Country Economic Memorandum

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http://hdl.handle.net/10986/2184

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The Union of Comoros Country Economic Memorandum: Boosting Growth for Greater Opportunities

(Washington, DC: World Bank, 2023-09-14) World Bank

Comoros is at the crossroads to redefine its future and become an upper-middle income country by 2050, but this would require implementing an ambitious reform agenda that focuses on increasing productivity and private investment. The current business-as-usual policy framework has delivered low private investment and human capital, sectoral growth below potential, and no poverty eradication. Pursuing this policy framework, which would not allow Comoros to reach the GDP growth target of 7.5 percent by 2030 laid out in the national development plan, could result in GDP per capita of US$1,890 and a poverty rate of 22.9 percent by 2050. By contrast, under a policy framework of ambitious reforms that include measures to increase inclusiveness, Comoros could reach a GDP per capita of US$3,934 and reduce the poverty rate to below 5 percent by 2050. Supported by the continuous implementation of ambitious reforms, such a level of GDP per capita could have Comoros reach upper-middle-income status by 2050. Under this ambitious reform agenda, private investment would average 11.9 percent of GDP in 2023–2050, and total factor productivity growth would average 1.45 percentage points per year during the same period.
Kenya Country Economic Memorandum: Seizing Kenya’s Services Momentum

(Washington, DC: World Bank, 2023-07-31) World Bank

Kenya’s economy has been growing solidly but maintaining and increasing growth will depend on increasing private investment and productivity. Between 2010 and 2019, Kenya maintained a steady annual growth rate of 5 percent and the economy was able to rebound relatively rapidly from the COVID-19 pandemic. However, productivity growth did not make much of a contribution to output growth, and growth has been lower than that of some other, fast-growing middle-income countries. This points to the potential for Kenya to increase growth via productivity gains, by expanding the role of the private sector and, especially, accelerating private investment. Doing this has become more urgent as the Government's fiscal space to invest has shrunk, making it crucial also for the sustainability of growth to identify new opportunities for the private sector to contribute. This Country Economic Memorandum (CEM) focuses on the question of how seizing opportunities in Kenya’s services sector can contribute more effectively to long-term economic growth. This report argues that growing the services sector should not be seen as an alternative to industrialization, but rather as an enabler of economy-wide growth, including in manufacturing, and in agriculture too. It focuses on five channels through which services contribute to jobs, economic transformation and inclusion: (i) the need to SHIFT the services sector to higher value-added activities; (ii) how to LINK services better to other economic activities to grow its enabling role; (iii) how to BOOST the productivity of the sector through technology and increasing competition; (iv) how to TRADE more services through removing regulatory barriers to trade and investment; and finally (v) how to SECURE people’s economic livelihoods better, especially those working in lower-skilled and economically more vulnerable services subsectors. Growing the contribution of services will require a program of structural reforms and complementary efforts.
Papua New Guinea Country Economic Memorandum: Pathways to Faster and More Inclusive Growth

(Washington, DC: World Bank, 2023-07-13) World Bank

The Country Economic Memorandum (CEM) focuses on long-term growth, outlining the challenges Papua New Guinea (PNG) faces to achieve sufficient economic growth to expand the incomes of its rapidly growing population as well as what is required for PNG to make the transition to a higher, more stable, and more inclusive growth path. PNG’s modest headline economic growth has translated into limited per capita income growth in the past four decades. While the economy expanded by 3.2 percent on average during 1980-2021, per capita gross domestic product (GDP) recorded an average annual growth rate of only 0.9 percent. Moreover, the gap between PNG’s per capita income level and those of its peer countries has widened. Despite being at a similar level of development in the 1970s and having enormous natural wealth, PNG’s income level is diverging away from the East Asia and Pacific (EAP) region. This calls for a renewed policy focus on boosting economic growth, by addressing PNG’s excessive macroeconomic volatility, low productivity growth, and high reliance on natural capital as opposed to human and physical capital.
Yemen Country Economic Memorandum 2022: Glimmers of Hope in Dark Times

(Washington, DC: World Bank, 2023-06-22) World Bank

Yemen’s economy has been transformed by eight years of violent conflict. War has shattered the country’s already fragile economic equilibrium, touching upon virtually every aspect of life. The compounded shocks of the COVID-19 pandemic and rising global prices have only deepened the economic and humanitarian disaster precipitated by the war. Since the start of the conflict, economic analyses have tended to focus on the deterioration of macroeconomic indicators, the sharp rise in poverty and food insecurity, and the destruction of infrastructure and the capital stock, but relatively little attention has been paid to the current structure of the economy or what prospects can be envisaged for the country. Also, it is important to situate this analysis within the political economy dynamics of the country which majorly affect the economic development challenges of the country. Data constraints and the unique characteristics of Yemen’s recent experience limit the effectiveness of traditional growth-analysis methodologies. This Country Economic Memorandum (CEM) uses novel data-collection methods and analytical techniques, triangulating its findings with traditional approaches and direct data collection to close the economic knowledge gap. Information sources include extensive key-informant interviews, household phone surveys, and remotely sensed geospatial data based on satellite imagery, including nighttime illumination data. This CEM also combines an in-depth political economy analysis with economic development investigation.
Timor-Leste: Pathways to Economic Diversification - Country Economic Memorandum 2023

(Washington DC, 2023-05-03) World Bank

Timor-Leste has made important development gains since independence in 2002 but is now at a critical juncture. The government has successfully rebuilt public infrastructure, reduced poverty, and quickly built from scratch a network of functional public institutions. Despite these achievements, there is an urgent need for private sector-centered development that is not dependent on the oil sector. Receipts from sales of hydrocarbons have been the main source of government revenues, but their contribution to the economy is decreasing, raising the urgency for economic diversification. High public spending has not translated into strong and sustained economic growth. Furthermore, depleting oil reserves signal an urgency to reduce economic dependence on oil. The public sector-driven growth model has run its course and is fiscally unsustainable. The excessive public spending level led to an astronomical fiscal deficit of 45.3 percent of non-oil gross domestic product (GDP) in 2021. This fiscal stance entails significant risks that bring the country toward a damaging fiscal cliff in 2035. Albeit narrowing, there is a window of opportunity for the government to urgently implement the much-needed reforms in the next five years. There are several potential drivers for increased regional integration. These include the operationalization of the Tibar Bay port, the modernization of the Dili airport, the internet submarine cable installation, and the World Trade Organization (WTO) accession progress. Success requires a concerted and persistent government effort to address supply-side constraints, kick-start economic diversification, and boost export. This report provides an in-depth analysis of Timor-Leste’s economic performance in recent decades and proposes policies to enhance growth. It highlights two key interrelated constraints to sustained and inclusive growth: the ‘missing’ private sector and the need to tap into the growth-enhancing benefits of international trade. Given the diminishing returns of public investments, pursuing a sustainable development path will require a shift toward a more dynamic, private sector-driven growth model. Furthermore, with the right combination of a supportive enabling environment and trade policies, Timor-Leste could capitalize on incipient and established comparative advantages for its exports. Accordingly, the reforms to support private sector development and expand exports have the potential to boost Timor-Leste’s international competitiveness and improve economic diversification.
Zimbabwe Country Economic Memorandum: Boosting Productivity and Quality Jobs

(Washington, DC, 2022-10) World Bank

Despite various economic setbacks, Zimbabwe regained lower middle-income country (LMIC) status in 2018 and aspires to become an upper middle-income country (UMIC) by 2030. The focus of this Country Economic Memorandum (CEM) is to identify options for structural reforms to help Zimbabwe accelerate economic growth and to achieve UMIC status. This is the first CEM for Zimbabwe since 1985 and it comes at a critical juncture along Zimbabwe’s development path. The objective of the report is to support and inform policy makers and stakeholders on policies to accelerate economic growth, boost productivity, and create high-quality jobs. In this regard, the CEM first establishes macroeconomic stability as a necessary condition for high and sustained growth. It then uses productivity as an overall framing to identify key structural bottlenecks, before providing deep-dives on informality and trade as priority areas to address in order to unleash productivity growth. Importantly, the report also aims to present data about Zimbabwe’s economic performance in a systematic fashion, focusing on the previous two decades and comparing Zimbabwe with its peers in the region, as well as aspirational peers globally.
Ethiopia’s Great Transition: The Next Mile - A Country Economic Memorandum

(Washington, DC : World Bank, 2022-06-17) World Bank

Ethiopia’s rapid growth over the past two decades has resulted in a surge in income per capita levels, with the country approaching fast the middle-income milestone. Over the past decade, fast growth was driven by capital accumulation, but the extent to which this growth has been equally distributed is unclear. Public infrastructure spending accelerated dramatically in the first half of the 2010s, helping underpin fast economic growth. However, this approach seems to have had important shortcomings. Contrary to the findings of World Bank (2015) which examined an earlier period, total factor productivity (TFP) declined during 2011-2020, contributing negatively to growth. In addition, inequality at the household level increased between 2011 and 2016. Finally, macroeconomic imbalances have widened, a trend exacerbated by recent shocks. This report discusses the drivers of growth in Ethiopia and, in the absence of official subnational gross domestic product (GDP) figures, examines whether there has been convergence in economic activity at the subnational level.
Directions for Reform: A Country Economic Memorandum for Recovery and Resilience in South Sudan

(Washington, DC: World Bank, 2022-06-10) World Bank

South Sudan is at a crossroads in its recovery, reconstruction, and development. Having gained independence in 2011 after two protracted civil wars, the country twice relapsed into conflict: first in 2013 and again in 2016. While the economy began to recover following the 2018 peace deal, progress has stalled amidst a multitude of crises – including the COVID-19 pandemic, climate shocks, and dwindling oil production. At the same time, the broad-based rise in commodity prices due to the war in Ukraine have on balance affected South Sudan adversely. A decade after independence, South Sudan remains caught in a web of fragility and economic stagnation, with weak institutions, recurring cycles of violence, and ubiquitous poverty. Overall, the conflict is estimated to have cost South Sudan an accumulated loss in aggregate GDP of some US$81 billion during 2012 – 2018, equivalent to $11.6 billion per year on average (80 percent of 2010 GDP). Consequently, South Sudan’s real GDP per capita in 2018 was estimated at being one third of the counterfactual estimated for a non-conflict scenario. With the fragile peace deal largely holding despite challenges in implementation, the authorities initiated an ambitious reform program aimed at macroeconomic stabilization and modernization of the young country’s public financial management systems. This report discusses South Sudan’s economic performance since independence, with a focus on leveraging the country’s endowments of natural capital – oil and arable land – to support recovery and resilience. Three messages emerge from this report. First, there is a peace dividend in South Sudan. South Sudan’s real GDP per capita in 2018 was estimated at one third of the counterfactual estimated for a non-conflict scenario. Thus, maintaining peace can by itself be a strong driver of growth. Second, with better governance and accountability, South Sudan’s oil resources can drive transformation. Third, South Sudan’s chronic food insecurity could be reversed with targeted investments to improve the resilience of the agricultural sector.
Georgia Country Economic Memorandum: Charting Georgia’s Future

(Washington, DC, 2022-06) World Bank

From the Coronavirus (COVID) pandemic to the war in Ukraine, the world and Georgia are experiencing more uncertainty and accelerating disruption. As a small open economy looking to integrate with the global economy, Georgia must carefully navigate these trends by being prepared for the risks and on the lookout for emerging opportunities. A more capable, competitive and connected Georgia will be better placed to navigate these trends. This Country Economic Memorandum (CEM) aims to inform the policies that could offset these headwinds. To sustain productivity growth, Georgia needs to facilitate its structural transformation and the corresponding spatial adjustment (Chapters 1 and 2). Furthermore, growth will increasingly need to come from improvements in total factor productivity (TFP) in Georgia’s firms (Chapter 3) and advancement in their ability to exploit opportunities in external markets (Chapter 4). Finally, more active and better-skilled labor (Chapter 5) can help offset existing demographic trends and augment productivity. Progress in these areas, supported by higher savings, will make Georgia’s economy more competitive, connected, and capable, help sustain robust GDP growth over the long-term and turn Georgia’s aspirations into reality.
Gabon Country Economic Memorandum: Toward More Inclusive and Greener Growth

(Washington, DC: World Bank, 2022-05) World Bank

Over-reliance on natural resources has held back diversification of Gabon’s economy, as growth, exports, and fiscal revenues are still largely dependent on extractives. Despite Gabon’s abundant natural resources, growth has been slow to reduce poverty. In the context of dual shocks from low oil prices and the COVID-19 pandemic in 2020, government authorities committed to fiscal consolidation, structural reforms, and economic diversification as part of the Accelerated Transformation Plan (PAT). In addition, at their exceptional summit in August 2021, the Economic and Monetary Community of Central Africa (CEMAC) heads of state provided a strong political endorsement for structural reforms, with emphasis on improved management of public funds and governance, business environment reforms, and regional integration of human capital. This Country Economic Memorandum (CEM) is framed along the new reforms supported by the CEMAC heads of state to achieve faster, more inclusive, and sustainable growth. In this CEM, the green economy is viewed as an opportunity for Gabon to position itself as a champion. Economic transformation is necessary to find a better, sustainable model for job creation: reinforcing labor supply through better skills and job-search training, and creating economic opportunities in a more conducive environment for investment and trade. This CEM aims at supporting policy makers in their reform efforts. Their goal is to help Gabon, a small economy of 2.3 million people, break free from its resource-dependent growth model and create the conditions to move people into jobs in promising green sectors.