentially, poverty. continued macroeconomic instability, poor Finance announced a possible move to a job creation in the productive sectors, currency board, but details are lacking. FIGURE 1 Zimbabwe / Exchange rates FIGURE 2 Zimbabwe / Actual and projected poverty rates and real GDP per capita Poverty rate (%) Real GDP per capita (constant LCU) 100 16000 90 14000 80 12000 70 60 10000 50 8000 40 6000 30 4000 20 10 2000 0 0 2011 2013 2015 2017 2019 2021 2023 2025 International poverty rate Lower middle-income pov. rate Upper middle-income pov. rate Real GDP pc Sources: Zimstat and World Bank staff estimates. Source: World Bank. Notes: see Table 2. MPO 96 Apr 24 Fiscal pressures increased in 2023 ahead of the impact of structural bottlenecks, The current account surplus is expected national elections and the transfer of RBZ’s macroeconomic instability (high inflation to shrink further, reflecting an increase external liabilities to the treasury. The gov- and severe exchange rate volatility), an El in imports in the face of drought con- ernment increased civil servants’ salaries Niño-related drought, and lower commod- ditions and lower commodity prices. Ex- sharply, both in foreign and local currency. ity prices. El-Nino induced drought will ports are therefore expected to decline. The Treasury took over the servicing of affect most rain fed crops and may inten- Remittances remain the main driver of debt of US$1.8 billion in external liabilities sify electricity supply shortages. Neverthe- current account surplus. from RBZ. Meanwhile, some of the rev- less, continued increase in remittances will Poverty is expected to increase in 2024 enue proposals in the 2024 budget has help to stimulate growth in services due to drought and is projected to re- been reversed, casting doubt on the credi- (wholesale and retail trade), and construc- main high in the medium term. The bility of the budget. Nevertheless, the im- tion. Risks are titled to the downside and elasticity of poverty reduction to plemented taxes like sugar tax have led to include geopolitical tension, a weak global growth has proven to be very low in an increase in prices. environment for growth, and high infla- Zimbabwe, undermining the outlook The current account surplus narrowed in tion. Inflationary pressures will intensify for poverty reduction amid projected 2023, as remittances from non-governmen- in 2024, given drought conditions and in- deceleration of growth in 2024. This tal organization contracted. Nevertheless, crease in domestic taxes. is further exacerbated by El-Nino in- the trade deficit was slightly lower in 2023 The fiscal deficit will increase in 2024, dri- duced drought. In the medium term, compared to 2022. Exports increased by 9.7 ven by high interest payments on external vulnerability to poverty is expected to percent year-on-year, driven by tobacco debt, drought mitigation related spending, increase with changes in temperature and diamond. Imports increased by 6.4 wage pressures, and reversal of several and rainfall patterns linked to climate percent driven by fuel and maize imports. budget revenue measures. Interest pay- change. Key structural priorities to re- ments from servicing RBZ’s external liabil- duce poverty and break the depen- ities are projected to significantly increase, dence on weather cycles include boost- posing liquidity risks, amid limited access ing agricultural productivity, facilitat- Outlook to concessional financing. Fiscal deficit is ing structural transformation through projected to reach 2.3 percent of GDP in investment climate and monetary and Real GDP growth is projected to slow fur- 2024, before slowing to under 2.0 percent exchange rate reforms, and instituting ther to 3.3 percent in 2024, partly reflecting in the medium term. a robust social protection system. TABLE 2 Zimbabwe / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2021 2022 2023e 2024f 2025f 2026f Real GDP growth, at constant market prices 8.5 6.5 5.5 3.3 3.6 3.5 Private consumption 1.5 4.9 3.0 4.0 3.6 3.5 Government consumption 142.1 31.3 30.6 3.6 1.8 2.0 Gross fixed capital investment 12.8 22.3 -18.0 -6.1 5.6 4.6 Exports, goods and services 47.0 43.9 3.0 1.5 3.4 3.4 Imports, goods and services 61.5 54.6 2.0 1.1 2.5 2.5 Real GDP growth, at constant factor prices 8.4 6.4 5.6 3.3 3.6 3.5 Agriculture 17.5 6.2 11.1 -5.9 6.0 4.9 Industry 6.4 5.5 2.8 4.0 3.0 3.1 Services 7.7 7.0 6.0 5.1 3.4 3.4 Inflation (consumer price index) 98.5 193.4 305.0 45.1 15.9 72.3 Current account balance (% of GDP) 1.0 1.0 0.8 0.1 -0.2 0.7 Net foreign direct investment inflow (% of GDP) 0.7 1.0 0.3 0.0 0.0 0.0 Fiscal balance (% of GDP) -2.0 0.1 -1.2 -2.3 -1.3 -1.2 Revenues (% of GDP) 15.3 16.4 17.2 18.4 18.6 18.4 Debt (% of GDP) 58.4 99.6 97.0 102.6 98.7 91.3 Primary balance (% of GDP) -1.9 0.2 -0.3 -1.4 -0.4 -0.5 a,b International poverty rate ($2.15 in 2017 PPP) 41.4 39.6 38.2 37.7 37.1 36.4 a,b Lower middle-income poverty rate ($3.65 in 2017 PPP) 65.8 64.2 63.1 62.7 62.0 61.2 a,b Upper middle-income poverty rate ($6.85 in 2017 PPP) 85.6 85.0 84.5 84.3 84.0 83.7 GHG emissions growth (mtCO2e) 0.4 1.2 0.7 -0.6 -0.4 -0.2 Energy related GHG emissions (% of total) 9.9 10.4 10.8 10.1 9.7 9.5 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2019-PICES. Actual data: 2019. Nowcast: 2020-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2019) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. MPO 97 Apr 24 Macro Poverty Outlook 04 / 2024