Sub-Saharan Africa Macro Poverty Outlook Country-by-country Analysis and Projections for the Developing World Spring Meetings 2022 © 2022 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. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 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 The Gambia Mozambique Tanzania Central African Republic Ghana Namibia Togo Chad Guinea Niger Uganda Comoros Guinea-Bissau Nigeria Zambia Congo, Dem. Republic Kenya Rwanda Zimbabwe Congo, Republic Lesotho São Tomé and Príncipe MPO 1 Apr 22 population) had received at least one dose of a COVID-19 vaccine. ANGOLA Key conditions and Main challenges include a steeper and re- newed decline in oil production, limited challenges economic diversification, difficulty in at- tracting foreign direct investment in non- Table 1 2021 Angola remains excessively dependent on oil sectors, as well as Angola’s vulnerabil- Population, million 33.9 the oil sector. Although oil production ity to climate change. Moreover, food in- GDP, current US$ billion 81.8 declined by 39 percent since its peak in flation, already at high levels, will likely GDP per capita, current US$ 2410.8 2015, oil still accounts for 94 percent of be exacerbated by the increase in global a 49.9 International poverty rate ($1.9) exports as of 2021. This lack of diversi- commodity prices and economic uncer- a 71.5 fication reflects the legacy of macroeco- tainty triggered by the Russian invasion Lower middle-income poverty rate ($3.2) a 88.5 nomic instability, underinvestment in in- of Ukraine and associated sanctions and Upper middle-income poverty rate ($5.5) Gini index a 51.3 frastructure and human capital, and a supply disruptions. School enrollment, primary (% gross) b 113.5 challenging business environment. The b 61.1 decline in oil prices and production with- Life expectancy at birth, years out growth elsewhere in the economy Total GHG Emissions (mtCO2e) 112.5 translated into a cumulative GDP contrac- Recent developments Source: WDI, Macro Poverty Outlook, and official data. tion of 9.2 percent from 2015 to 2020, loss a/ Most recent value (2018), 2011 PPPs. b/ WDI for School enrollment (2015); Life expectancy of formal jobs, and an increase in pover- Angola exited the recession in 2021, with (2019). ty, which has been exacerbated in recent growth expected at 0.2 percent as agricul- years by high food inflation. ture and services growth offset continued Underinvestment in the social sectors declines in oil production. Oil exports Angola recorded marginally positive has resulted in low levels of schooling grew 60 percent while imports grew only GDP growth in 2021 following five con- and poor health outcomes, such that 23 percent, widening the current account. Angola is among the countries with the This, together with an SDR allocation of secutive years of economic contraction. lowest Human Capital Index (0.36 in US$1 billion, increased Angola’s net re- With oil prices expected to remain high, 2020). Angola is also highly exposed to serves, maintaining import coverage at the outlook for 2022 is favorable. Howev- climate risks, with parts of the coun- around eleven months. Non-oil exports er, despite improvements in macroeco- try continuously suffering from severe (wood, fish, granite, and beverages) re- drought, floods, and soil degradation mained small and volatile. nomic policies in recent years, a legacy of since around 2012. Largely because of higher oil prices, the underinvestment in physical and human Angola’s economy suffered from exchange rate appreciated 13.4 percent capital poses considerable challenges to COVID-19 indirectly through falling oil YoY by December 2021, recovering al- poverty reduction and economic diversifi- prices, but overall, the country has been most a third of the 2020 depreciation. cation, leaving Angola highly exposed to relatively resilient against the pandemic. The stronger currency has not translated As of February 14, 2022, Angola had 55.9 into lower inflation, which remains high risks from volatile oil prices, the pandem- at 27 percent, driven by high food prices COVID-19 deaths per million people ic, and climate change. (compared to 745.9 globally) and 10.9 mil- and the lagged effect of monetary mea- lion people (69.3 percent of the target sures from 2020. In response, the central FIGURE 1 Angola / Actual and projected public debt levels FIGURE 2 Angola / Actual and projected poverty rates and and primary balance real private consumption per capita Percent of GDP Percent of GDP Poverty rate (%) Real private consumption per capita (constant LCU) 10 150 100 30000 Public debt (RHS) Primary fiscal balance 90 25000 80 8 70 100 20000 60 50 15000 5 40 10000 30 50 20 3 5000 10 0 0 2008 2010 2012 2014 2016 2018 2020 2022 2024 0 0 International poverty rate Lower middle-income pov. rate 2019 2020 2021 2022 2023 2024 Upper middle-income pov. rate Real priv. cons. pc Sources: Angola Ministry of Finance, World Bank MTI. Source: World Bank. Notes: see Table 2. MPO 2 Apr 22 bank raised the reference rate from 15.5 of a projected 1.6 million vulnerable appreciation, the government is expected to 20 percent. families enrolled, 300,000 of whom have to miss its inflation target of 18 percent Higher oil receipts combined with buoy- received at least one transfer. due to rising global commodity prices ant non-oil revenues (especially VAT) led which particularly affect staple foods. fiscal revenues to grow about 47.5 percent Projections suggest that the share of the in 2021. Public spending growth, estimat- Angolan population living on less than ed at 18.6 percent, was driven by cur- Outlook US$1.90 per day (2011 PPP) will remain at rent spending as public investment grew 53.2 percent in 2022 as economic growth by 0.2 percent. Most additional oil rev- With soaring oil prices, GDP growth is ex- fails to keep up with population growth. enue was saved, increasing the primary pected at 2.9 percent in 2022. The non-oil This includes over 1.3 million people fac- surplus. This, together with currency ap- sector is expected to grow 2.3 percent, pro- ing severe hunger due to drought in some preciation and GDP growth, drove debt pelled by mining of diamonds and other of the poorest provinces in the country. levels from 130.5 to 88.1 percent of GDP minerals, the beverage and construction Meanwhile, the continued expansion of from 2020 to 2021. Consequently, bond industry, agriculture and fisheries, and the Kwenda program and improvements yields declined, and Angola’s credit rat- trade. With rising oil prices and a small but in non-oil sectors are expected to increase ing was upgraded. temporary recovery of oil production, oil the welfare of the poorest. Employment declined to 61.2 percent of sector growth is projected at 4.4 percent. The risks to the outlook arise from possible adults in Q4 2021 (from 62.8 percent a The 2022 budget keeps Angola on a path future waves or variants of COVID-19, oil year earlier), with the vast majority (81 of fiscal consolidation. The government is price volatility, and political uncertainty percent) employed in the informal sec- expected to increase the primary surplus resulting from the 2022 elections. In addi- tor. Food insecurity and poverty were from 7.3 percent of GDP in 2021 to 8.1 tion, escalating geopolitical tensions or cli- exacerbated by limited employment op- percent of GDP, further decreasing public mate-related natural disasters can further portunities and food inflation. After two debt levels to 74.2 percent of GDP. This, disrupt global value chains and fuel food years of stagnation, the minimum wage however, remains subject to oil price prices growth with potentially severe con- rose 50 percent against accumulated in- risks as non-oil revenues are expected sequences for the food security and wel- flation of 52 percent. The Kwenda cash to increase only gradually. Despite con- fare of vulnerable households. transfer program has about 500,000 out tinued monetary tightening and currency TABLE 2 Angola / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices -0.7 -5.5 0.2 2.9 3.1 3.3 Private Consumption -6.2 -4.0 6.6 3.1 4.7 4.3 Government Consumption -1.6 -7.1 6.5 2.8 2.5 4.4 Gross Fixed Capital Investment -1.9 -1.6 8.0 3.0 4.5 5.5 Exports, Goods and Services -5.9 -6.3 -10.8 4.3 1.3 -0.3 Imports, Goods and Services -11.0 -21.7 6.0 6.0 8.0 6.5 Real GDP growth, at constant factor prices -1.2 -6.7 0.2 2.9 3.1 3.3 Agriculture -1.3 2.4 12.2 6.5 7.0 6.8 Industry -3.6 -10.4 -9.1 0.8 -0.2 0.2 Services 2.2 -3.5 9.6 4.4 5.6 5.4 Inflation (Consumer Price Index) 17.1 22.3 25.6 20.0 12.3 9.5 Current Account Balance (% of GDP) 6.2 2.4 9.1 11.0 9.2 6.1 Net Foreign Direct Investment (% of GDP) -2.1 -3.3 -3.2 -0.2 0.5 0.8 Fiscal Balance (% of GDP) 0.8 -1.9 2.5 2.9 2.0 1.5 Debt (% of GDP) 119.6 130.5 88.1 74.2 68.3 64.6 Primary Balance (% of GDP) 6.5 4.9 7.3 8.1 7.7 6.5 a,b International poverty rate ($1.9 in 2011 PPP) 52.2 54.1 53.2 53.2 52.8 52.5 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 73.0 74.2 73.6 73.7 73.4 73.2 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 90.4 91.8 91.1 91.2 90.9 90.6 GHG emissions growth (mtCO2e) -5.0 -3.6 -1.5 -1.2 -0.4 -0.1 Energy related GHG emissions (% of total) 14.6 13.3 13.0 12.3 12.1 12.0 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2018-IDREA. Projection using point to point elasticity at regional level with pass-through = 0.7 based on private consumption per capita in constant LCU. b/ Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. MPO 3 Apr 22 In terms of risks, sustained food and ener- gy price volatility fueled by global geopo- BENIN Key conditions and litical tensions would negatively impact poor and vulnerable households, increas- challenges ing food insecurity and slowing poverty reduction. Extreme climate events would Table 1 2021 Prior to the pandemic, Benin experienced also cause damage and jeopardize agricul- Population, million 12.5 robust real GDP growth, averaging 6.4 tural output. Increased insecurity in the GDP, current US$ billion 18.5 percent between 2017-2019, due to a rela- northern part of the country could threaten GDP per capita, current US$ 1487.0 tively favorable external environment and the economic development of these rural a 19.2 International poverty rate ($1.9) commitment to macroeconomic stability. regions, push more households into a 51.3 The swift socio-economic response to fragility and trigger new security spend- Lower middle-income poverty rate ($3.2) a 79.3 COVID-19, combined with the continua- ing, reducing fiscal space. Finally, mone- Upper middle-income poverty rate ($5.5) Gini index a 37.8 tion of large public infrastructure projects tary policy tightening in advanced School enrollment, primary (% gross) b 114.2 supported growth throughout 2020, keep- economies would put pressure on Benin’s b 61.8 ing the real GDP deceleration among the external financing and debt sustainability. Life expectancy at birth, years lowest in SSA. The Government Action Total GHG Emissions (mtCO2e) 30.5 Plan (PAG) which initially covered the Source: WDI, Macro Poverty Outlook, and official data. period 2016-2021 was extended to 2026 a/ Most recent value (2018), 2011 PPPs. b/ WDI for School enrollment (2020); Life expectancy following the reelection of President Recent developments (2019). Talon in April 2021, and PAG2 maintains its focus on strengthening governance Real GDP growth is expected to have and on ambitious infrastructure invest- reached 6.6 percent in 2021, 3.8 percent Backed by a rebound of services and dy- ments (transport, logistics, agriculture, in per capita terms, driven by a strong namic construction sector, real GDP and tourism). rebound of the tertiary and construction Extending the recovery into the medium sectors. Private consumption (+3.9 per- growth is estimated to have reached 6.6 term will require continued structural re- cent) and total investment (+19.4 percent) percent in 2021, in-line with pre-COVID forms alleviating key constraints. First, benefited from easing cross border restric- trends. The fiscal deficit deteriorated fur- productivity growth in services and indus- tions and large public investment pro- ther as government extended its socio- try has been slow, due to low quality ed- jects. Inflation eased to 1.7 percent on av- ucation and skills mismatches. Second, the erage in 2021, notably on the back of economic response into 2021 and main- COVID-19 crisis highlighted a lack of re- lower energy prices until September 2021 tained capital expenditure levels, putting silience stemming from high gender dis- and a good, yet delayed, local subsistence pressure on PPG debt. Global inflation, parities and inadequate social safety nets. farming production. regional insecurity spreading through the Finally, even though fiscal consolidation The external current account deficit (CAD) northern border, and tightening global fi- efforts since 2016 enabled the use of coun- is estimated to have significantly deterio- tercyclical fiscal policy in response to the rated to -4.6 percent of GDP in 2021, after nancial conditions cloud the outlook. a temporary improvement to -1.7 percent COVID-19 crisis, domestic revenue mobi- lization remains structurally weak, limit- of GDP in 2020. In 2021, the resumption of ing fiscal space for productive spending. re-export activities following the end of the FIGURE 1 Benin / Budget balance and change in public and FIGURE 2 Benin / Actual and projected poverty rates and publicly guaranteed debt real GDP per capita Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 10 100 900000 8 90 800000 6 80 700000 4 70 600000 2 60 500000 0 50 400000 -2 40 300000 30 -4 20 200000 -6 10 100000 -8 2011 2013 2015 2017 2019 2021 2023 0 0 2011 2013 2015 2017 2019 2021 2023 Change in debt (%GDP) Budget balance (%GDP) 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 4 Apr 22 border closure with Nigeria and the large stood at 44.2 percent, +12.8 ppts higher by regional bond emissions and conces- import demand required for infrastructure than in urban areas. Poverty reduction sional financing. projects fueled the deficit. The CAD was ($1.9 a day, 2011 PPP) based on the 2018 Swift response to alleviate the surge in mainly financed by external commercial EHCVM was estimated at 19.2 percent, food and fuel prices on households, will borrowing in 2021. and it slightly slowed down in 2021 (-0.5 keep the fiscal deficit (including grants) Fiscal policy remained expansionary for a percent y-o-y) versus 2020, as extreme high at 5.5 percent of GDP in 2022. A rev- second consecutive year with the fiscal poor represented 18.3 percent of the popu- enue-based fiscal consolidation is expected deficit (incl. grants) up from 4.7 percent of lation end-2021. to narrow the fiscal deficit to 4.4 percent the GDP in 2020, to 5.8 percent of GDP in 2023 and reach the WAEMU target of 3 in 2021. The increase was mostly driven percent of GDP by 2025. As a result, PPG by capital expenditure and the extension debt is expected to peak at 52.4 percent end of COVID related current spending. Rev- Outlook 2023 before gradually decreasing. enues, excluding grants, increased from WAEMU reserves are expected to fall to 12.7 to 13.4 percent of GDP in 2021, due The ongoing war in Ukraine and its around 5.5 months of imports in 2022 to higher customs revenues and resilient repercussions in fuel and food prices, are and 5.3 months in 2023 and 2024, re- tax revenues. Public and publicly guaran- expected to negatively weigh on the short flecting faster growth in imports and a teed (PPG) debt increased to 51.7 percent term outlook. Real GDP growth is expect- reduction in net capital inflows (as a in 2021 (+9.2 ppt compared to 2019), with ed to decelerate to 5.9 percent in 2022, be- percent of GDP), as the environment for Eurobond issuances representing the bulk fore stabilizing at around 6 percent with Eurobond issuances remains uncertain. of 2021’s financing. fiscal consolidation muting the rebound. Growth-friendly fiscal consolidation and Benin’s monetary and exchange rate poli- A gradual shift from public to private the implementation of structural reforms cies are managed by the Central Bank of investments in the medium term is ex- are key to maintaining reserves at an West African States (BCEAO), which main- pected to drive growth on the demand optimal level. tains a fixed peg between the CFA Franc side, underpinned by the implementation Poverty reduction is expected to gradually and the Euro. Its reserves reached 5.8 of the PAG 2. revert to its pre-crisis downward trend as months of imports of goods and services Inflation is projected to sharply increase to the economy rebounds, but recent increas- in 2021, as a result of increased exports, 3.9 percent in 2022, and gradually abate es in food and energy prices could slow the August 2021 SDR allocation, and port- as the impact of the ongoing conflict in its pace. On the back of improved employ- folio inflows linked to Eurobond issuances Ukraine recedes. ment indicators, and social protection pro- in the region. The current account deficit (including grams, the $1.9/day PPP poverty head- Poverty and vulnerability remain high. grants) is expected to widen to 6 percent of count rate is expected to decrease to 18 The poverty rate based on the national GDP in 2022, as import prices rise driven percent in 2022 (-0.3 percent y-o-y), and to poverty line was 38.5 percent in 2019, with by imports from construction and energy 17.4 percent by 2024. strong spatial disparities: rural poverty sectors. The CAD will be mainly financed TABLE 2 Benin / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 6.9 3.8 6.6 5.9 6.1 6.0 Private Consumption 3.5 3.0 3.9 3.5 3.6 4.3 Government Consumption 5.8 19.6 8.5 9.2 -2.0 3.0 Gross Fixed Capital Investment 8.4 -10.9 11.6 11.0 15.4 10.2 Exports, Goods and Services -1.6 -15.4 23.8 14.0 8.3 5.8 Imports, Goods and Services -6.1 -21.5 19.8 13.4 6.9 4.6 Real GDP growth, at constant factor prices 6.9 3.8 6.6 5.9 6.1 6.0 Agriculture 7.2 1.8 3.2 5.0 5.4 5.5 Industry 6.2 5.2 9.4 8.4 9.5 10.1 Services 7.1 4.5 7.4 4.7 3.9 2.9 Inflation (Consumer Price Index) -0.9 3.0 1.7 3.9 2.5 2.0 Current Account Balance (% of GDP) -4.0 -1.7 -4.6 -6.0 -5.3 -4.8 Net Foreign Direct Investment (% of GDP) 1.3 0.5 1.4 1.5 1.8 2.2 Fiscal Balance (% of GDP) -0.5 -4.7 -5.8 -5.5 -4.3 -3.1 Debt (% of GDP) 42.5 46.1 51.7 52.2 52.3 51.2 Primary Balance (% of GDP) 1.1 -2.7 -3.6 -3.7 -2.6 -1.6 a,b International poverty rate ($1.9 in 2011 PPP) 18.8 18.7 18.3 18.0 17.7 17.4 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 50.8 50.7 50.2 49.8 49.5 49.1 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 78.6 78.4 77.7 77.1 76.5 75.9 GHG emissions growth (mtCO2e) 1.6 2.3 4.2 3.6 3.3 3.5 Energy related GHG emissions (% of total) 35.2 36.0 38.0 39.4 40.6 41.8 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2011-EMICOV, 2015-EMICOV, and 2018-EHCVM.Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. b/ Projection using point to point elasticity at regional level with pass-through = 0.7 based on GDP per capita in constant LCU. MPO 5 Apr 22 rationalizing the SOE sector and address- ing constraints that hinder private sector BOTSWANA Key conditions and engagement in trade and investment are central to the recovery. challenges Table 1 2021 Botswana has historically enjoyed Population, million 2.4 strong and stable growth since inde- Recent developments GDP, current US$ billion 16.5 pendence supported by the discovery GDP per capita, current US$ 6849.4 of large diamond deposits and pru- Botswana’s economy rebounded strongly a 14.5 International poverty rate ($1.9) dent use of the proceeds. The limita- in 2021 led by the mining sector. GDP a 36.5 tions of the existing diamond sector- growth is estimated to have bounced Lower middle-income poverty rate ($3.2) a 59.1 led development model have become back to 12.1 percent in 2021, following Upper middle-income poverty rate ($5.5) Gini index a 53.3 increasingly pronounced: growth re- a contraction of 8.5 percent in 2020, dri- School enrollment, primary (% gross) b 103.2 mains sluggish, job creation is low, ven by a rebound in diamond activity. b 69.6 and inequality is high. Weakened glob- Botswana’s economy grew 13.5 percent Life expectancy at birth, years al demand has kept diamond proceeds over Q1-Q3 2021 year-on-year (y-o-y). Total GHG Emissions (mtCO2e) 59.1 below pre-global financial crisis levels Supported by the rollout of COVID-19 Source: WDI, Macro Poverty Outlook, and official data. and competition from synthetic dia- vaccines, domestic consumption also sig- a/ Most recent value (2015), 2011 PPPs. b/ WDI for School enrollment (2015); Life expectancy monds and higher production costs nificantly contributed to the recovery. Di- (2019). have added further pressures. amond prices returned to pre-pandem- Since 2015, continued fiscal expansion to ic levels after a sharp decline in 2020. support growth has created large fiscal Diamond mining increased 35.4 percent Botswana’s economic growth is projected deficits, eroded buffers and weakened the over Q1-Q3 2021, contributing 6.1 percent to moderate to 4.1 percent in 2022 follow- external position. Low capital accumula- to overall GDP growth. Non-mining sec- tion and sluggish productivity constrained tors showed more mixed recovery tra- ing a 12.1 percent rebound last year. De- growth in the non-diamond economy. Un- jectories. The hospitality sector remained spite the headwinds created by employment remains high, as the private affected by intermittent restrictions. Un- COVID-19, economic growth surpassed sector struggles to create jobs due to high employment peaked from 24.5 percent in expectations. Structural policies to deliv- costs/barriers to doing business and the Q42020 to 26 percent in Q42021. Pover- mismatch between poor domestic supply ty is projected to have declined to 56.6 er a stronger, resilient, equitable and sus- of skills and high demand. percent in 2021 after a projected sharp tainable recovery remain key to tackle COVID-19 exacerbated existing econom- increase in 2020, based on the upper among others the unemployment rate of ic and social challenges, setting back middle-income country poverty line and 26 percent and the projected poverty rate some gains made in alleviating poverty, remains high compared to other upper of 56.6 percent in 2021, based on the up- underscoring the urgent need for a sig- middle-income countries. nificant shift towards a more diversified CPI averaged 6.7 percent in 2021 com- per middle-income country poverty line. pared to 1.9 percent in 2020. Inflationary and export-led economy, with the pri- vate sector playing a leading role. Im- pressures were on an upward trajectory proving public sector spending efficiency, driven by adjustments to regulated FIGURE 1 Botswana / Real GDP growth and contributions FIGURE 2 Botswana / Actual and projected poverty rates to real GDP growth and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 0.6 70 90000 80000 0.4 60 70000 0.2 50 60000 40 50000 0.0 30 40000 -0.2 30000 20 -0.4 20000 10 10000 -0.6 2019Q1 Q3 2020Q1 Q3 2021Q1 Q3 0 0 Gross Capital Formation Public Consumption 2009 2011 2013 2015 2017 2019 2021 2023 Private Consumption Exports International poverty rate Lower middle-income pov. rate Imports GDP Growth Upper middle-income pov. rate Real GDP pc Source: Statistics Botswana. Source: World Bank. Notes: see table 2. MPO 6 Apr 22 prices, notably utilities, VAT, Botswana poised to remain robust, supported by ex- Housing Corporation rentals, and in- ternal demand. Investment in renewable creases in domestic fuel prices. Bank of Outlook energy projects will support growth and Botswana maintained an accommodative contribute to removing the energy supply monetary policy stance, maintaining the The outlook is not without substantial constraint to higher private sector activity. repo rate at 3.75 percent. The current downside risks as the emergence of new Abundant copper reserves coupled with account deficit narrowed in 2021 to an COVID-19 variants pose a threat to the re- record-high copper prices will add the estimated 2.1 percent of GDP, buoyed covery. Prolonged higher inflation leading needed impetus. Implementation of struc- by the rebound in diamond exports. to monetary tightening around the world tural reforms will support growth over the Foreign exchange reserves are estimat- could slow the recovery exacerbated by the medium term as Government pursues fis- ed to have increased from P58.8 bil- Ukraine-Russia conflict through high food cal consolidation. Growth is expected to lion (US$4.9 billion) in December 2020 and fuel prices. Muted mineral receipts average 4 percent over 2023-24. to P61.1 billion (US$5.2 billion) in No- against envisaged lower SACU receipts The current account deficit is expected to vember 2021 with sound reserves at 10 would dampen the fiscal position. Poverty narrow to 0.6 percent of GDP in 2022 and months of import cover. levels are projected to reach 56.2 percent in record a surplus of 1.6 percent of GDP in With the Government channeling fiscal 2022 (measured using the upper-middle- 2023 as the rebound in diamond produc- resources towards healthcare and sup- income country poverty line, US$5.5/per- tion and favorable terms of trade owing porting the economy, the 2020 projected son/day in 2011PPP). to subdued diamond supply in Russia an- deficit increased to 9.4 percent of GDP Growth is envisaged to moderate in 2022 chor the projected drop in SACU revenues. hence further Government Investment but still maintain a robust recovery at 4.1 The fiscal deficit is expected to decline to Account drawdowns, dropping balances percent as the base effects from the pan- 4.2 percent of GDP in FY2022/23, driven from US$ 1.6 billion in 2020 to an all- demic shock fade. Progress in vaccination by higher revenue collection while expen- time low of US$ 0.8 billion as of Septem- will support economic activity, especially diture remain under pressure. Public debt ber 2021. Debt is projected to reach 25.5 in the non-mining sectors that have con- is estimated to reach 27.2 percent of GDP percent of GDP in 2021 from 23.9 percent tinued to be significantly affected by the this year and 26.8 percent by 2023, driven in 2020. pandemic in 2021. Diamond activity is also by external borrowing. TABLE 2 Botswana / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 3.0 -8.5 12.1 4.1 4.0 4.0 Private Consumption 3.5 -2.7 6.2 6.0 4.2 4.0 Government Consumption 9.8 3.6 0.7 -5.2 -2.2 -1.8 Gross Fixed Capital Investment 10.2 -7.7 7.0 4.1 4.0 4.1 Exports, Goods and Services -7.1 -18.1 44.0 9.2 8.3 7.3 Imports, Goods and Services 11.9 5.2 5.1 5.0 4.9 4.8 Real GDP growth, at constant factor prices 3.2 -8.9 12.1 4.1 4.0 4.0 Agriculture 3.0 -1.7 3.0 3.0 2.8 2.6 Industry -1.5 -20.6 26.7 4.6 4.4 4.4 Services 6.8 -0.8 4.1 3.8 3.8 3.8 Inflation (Consumer Price Index) 2.8 1.9 6.7 7.5 4.5 4.5 Current Account Balance (% of GDP) -8.4 -10.6 -2.1 -0.6 1.6 1.9 Net Foreign Direct Investment (% of GDP) 1.3 -0.6 0.6 0.8 1.2 1.2 a Fiscal Balance (% of GDP) -6.2 -9.4 -5.7 -4.2 -0.5 0.0 Debt (% of GDP) 21.2 23.9 25.5 27.2 26.8 26.4 a,b Primary Balance (% of GDP) -5.5 -8.7 -4.9 -3.4 0.3 1.1 c,d International poverty rate ($1.9 in 2011 PPP) 12.0 15.0 12.3 12.1 11.5 11.2 c,d Lower middle-income poverty rate ($3.2 in 2011 PPP) 32.5 37.1 33.1 32.5 31.8 31.4 c,d Upper middle-income poverty rate ($5.5 in 2011 PPP) 56.2 59.4 56.6 56.2 55.8 55.1 GHG emissions growth (mtCO2e) 0.6 -1.4 3.7 0.4 0.3 0.4 Energy related GHG emissions (% of total) 17.2 15.7 16.8 17.2 17.4 17.7 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Fiscal balances are reported in fiscal years (April 1st -March 31st). b/ Refers to Public and Publicly Guaranteed debt. c/ Calculations based on 2015-BMTHS. Actual data: 2015. Nowcast: 2016-2021. Forecasts are from 2022 to 2024. d/ Projection using neutral distribution (2015) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 7 Apr 22 BURKINA FASO Key conditions and Recent developments challenges Following a sharp recovery in the second half of 2020, GDP growth remained Table 1 2021 Over the past decade, the primary (mainly strong in 2021, estimated at 7.0 percent. Population, million 21.5 agriculture) sector has declined in impor- This reflected a strong rebound in ser- GDP, current US$ billion 18.0 tance, now contributing less than 20 per- vices and robust gold production and was GDP per capita, current US$ 839.4 cent to the economy, with a booming gold supported by private investment, main- a 33.7 International poverty rate ($1.9) industry generating almost 20 percent of ly into mines, air transport, and bever- a 61.8 GDP and 85 percent of exports. Services ages. The fiscal deficit remained above 5 Lower middle-income poverty rate ($3.2) a 80.0 account for nearly half of GDP, with the percent as the government implemented Upper middle-income poverty rate ($5.5) Gini index a 47.3 public and retail sectors creating most jobs the Economic Recovery Plan in response School enrollment, primary (% gross) b 92.6 and output. With an increasingly violent to COVID-19 while enacting additional b 61.6 security context outside the capital, about security spending. Despite robust gold Life expectancy at birth, years a quarter of schools have closed in the two production, the trade deficit deteriorated, Total GHG Emissions (mtCO2e) 62.7 most affected regions, and the number of with imports rising faster than exports. Source: WDI, Macro Poverty Outlook, and official data. internally displaced persons reached 1.8 With lower donor grants, the current ac- a/ Most recent value (2018), 2011 PPPs. b/ WDI for School enrollment (2020); Life expectancy million as of March 2022. count deficit is estimated to have (2019). Economic prospects are uncertain after widened to 3.0 percent of GDP. the recent unconstitutional regime Fueled by an accommodative monetary change, combined with growing insecu- stance and rising food prices (+14.7 per- The economy grew by an estimated 7.0 rity, the impact of climatic change, and cent) on account of a sharp contraction percent in 2021 (4.2 percent in per-capita the lingering effects of COVID-19. On in agricultural output, inflation (CPI) January 24, 2022, a military junta seized reached 3.9 percent in 2021, a 10-year terms), with investment-led growth in power in response to the worsening se- high. Food inflation is a particular con- services, gold mining, and manufactur- curity situation, which reduced interna- cern for the poor, as food accounts ing. Due to supply bottlenecks in the tional community financial support and for 48 percent of their total consump- agricultural sector, food insecurity re- could prompt economic sanctions by tion. The Central Bank of West African ECOWAS, the regional bloc from which States (BCEAO) manages the monetary mains high, and inflation approached a the country got suspended. The primari- and exchange rate policies, which main- 10-year peak. The transition government, ly rain-fed agriculture and livestock sec- tains a fixed peg between the CFA Franc in place since the January 2022 coup tors remain highly vulnerable to climat- and the Euro. Its reserves reached 5.8 d’état, faces significant challenges in ad- ic shocks and natural disasters, particu- months of imports of goods and services dressing the multifaceted security, hu- larly droughts, floods, and locust inva- in 2021 due to increased exports, the sion. A resurgence of COVID-19, with August 2021 SDR allocation, and portfo- manitarian, and food crises. less than 20 percent of the population lio inflows linked to Eurobond issuances vaccinated, could also subdue domestic in the region (by Benin, Côte d’Ivoire, demand and hurt the services sector. Senegal, and BOAD). FIGURE 1 Burkina Faso / Real GDP and sectoral FIGURE 2 Burkina Faso / Actual and projected poverty decomposition of real GDP rates and real GDP per capita Billion CFAF Poverty rate (%) Real GDP per capita (constant LCU) 2,250 100 600,000 2,000 90 500,000 1,750 80 1,500 70 400,000 1,250 60 1,000 50 300,000 750 40 200,000 30 500 20 250 100,000 10 - Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 0 0 2016 2017 2018 2019 2020 2021 2014 2016 2018 2020 2022 2024 International poverty rate Lower middle-income pov. rate Primary Sector Secondary Sector Tertiary Sector Upper middle-income pov. rate Real GDP pc Source: : World Bank staff estimates based on the national statistical institute Source: World Bank. Notes: see table 2. (INSD) data. MPO 8 Apr 22 The international extreme poverty rate at 4.8 percent in 2022, assuming that there reforms are crucial to maintaining reserves (US$1.9/day per capita, 2011 PPP) in- continue to be no significant sanctions at an optimal level. creased by about half a percentage point from the international community in re- The extreme poverty rate is projected to to 32.6 percent in 2020, resulting in an ad- sponse to the January coup d’état and tran- continue to fall by about one percentage ditional 290,000 extreme poor. In 2021, sition arrangements. Growth is expected to point a year over the medium term. The poverty projections based on per-capita be driven by private consumption and a number of poor is also projected to de- GDP growth estimated a decline to 30.8 rebound in agriculture, while the current crease. Still, with high population growth, percent. Food insecurity (as measured by account deficit may widen further due to this means only 50,000 to 100,000 would the FIES) has followed the same pattern, high oil prices and a decline in donor escape poverty each year, and over 6 mil- rising from 44 percent in 2018 to 53 percent grants after the coup. lion Burkinabe will remain poor for the in June 2020 and then falling to 37 percent The fiscal deficit is projected to worsen in foreseeable future. Food insecurity is ex- by June 2021 (phone surveys). However, 2022 due to increased security spending pected to deteriorate due to poor harvests the decline in poverty may be overestimat- and lower grants before gradually con- in 2021 and rising food prices, with the sit- ed as mining and services growth is un- verging toward the WAEMU fiscal target uation particularly severe in the north. likely to quickly translate into increased of 3 percent of GDP by 2025. Over the There are significant downside risks to the incomes for poor and rural households, medium term, further tax reforms and economic outlook with multiple domestic and the same surveys find that almost half wage bill controls could significantly lower risks, including further political instability, of households had lower incomes in 2021, the fiscal deficit. Burkina Faso remains at climate shocks, local COVID outbreaks, compared to 2020, with only 28 percent re- moderate risk of external and overall pub- and widespread social discontent from ported an increase. lic debt distress, with some space to absorb high food inflation and insecurity. The eco- shocks on external debt. nomic consequences of the Russia-Ukraine WAEMU regional foreign exchange re- war would primarily be through higher serves are expected to fall to around 5.3 global food (grains and fertilizer) and en- Outlook months of imports by 2024, reflecting ergy prices. The projections already reflect faster growth in imports and a reduction in recent sharp price increases of oil, gas, Over the medium term, the economy is ex- net capital inflows (as a percent of GDP), metals, minerals, and agricultural com- pected to continue slightly below its pre- as the environment for Eurobond is- modities since January 2022, including pandemic growth path amidst heightened suances remains uncertain. Growth- gold, which benefits Burkina Faso. uncertainty. Real GDP growth is projected friendly fiscal consolidation and structural TABLE 2 Burkina Faso / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 5.7 1.9 7.0 4.8 5.4 5.3 Private Consumption 3.5 8.6 3.4 9.9 3.4 5.4 Government Consumption 13.4 8.0 6.6 13.7 12.5 3.2 Gross Fixed Capital Investment 3.0 -4.0 29.1 -9.2 6.2 8.0 Exports, Goods and Services -0.3 -3.6 6.5 9.7 4.5 3.4 Imports, Goods and Services -2.8 10.0 15.5 10.7 5.1 4.8 Real GDP growth, at constant factor prices 5.9 2.6 7.0 4.8 5.4 5.3 Agriculture 2.1 6.3 -4.1 6.3 4.6 6.2 Industry 2.7 15.6 11.0 4.8 5.9 6.9 Services 9.8 -6.0 10.6 4.1 5.5 3.9 Inflation (Consumer Price Index) -3.2 1.9 3.9 5.0 3.5 3.0 Current Account Balance (% of GDP) -3.3 -0.2 -3.0 -4.8 -4.7 -4.9 Net Foreign Direct Investment (% of GDP) 0.9 0.6 0.5 0.5 0.6 0.6 Fiscal Balance (% of GDP) -3.3 -5.5 -5.5 -6.6 -5.1 -3.8 Debt (% of GDP) 42.0 46.3 55.0 59.3 58.4 56.4 Primary Balance (% of GDP) -2.1 -4.2 -4.0 -4.4 -2.9 -1.8 a,b International poverty rate ($1.9 in 2011 PPP) 32.1 32.6 30.8 30.1 28.8 27.7 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 60.6 60.9 59.7 59.0 57.8 56.7 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 79.2 79.5 78.4 77.9 77.4 76.8 GHG emissions growth (mtCO2e) 4.3 4.7 4.4 5.1 5.0 4.9 Energy related GHG emissions (% of total) 10.5 10.9 10.7 11.2 11.7 12.1 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2018) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 9 Apr 22 social stability and economic growth aims to sustain growth and resilience by boost- BURUNDI Key conditions and ing promising sectors, developing human capital, enhancing environmental protec- challenges tion, and strengthening institutional ca- pacity. Implementing this agenda poses Table 1 2021 Burundi’s development has been ham- significant financing needs and requires Population, million 12.3 pered by structural weaknesses locking the deeper economic reforms. GDP, current US$ billion 3.5 economy in a low-level equilibrium sus- The rising oil and wheat prices resulting GDP per capita, current US$ 287.3 tained by mutually reinforcing fragility from the Russian invasion and associated a 72.8 International poverty rate ($1.9) and poverty. Burundi faces a multidimen- sanctions, represent a negative term - of a 38.6 sional fragility trap with recurring political trade shock likely to slow economic Gini index b 119.0 instability, low economic diversification, growth, accelerate inflation, and increase School enrollment, primary (% gross) Life expectancy at birth, years b 61.6 high population growth, and environmen- fiscal and current account deficits. Al- Total GHG Emissions (mtCO2e) 9.8 tal degradation, leading to low and volatile though projected to accelerate in the medi- growth. The business environment is not um term, economic growth in 2022 and Source: WDI, Macro Poverty Outlook, and official data. a/ Most recent value (2013), 2011 PPPs. conducive to private sector development. 2023 will be lower than initially projected, b/ Most recent WDI value (2019). The cessation of most aid since 2015 con- which further complicates efforts to re- strained the government's ability to build verse poverty trends. The fiscal and cur- infrastructure. These weaknesses have rent account deficit are projected to remain Economic growth is estimated at 1.8 per- been exacerbated by inconsistent macro- high in 2022 before improving gradually cent in 2021 from 0.3 percent in 2020, economic policies including foreign ex- over the medium term. change restrictions, exchange rate overval- driven by agriculture and a recovery in uation, fiscal dominance of monetary pol- services. Industrial growth was subdued icy, and high public sector indebtedness. due to mining disputes. While recovery is These factors lead to low capital accumula- Recent developments expected to accelerate over the medium tion, weak productivity growth and limit- ed structural transformation of the econo- Growth in 2021 reached 1.8 percent from term, the country faces serious downside my and contribute to higher poverty rates 0.3 percent in 2020, with a rebound in ser- risks, including from fiscal slippages and and curtailed human capital development. vices and steady agriculture growth. In- inadequate external financing. Poverty The COVID-19 outbreak has increased the dustrial growth was subdued due to the continued to rise, reflecting the negative economy’s vulnerability with a deteriora- ongoing suspension of mining activities as tion of macroeconomic accounts. A recent contracts were renegotiated. Private con- per capita GDP growth as population survey revealed that off-farm incomes de- sumption and investment supported growth remains high. creased and food insecurity rose while growth on the demand side. Inflation ac- large proportions of businesses reported celerated to 8.3 percent in December 2021 declining sales, difficulty accessing inputs from 7.5 percent a year before, driven by and cash flow crunches. The national de- food prices. velopment plan 2018-2027 and the Presi- The fiscal deficit remained high at 5.1 per- dent’s program for peace consolidation, cent of GDP in 2021 from 6.5 percent of FIGURE 1 Burundi / Public debt, fiscal and current account FIGURE 2 Burundi / Actual and projected poverty rates and deficits real GDP per capita Percent of GDP Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 80 16 100 190000 70 14 180000 95 60 12 170000 90 50 10 160000 85 150000 40 8 80 140000 30 6 130000 20 4 75 120000 10 2 70 110000 0 0 65 100000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Public domestic debt (lhs) Public external debt (lhs) International poverty rate Real GDP pc Fiscal deficit (rhs) Current account deficit (rhs) Sources: Official statistics and World Bank calculations. Source: World Bank. Notes: see table 2. MPO 10 Apr 22 GDP in 2020. The increase in revenue mo- growth per capita remains negative, with CAD is expected to average 14 percent of bilization was not enough to cover expen- poverty estimated at 87.2 percent in 2021 GDP in 2024, since export growth (expect- ditures, with increased interest payments. (based on international poverty line of ed from minerals and traditional exports) The fiscal deficit continues to be financed $1.90/day, in 2011 PPP), from 72.8 per- will be offset by higher imports driven by mainly by domestic borrowing, bringing cent in 2013 (the last year with data higher consumption growth and exchange public debt to 70.6 percent of GDP (73 per- availability). rate overvaluation. The share of the popu- cent of which is domestic debt). lation living below 1.90/day (2011 PPP), is Driven by oil prices, the current account projected to reach 86.4 percent in 2024. deficit (CAD) remained high at 13.9 per- The outlook is vulnerable to climatic haz- cent of GDP in 2021, primarily financed by Outlook ards, fiscal risks, and further spillover ef- trade credits. Despite higher prices for Bu- fects of the Ukraine/Russia conflict. Do- rundi's main exports, export earnings de- Growth is projected to range between 2.5 mestic fiscal risks include weaker growth clined due to the absence of gold exports - 4.1 percent in 2022-24. Services should performance and higher domestic debt following the suspension of mining. The continue to recover while agriculture will service costs. External fiscal risks include increase in export volumes focused on a keep its growth pace assuming favorable weaker grants and higher interest rates few regionally traded products (e.g., beer). rainfall. Industrial growth is projected to on external borrowing. Inadequate financ- Imports of both capital and consumption accelerate due to a loosening of forex con- ing of the CAD could heighten pressure goods increased. The SDR issuance straints from the SDR allocation, and as- on currency. With weak vaccination, the strengthened international reserves, cover- suming resolution in mining disputes and COVID-19 pandemic could return and af- ing 4.3 months of imports at end-October increased power generation. Private con- fect the economy. On the upside, foreign 2021 from 0.8 months a year before. The sumption and public investment are pro- aid could accelerate with the progress in exchange rate remained overvalued with jected to remain high given economic re- international cooperation, following the the parallel market premium averaging 70 covery and public infrastructure pro- lifting of sanctions by the USA in Novem- percent (end-December 2021). grams. The fiscal deficit is projected to 5 ber 2021 and the EU in February 2022, Burundi’s Human Capital Index remains percent of GDP in 2022 before narrowing and the re-engagement of the IMF. How- low at 0.39, with stunting and learning in 2023-24 as current spending is contained ever, for growth to accelerate meaningful- poverty at 52.2 and 93 percent, respec- and revenue collection increases. Howev- ly, Burundi needs to implement reforms tively. Literacy remains particularly low er, the deficit will remain high at 4 percent that support export growth and private among women and rural residents. With of GDP as external grants increase only sector development. high population growth, any demograph- gradually. Public debt is expected to de- ic dividend remains out of reach. GDP crease to 64 percent of GDP by 2024. The TABLE 2 Burundi / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 1.8 0.3 1.8 2.5 3.3 4.1 Private Consumption 3.1 0.3 2.8 3.0 3.4 3.6 Government Consumption 8.3 19.2 5.4 4.0 3.9 3.9 Gross Fixed Capital Investment 32.9 -16.6 17.8 7.7 10.3 13.5 Exports, Goods and Services -0.5 -14.9 18.2 10.9 9.4 9.8 Imports, Goods and Services 17.1 3.4 13.5 7.3 7.0 7.1 Real GDP growth, at constant factor prices 1.8 0.3 1.8 2.5 3.3 4.1 Agriculture 3.1 2.8 2.9 3.0 3.4 4.0 Industry 2.1 1.8 1.4 2.4 3.1 4.4 Services 0.9 -1.7 1.3 2.2 3.3 4.0 Inflation (Consumer Price Index) -0.8 7.5 8.3 9.0 6.7 6.7 Current Account Balance (% of GDP) -13.4 -10.9 -13.9 -15.7 -15.0 -14.2 Net Foreign Direct Investment (% of GDP) 0.0 -0.1 0.0 0.0 0.0 0.0 Fiscal Balance (% of GDP) -4.9 -6.5 -5.1 -5.0 -4.0 -3.9 Debt (% of GDP) 58.5 63.6 70.6 68.8 66.9 63.8 Primary Balance (% of GDP) -4.3 -5.2 -2.3 -2.4 -1.8 -1.8 a,b International poverty rate ($1.9 in 2011 PPP) 84.0 86.2 87.2 87.7 87.4 86.4 GHG emissions growth (mtCO2e) 3.1 3.0 3.2 3.3 3.4 3.5 Energy related GHG emissions (% of total) 14.4 14.2 13.7 13.3 12.9 12.5 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2006-QUIBB and 2013-ECVMB. Actual data: 2013. Nowcast: 2014-2021. Forecasts are from 2022 to 2024. b/ Projection using point-to-point elasticity (2006-2013) with pass-through = 1 based on GDP per capita in constant LCU. MPO 11 Apr 22 The pace of economic recovery is subject to substantial downside risks associated CABO VERDE Key conditions and with rising uncertainty in Europe due to the Ukraine conflict, the emergence challenges of new COVID-19 variants, and climatic shocks. Fiscal risks are high as the gov- Table 1 2021 Political stability, democratic institutions, ernment is exposed to contingent liabil- Population, million 0.6 and pro-market reforms have generated ities in sectors that are particularly vul- GDP, current US$ billion 1.9 significant economic and social progress nerable to the crisis, such as aviation, GDP per capita, current US$ 3363.6 since independence in 1975. However, ports, and utilities. A sustained Ukraine a 3.4 International poverty rate ($1.9) Cabo Verde’s development model, based war could reduce investments and a 15.4 on tourism and foreign direct investment tourism flows and trigger fiscal liabilities. Lower middle-income poverty rate ($3.2) a 41.3 (FDI) has shown signs of fatigue since the Moreover, Cabo Verde remains highly ex- Upper middle-income poverty rate ($5.5) Gini index a 42.4 2008 Global Financial Crisis. The subse- posed to natural disasters such as vol- School enrollment, primary (% gross) b 100.9 quent sluggish recovery in Europe re- canic eruptions, droughts, floods, and ris- b 73.0 duced the influx of funds, with dwindling ing sea levels that could further weigh on Life expectancy at birth, years private investment and growth. Ineffective external and fiscal balances. Total GHG Emissions (mtCO2e) 0.8 expansionary fiscal policy between Source: WDI, Macro Poverty Outlook, and official data. 2010-2015 led to growing fiscal financing a/ Most recent value (2015), 2011 PPPs. b/ Most recent WDI value (2019). needs and to put public debt back on a sustainable path, the authorities initiated a Recent developments consolidation program in 2016, including Growth rebounded to 7.1 percent in the reform of loss-making state owned en- Economic activity is estimated to have ex- terprises (SOEs). panded by 7.1 percent in 2021, magnified 2021, led by the gradual recovery in The COVID-19 crisis reversed the progress by base effects after a contraction of 14.8 tourism, supporting poverty alleviation. in fiscal consolidation and exacerbated the percent in 2020. Growth was led by a slight Inflationary pressures increased, driven growth model’s vulnerabilities. In addi- recovery of tourism from the second quar- by energy and food. Growth-friendly fis- tion to the adverse economic effects of mit- ter. Retail and wholesale trade, construc- igation measures, global travel restrictions tion, and public administration were the cal consolidation should see growth con- led to a sharp contraction in tourism and main contributors of growth. On the de- verging to 6 percent and put debt-to- related activities. The authorities respond- mand side, public consumption and net GDP on a declining path over the medi- ed by expanding public health services exports were the main drivers. um term. The outlook is subject to sub- and social protection programs, as well as The current account deficit (CAD) is esti- stantial downside risks stemming from by providing financial support to small mated to have declined from 15.9 percent of businesses. However, poverty reduction GDP in 2020, to 14.2 percent in 2021, sup- new COVID-19 variants, the Ukraine gains made since 2015 were reversed in ported by an increase in remittances and the crisis, and climatic shocks. 2020 driven largely by substantial tempo- moderate recovery in services exports. The rary job losses, particularly in the tourism CAD was financed by concessional loans sector. The unemployment rate increased and FDI. International reserves reached 6.9 from 11.3 to 14.5 percent in 2020. months of prospective imports. FIGURE 1 Cabo Verde / GDP per capita and debt outlook FIGURE 2 Cabo Verde / Actual and projected poverty rates and real GDP per capita Percentage of GDP Billions, CVE Poverty rate (%) Real GDP per capita (constant LCU) 240% 240 60 350000 215 215% 200 300000 50 182 190% 160 250000 40 165% 120 200000 154.9 157.1 153.1 147.1 30 140.8 150000 140% 80 124.7 124.1 20 116 100000 115% 110 40 104 100 98 10 50000 90% 0 2018 2019 2020 2021e 2022f 2023f 2024f 0 0 Public Debt: Post-COVID-19 forecast (lhs) 2007 2009 2011 2013 2015 2017 2019 2021 2023 Public Debt: Pre-COVID-19 forecast (lhs) International poverty rate Lower middle-income pov. rate Real GDP per capita: Post-COVID-19 forecast Upper middle-income pov. rate Real GDP pc Sources: World Bank and IMF staff estimates. Note: Pre COVID-19 GDP forecast Source: World Bank. Notes: see table 2. refers to the 2019 Annual Meetings Macro-poverty Outlook. MPO 12 Apr 22 The fiscal deficit is estimated to have nar- in poverty. The extreme poverty rate fell Inflation is projected to converge to 2 per- rowed slightly to 9.5 percent of GDP in slightly from 2.4 percent to 2 percent. cent over the medium-term. 2021, driven by sustained high current ex- The CAD is projected to reach 11.8 percent penditure (33.8 percent of GDP). Financing of GDP in 2022, falling to 6.7 percent by needs of 8.8 percent of GDP were covered 2024 driven by the rebound in service ex- by concessional credits, grants, domestic Outlook ports. Medium-term external financing borrowing, and resources freed up by the needs are expected to be covered mainly Debt Service Suspension Initiative. Public Real GDP growth is projected to reach by FDI, which is expected to reach 5.3 per- debt as a share of GDP increased slightly to 5.5 percent in 2022 (4.4 percent in per cent of GDP in 2024. International reserves 157.1 percent of GDP, driven by increased capita terms), driven by the continued re- are expected to remain strong, at 6 to 7 domestic debt, and remains sustainable, covery of the tourism sector. The Ukraine months of imports. but the risk of external and total debt dis- crisis will weigh on growth, mainly The authorities are committed to gradual tress is high. through increasing oil and food prices. fiscal consolidation over the medium term, Cabo Verde’s monetary policy is aligned Over the medium term, private con- which includes enhanced management of with the Eurozone, as the escudo is pegged sumption and investment in tourism and fiscal risks, notably from SOEs, and rev- to the euro. Inflationary pressures in- the blue economy will be the main con- enue mobilization. The primary fiscal creased in 2021 due to higher international tributors to growth. The outlook is sub- deficit is projected to decline to 8 percent of oil and food prices. Average headline in- ject to substantial downside risks stem- GDP in 2022. Fiscal consolidation and pru- flation rose from 0.6 percent in 2020, to ming from climate shocks, new dent borrowing policies should reduce the 1.9 percent in 2021. Food inflation, which COVID-19 variants, the realization of public debt-to-GDP ratio to 140.8 percent stood at 0.6 percent, affected dispropor- contingent liabilities, increased global un- by 2024. tionally the poor as the bottom forty per- certainty due to the Ukraine war, and de- The poverty rate (based on the lower- cent of the population spends about 34 lays in SOE reforms. middle income poverty line of US$3.2 a percent of their income on consumption. Inflationary pressures are expected to peak day, 2011 PPP) is projected to decline to The rebound in economic activity in 2021 in 2022, reaching 3.5 percent, reflecting the 10.6 percent in 2022 and 8 percent by resulted in a reduction in the poverty stress on global value chains and the im- 2024. Poverty reduction will be supported rate from 14.7 percent to 12.3 percent (us- pact of the Ukraine war. Inflation is expect- by growth, mainly in the tourism sector, ing $3.2 US per day PPP in 2011), re- ed to start stabilizing in 2023 as supply dis- and the stabilization of inflation over the flecting nearly 12,000 fewer people living ruptions abate and energy prices stabilize. medium term. TABLE 2 Cabo Verde / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 5.7 -14.8 7.1 5.5 6.1 6.0 Private Consumption 5.9 -11.3 3.9 2.3 3.4 3.0 Government Consumption 4.8 0.8 7.5 2.3 2.5 1.7 Gross Fixed Capital Investment -6.3 19.7 11.2 12.5 10.4 10.6 Exports, Goods and Services 8.7 -58.4 8.4 22.4 13.4 12.7 Imports, Goods and Services 0.8 -22.5 7.4 13.6 9.1 8.8 Real GDP growth, at constant factor prices 5.7 -14.8 7.1 5.5 6.1 6.0 Agriculture -6.8 -6.3 8.1 4.5 2.9 2.6 Industry 7.5 -2.0 10.3 6.4 6.3 5.6 Services 6.3 -19.2 5.9 5.3 6.3 6.5 Inflation (Consumer Price Index) 1.1 0.6 1.9 3.5 2.3 2.0 Current Account Balance (% of GDP) -0.4 -16.5 -13.5 -11.8 -7.0 -6.7 Net Foreign Direct Investment (% of GDP) 4.2 3.7 5.8 2.6 4.2 5.3 Fiscal Balance (% of GDP) -2.4 -10.0 -9.5 -8.0 -7.1 -5.9 Debt (% of GDP) 124.1 154.9 157.1 153.1 147.1 140.8 Primary Balance (% of GDP) 0.2 -7.1 -7.0 -4.8 -3.6 -2.2 a,b International poverty rate ($1.9 in 2011 PPP) 2.0 3.1 2.4 2.0 1.6 1.4 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 10.2 14.7 12.3 10.8 9.2 8.0 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 32.5 41.1 37.0 34.2 31.2 28.7 GHG emissions growth (mtCO2e) 2.5 2.2 2.1 2.5 2.4 1.5 Energy related GHG emissions (% of total) 87.5 88.1 88.7 88.9 89.1 90.1 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2007-QUIBB, 2019-, and 2015-IDRF. Actual data: 2015. Nowcast: 2016-2021. Forecasts are from 2022 to 2024. b/ Projection using point-to-point elasticity (2007-2019) with pass-through = 1 based on GDP per capita in constant LCU. MPO 13 Apr 22 For growth to accelerate and become more inclusive, the government’s role CAMEROON Key conditions and needs to shift from being the main driver of economic activity to: (i) providing a challenges stable and fair regulatory environment and adequate infrastructure services; and Table 1 2021 Cameroon is the largest economy in the (iii) effectively delivering basic services to Population, million 27.2 Economic and Monetary Community of the population. GDP, current US$ billion 42.0 Central Africa (CEMAC), accounting for GDP per capita, current US$ 1543.7 over 40 percent of the region’s GDP a 26.0 International poverty rate ($1.9) and over 60 percent of regional foreign Lower middle-income poverty rate ($3.2) a 47.0 exchange reserves. The oil sector ac- Recent developments a 71.0 counts for 4 percent of the country’s Upper middle-income poverty rate ($5.5) Gini index a 46.6 GDP and 13.8 percent of its fiscal rev- Cameroon’s economic activity gradually School enrollment, primary (% gross) b 105.7 enues in 2021, highlighting Cameroon’s recovered in 2021 on the back of dynamic b 59.3 exposure to commodities and oil price secondary and tertiary sectors and Life expectancy at birth, years shocks. The current development model stronger external demand. Real GDP Total GHG Emissions (mtCO2e) 126.1 has run out of steam, as governance in- growth reached 3.5 percent in 2021, or 0.8 Source: WDI, Macro Poverty Outlook, and official data. dicators have deteriorated, human capi- percent in per capita terms. Higher oil pro- a/ Most recent value (2014), 2011 PPPs. b/ Most recent WDI value (2019). tal remains weak, and the business en- duction and prices and a rebound in ser- vironment is unfavorable. High market vices and external demand have supported concentration and state ownership of private consumption and investment. In- The completion of infrastructure projects commercial enterprises also limit do- creased shipping costs have put pressure mestic competition. The country has be- on prices in recent months, limiting the is expected to boost GDP growth in 2022. come more fragile. Conflicts affecting 6 availability of food staples in local mar- Driven by higher oil prices, the fiscal out of 10 of Cameroon’s regions have kets. Meanwhile, higher exports and oil deficit is projected to narrow in the medi- displaced people, increased violence, prices have improved Cameroon’s current um term, while the current account and led to a collapse in social services. account balance. Following a sharp decline The current growth level is too low to in 2020, imports moderately increased in deficit would decline gradually. The im- achieve a substantial poverty reduction. 2021, driven by large infrastructure pro- pact of the shipping crisis, along with the Although the poverty rate has declined jects, including initiatives related to the Ukraine-Russia war, could put further over the last decade, the absolute num- Africa Cup of Nations. Despite the im- pressure on inflation and incomes. The ber of poor people has increased con- proving economic context, vaccination outlook remains favorable, but is subject sistently due to population growth. The against COVID-19 remains low at 2.9 per- COVID-19 crisis has reversed progress cent of the total population, as of end- to several risks, hence the need to acceler- in poverty reduction, with the poverty March 2022. ate structural reforms. rate estimated to have increased in 2020. The fiscal deficit remained unchanged to The debt stock has been rising since 3.2 percent of GDP in 2021, owing to 2016, calling for improved debt manage- improved revenue collection and expen- ment to attract new investment. diture controls. Oil revenues reached 1.9 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 Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 10 90 800000 8 80 700000 6 70 600000 4 60 500000 2 50 400000 0 40 -2 300000 30 -4 20 200000 -6 10 100000 2000 2003 2006 2009 2012 2015 2018 2021 2024 0 0 Gov. cons. Exports GFCF 2007 2009 2011 2013 2015 2017 2019 2021 2023 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 14 Apr 22 percent of GDP in the same year due 3.2 percent of GDP in 2021 to 2.8 percent to higher oil prices. Tax revenues also in 2024. Non-oil revenues are expected to increased in 2021 due to better-than-ex- Outlook increase, due to simplified administrative pected collection of the value-added tax measures on property income and the new (VAT), corporate income tax, and excises. The economic recovery is expected to con- tax on mobile money transfers. Spending Similarly, efforts to improve the tax ad- solidate, with growth projected to reach reprioritization, including the gradual re- ministration, including digitization and 4.0 percent in 2022 and 4.4 percent in 2023. duction of subsidies to SOEs, would con- tax audits, also contributed to the revenue Economic growth would benefit from sus- tain expenditure in the medium term. Still, increase. On the expenditures side, even tained higher oil prices as the pandemic Cameroon remains at high risk of external though higher oil prices led to higher fuel comes progressively to an end. Unless the and overall debt distress, although debt is subsidies, the authorities cut current ex- government introduces price subsidies, the assessed as sustainable, according to the penditures on goods and services, allow- Ukraine-Russia war will affect the outlook, latest Debt Sustainability Analysis con- ing for some expansion of capital out- have an impact on poverty reduction, and ducted in February 2022. lays. Capital spending increased from 4.6 weigh on inflation. Key transmission chan- The outlook remains subject to risks asso- percent of GDP in 2020 to 5.4 percent nels are: (i) increased wheat prices, trans- ciated with: (i) a further tightening of mon- of GDP in 2021, while the public debt lating into higher prices for bread; (ii) etary policy; (ii) a protracted Ukraine-Rus- stock increased from 44.9 percent of GDP higher oil and energy prices, leading to sia war; and (iii) a persistent security cri- in end-2020 to 47.2 percent of GDP by higher production costs; and (iii) higher sis in the North-West, South-West, and Far end-2021. fertilizer prices, affecting the majority of North regions. Should such risks material- The Bank of Central African States tight- people working in agriculture. Efforts to ize, real GDP would grow more modestly ened its monetary policy in late 2021 over reduce poverty will also be hampered by than under the baseline scenario, affecting concerns about the evolution of foreign ex- the ongoing security crisis in parts of the fiscal and external accounts. A sharp rise change reserves. Despite higher oil prices country. Nevertheless, the poverty rate is in global risk premia following a monetary and the International Monetary Fund Spe- expected to remain constant at 23 percent policy tightening in advanced economies cial Drawing Rights allocation (equivalent in 2022. would affect the outlook and debt sustain- to US$1.4 billion), the country’s foreign ex- The current account balance should con- ability. The increase in international oil change reserves represented just above 3 tinue to improve, owing to robust oil and and food prices would add on existing in- months’ worth of imports of goods and non-oil commodity exports. The country’s flationary and fiscal pressures. services by end 2021 (same as by end 2020). fiscal deficit is projected to narrow from TABLE 2 Cameroon / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 3.7 0.5 3.5 4.0 4.3 4.4 Private Consumption 4.5 3.3 3.8 4.0 5.4 4.6 Government Consumption 1.8 2.3 3.4 9.1 -5.2 -7.9 Gross Fixed Capital Investment 8.1 2.4 8.2 8.9 8.5 8.9 Exports, Goods and Services 5.1 -21.0 3.2 3.9 11.5 8.8 Imports, Goods and Services 10.5 -5.4 9.0 11.5 11.0 7.0 Real GDP growth, at constant factor prices 3.6 0.5 3.5 4.0 4.3 4.4 Agriculture 2.8 0.1 4.1 4.3 5.6 5.6 Industry 3.6 1.3 4.1 4.4 4.5 4.5 Services 3.9 0.3 3.1 3.7 3.8 4.0 Inflation (Consumer Price Index) 2.5 2.5 2.5 3.0 2.5 2.0 Current Account Balance (% of GDP) -4.4 -3.7 -4.0 -3.9 -3.8 -3.7 Fiscal Balance (% of GDP) -3.3 -3.2 -3.2 -3.0 -2.9 -2.8 Debt (% of GDP) 43.0 45.8 47.1 45.1 42.3 39.8 Primary Balance (% of GDP) -2.4 -2.3 -2.1 -1.9 -2.0 -1.9 a,b International poverty rate ($1.9 in 2011 PPP) 23.2 23.9 23.6 23.1 22.6 22.0 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 42.4 43.4 42.9 42.2 41.3 40.3 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 66.4 67.5 67.0 66.2 65.3 64.2 GHG emissions growth (mtCO2e) 0.9 0.4 0.9 1.0 1.0 1.1 Energy related GHG emissions (% of total) 9.6 9.5 9.8 10.1 10.3 10.5 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2007-ECAM-III, 2019-, and 2014-ECAM-IV. Actual data: 2014. Nowcast: 2015-2021. Forecasts are from 2022 to 2024. b/ Projection using point-to-point elasticity (2007-2019) with pass-through = 1 based on GDP per capita in constant LCU. MPO 15 Apr 22 CENTRAL Key conditions and Recent developments challenges AFRICAN REP. CAR’s economic growth stagnated in 2021 due to renewed insecurity, coupled with Repeated instability and violence have the protracted effects of COVID-19 on the exacerbated CAR’s socioeconomic indica- global economy. Economic activity suf- Table 1 2021 tors and kept the country at the bottom fered particularly in 2021Q1 as renewed Population, million 4.9 of most development rankings. While en- insecurity amid election disputes disrupt- GDP, current US$ billion 2.4 dowed with ample natural resources, the ed production and trade. Boosted by the GDP per capita, current US$ 484.6 country’s economy is poorly diversified, resumption of commerce along the Gini index a 56.2 with agriculture and forestry constituting Douala-Bangui corridor and security b 102.0 the backbone of economic activities. The gains, economic activity picked up in the School enrollment, primary (% gross) b agriculture sector accounts for more than second half of the year. Mining and agri- Life expectancy at birth, years 53.3 75 percent of total employment, and tim- cultural production accelerated, owing to Total GHG Emissions (mtCO2e) 88.9 ber, cotton, coffee, diamond, and gold improved security around production sites Source: WDI, Macro Poverty Outlook, and official data. represented more than 85 percent of total and favorable rainfall. Public investment a/ Most recent value (2008), 2011 PPPs. b/ WDI for School enrollment (2016); Life expectancy exports in 2019. Poverty is high, with declined from 11.4 percent of GDP in 2020 (2019). more than 7 in 10 Central Africans living to 7.5 percent of GDP in 2021 as the gov- below the international poverty line ernment unwound its COVID-19 fiscal (measured using US$1.90 per day, 2011 stimulus package. Economic growth is Renewed insecurity prevented the Central PPP). Inadequate social protection sys- projected to increase by 3.2 percent in 2022, tems and limited access to education and supported by the prospect of improved se- African Republic’s (CAR) economy from healthcare facilities are major bottlenecks curity and the ceasefire agreed in the Lu- rebounding in 2021. The outlook is sub- for human capital accumulation. The for- anda roadmap (i.e., the regional initiative ject to downside risks arising from a re- mal private sector is small and con- to restore peace). Conflict and COVID-19 versal in security gains and the impact of strained by several structural challenges, have hampered progress in reducing ex- the Ukraine-Russia war on commodity including limited access to finance, a treme poverty, with 71.4 percent of the weak regulatory framework, poor infra- population living in extreme poverty in and food prices, which could adversely af- structure (e.g., energy and transporta- 2021, up slightly from 71.0 percent in 2020. fect public finances and growth and result tion), lack of skilled labor, and a fragile Renewed conflict in late 2020/early 2021 in significant social hardship and human- security and political environment. The contributed to significant inflationary itarian costs. The ability of traditional humanitarian situation remains precari- pressures in the first half of 2021, which ous, with 43 percent of the population decelerated markedly as traffic along the partners to provide support in a geopoliti- facing acute food insecurity. As of Janu- country’s lifeline resumed. As a result, cally more complex environment weighs ary 2022, there were 734,000 refugees out- inflation reached an average of 3.8 per- heavily on the outlook, which is vulnera- side the country—the highest level since cent in 2021—above the 3 percent re- ble to headwinds. December 2013—and 652,000 internally gional ceiling. High inflation is projected displaced persons. to linger in 2022 on the back of rising 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) 8 78 250000 76 6 74 200000 4 72 70 2 150000 68 0 66 100000 64 -2 62 -4 60 50000 58 -6 2016 2017 2018 2019 2020 2021 2022 2023 2024 56 0 Exports Gross Fixed Investment 2008 2010 2012 2014 2016 2018 2020 2022 2024 Government Consumption Private Consumption International poverty rate Real GDP pc Real GDP growth Source: World Bank. Source: World Bank. Notes: see Table 2. MPO 16 Apr 22 commodity prices and persistent disrup- 10.8 percent of GDP in 2021, owing mainly Inflation is expected to remain below the tions in food supply chains. The Bank of to delays in the disbursement of official regional convergence criteria in the medi- Central African States tightened its mon- transfers. The SDR allocation (equivalent um term, contingent on stable and im- etary policy in late 2021 over concerns to 5.8 percent of GDP) did, however, pro- proved security on the Douala-Bangui about the evolution of foreign exchange vide additional liquidity to meet some of corridor and a slowdown in inflationary reserves, which, despite higher oil prices the country’s financing needs. The trade pressures at the global level. The fiscal and the International Monetary Fund balance improved as the rebound in ex- balance is projected to remain in deficit 2021 Special Drawing Rights (SDR) allo- ports during the second half of 2021 ex- in the medium term, as donor financing cation, represented just above 3 months’ ceeded the uptick in imports. Persistent gradually declines without being offset worth of regional imports of goods and global uncertainty related to COVID-19 by domestic revenues. Public debt is pro- services by end-December 2021—roughly and renewed conflicts translated to a low- jected to remain sustainable. The current the same as at end-December 2020. er-than-expected recovery of foreign direct account balance is expected to improve in The overall fiscal deficit widened from 3.3 investment. The current account balance is the medium term, reflecting an improve- percent of GDP in 2020 to 6.1 percent of projected to improve in 2022 as exports re- ment in the trade balance, but it should GDP in 2021, reflecting a decline in do- cover and official transfers resume. remain structurally in deficit. mestic revenue and the cancelation and Risks to the outlook remain high and tilted postponement of budget support from to the downside. The absence of donor donors due to geopolitical tensions and budget support could lead to the accumu- the lack of transparency of the country's Outlook lation of external arrears and possible non- security expenditures. Pressures on public payment of public wages, resulting in sig- finances were high throughout 2021 de- Provided that security gains are not re- nificant socioeconomic hardship. A rever- spite cuts in public spending, forcing the versed, and the impact of the Ukraine- sal in security gains could undermine eco- government to rely on bridge financing Russia war on the global economic re- nomic activity and traffic on the main trade on the domestic market. Cashflow pres- covery is contained, economic growth is corridor. The possible lingering effect of sures are expected to remain high in 2022, expected to average 3.5 percent in the the pandemic, coupled with the impact of with a risk of a potential liquidity short- medium term, supported by solid agri- the Ukraine-Russia war at the global level, age if budget support from donors does cultural and industrial output on the could lead to persistent disruptions in not materialize. The government has al- supply side and high private consump- global supply chains and higher commodi- ready revised downward its public ex- tion on the demand side. Under these as- ty prices, resulting in higher fuel and grain penditure plan and is considering new sumptions, per capita income is expect- prices, with adverse effects on public fi- borrowing on the domestic market to pre- ed to return to its pre-COVID-19 level by nances and private consumption, as well vent any liquidity shortages. 2023. Extreme poverty is projected to re- as on poverty due to the effects of higher The current account deficit widened from main high, with a slow decline between food prices. 8.8 percent of GDP in 2020 to an estimated 2022 and 2024. TABLE 2 Central African Republic / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 3.1 0.9 0.9 3.2 3.4 4.0 Private Consumption 5.7 -4.2 0.5 4.7 5.3 2.3 Government Consumption 7.7 21.5 -4.9 -10.3 2.9 1.0 Gross Fixed Capital Investment -9.6 28.3 -9.6 6.7 -1.4 12.3 Exports, Goods and Services 1.9 -2.8 -5.5 6.3 8.2 9.3 Imports, Goods and Services 4.9 1.0 -10.3 7.1 8.4 4.9 Real GDP growth, at constant factor prices 2.6 0.9 1.2 3.1 3.4 3.9 Agriculture 3.1 4.5 3.2 3.8 4.2 4.0 Industry 2.1 0.0 -0.2 0.6 1.0 1.3 Services 2.3 -1.2 0.4 3.5 3.6 4.6 Inflation (Consumer Price Index) 2.8 2.3 3.8 3.6 2.7 2.5 Current Account Balance (% of GDP) -4.8 -8.8 -10.8 -6.8 -7.9 -6.6 Fiscal Balance (% of GDP) 1.7 -3.3 -6.1 -2.3 -2.0 -1.8 Debt (% of GDP) 47.9 44.0 48.4 44.9 43.4 41.9 Primary Balance (% of GDP) 2.0 -3.0 -5.8 -1.8 -1.4 -1.3 a,b International poverty rate ($1.9 in 2011 PPP) 70.8 71.0 71.4 70.9 70.6 70.3 GHG emissions growth (mtCO2e) 0.9 0.6 0.6 1.9 2.2 2.4 Energy related GHG emissions (% of total) 39.8 39.8 39.7 40.3 40.8 41.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2008-ECASEB. Actual data: 2008. Nowcast: 2009-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2008) with pass-through = 0.7 based on GDP per capita in constant LCU. MPO 17 Apr 22 percent (4.6 percent per capita) contraction in 2020. The passing of President Deby led CHAD Key conditions and to economic disruptions in the second quarter of 2021 as the new authorities con- challenges solidated power. Workers' strikes led to the suspension of oil production on Esso Table 1 2021 Chad's economy has performed below po- plants (one-fourth of Chad's production), Population, million 16.9 tential since the 2014-15 oil price shock. driving a decline in oil production of 8.2 GDP, current US$ billion 11.4 Notwithstanding the 2018-19 recovery, an- percent over the year. Although the coun- GDP per capita, current US$ 672.8 nual GDP growth contracted by 1.1 per- try suffered from food insecurity, due part- a 33.2 International poverty rate ($1.9) cent on average over the past six years, ly to weak cereal production after poor a 66.4 which, given the rapidly growing popula- rains, agriculture remained the main non- Lower middle-income poverty rate ($3.2) a 87.9 tion, translated into an annual decrease in oil growth driver, contributing 1.9 percent- Upper middle-income poverty rate ($5.5) Gini index a 37.5 per capita income of 4.1 percent. Oil con- age points (pp), while services contracted School enrollment, primary (% gross) b 89.2 stitutes about 20 percent of GDP, 35 per- 4.4 pp. Export value increased by 55.3 per- b 54.2 cent of revenue, and 75 percent of exports. cent due to the increase in oil prices (66.4 Life expectancy at birth, years Chad ranked 187th out of 189 countries on percent), helping the current account Total GHG Emissions (mtCO2e) 118.2 the Human Development Index in 2020. deficit narrow from 7.8 percent of GDP to Source: WDI, Macro Poverty Outlook, and official data. Living conditions and access to essential 5.6 percent in 2021. a/ Most recent value (2018), 2011 PPPs. b/ Most recent WDI value (2019). services remain poor due to severe weath- As containment measures on domestic er conditions, cyclical insecurity, political supply chains were slowly lifted, inflation unrest, weak governance, including oil dropped from 3.5 percent to one percent in GDP contracted by 1.2 percent in 2021 revenues management, poor trade net- 2021. Food inflation was 3 percent, signifi- works, low human capital investment, and cantly lower than the rest of Sahel. Chad's (4.2 percent per capita) - the second con- a lack of infrastructure. monetary and exchange rate policies are secutive year of recession – due to a tem- Chad has not strengthened regional inte- managed by the regional Central Bank, porary suspension of oil production, so- gration, economic transformation, or ac- which supported regional reserve accumu- cio-political insecurity, and liquidity con- cess to electricity and digital technologies. lation by raising its policy rate to 3.5 per- Growing political and security expenses cent and the marginal lending facility rate straints. This situation likely increased and high levels of debt service relative to from 5 to 5.25 percent. As a result, regional extreme poverty by 2 percentage points. domestic revenue have constrained Chad's reserves increased to 3.4 months of im- Growing food and general insecurity, cli- ability to improve basic services and infra- ports from 3.1 months in 2020, thanks also matic shocks, and continued dependency structure delivery. to regional fiscal consolidation policies and on volatile oil revenues heightens the rising oil prices. Despite a significant increase in oil prices, risks to the fragile recovery during a sen- the fiscal deficit, excluding grants, stood at sitive political transition. Recent developments 6.7 percent of GDP (4.3 percent including grants) in 2021, due to the one-year lag in Chad's GDP contracted by 1.2 percent (4.2 the main component of oil-revenue taxa- percent per capita) in 2021, following a 1.6 tion as well as an increase in security and FIGURE 1 Chad / GDP growth, current account and fiscal FIGURE 2 Chad / Actual and projected poverty rates and balance real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 6 100 450000 4 90 400000 2 80 350000 0 70 300000 60 -2 250000 50 -4 200000 40 -6 150000 30 -8 20 100000 10 50000 -10 2019 2020 2021 2022 2023 2024 0 0 Fiscal balance (% of GDP) 2011 2013 2015 2017 2019 2021 2023 Current account balance (% of GDP) 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 22 political transition spending. Total public grow by 2.8 percent in 2022 (-0.2 percent and lack of structural economic transfor- debt slightly increased while debt ser- per capita). The positive outlook for the mation will limit the space for poverty vices remained too high; the Government oil sector, services, and agriculture should reduction. The social protection system has requested a debt restructuring under strengthen over the medium-term, with should be strengthened to extend its cov- the G20 Common Framework to help re- growth averaging 3.7 percent per annum. erage and better target the poorest and store debt sustainability. Higher global energy and food prices due most vulnerable. The extreme poverty rate (US$1.9/ day per to the Russia-Ukraine war is projected to This outlook is subject to high uncertainty capita, 2011 PPP) is projected to have in- increase inflation in 2022. and multiple downside risks, including in- creased by more than 2 pp between 2020 The current account balance is projected to creased political instability during a transi- and 2021, reaching 37.8 percent, with the become positive, at 0.9 percent of GDP on tion period, intensified security risks, fur- number of extremely poor increasing from average over 2022-24, driven by increased ther climate-related shocks, continuing 5.8 to 6.2 million. The COVID-19 crisis fur- activity in the oil and services sectors. The food security challenges, uncontrolled lo- ther impacted the livelihoods of poor and fiscal balance is expected to stand at 1.2 cal COVID outbreaks, and widespread so- vulnerable households. In high-frequency percent of GDP in 2022 and further im- cial discontent from food and general inse- phone surveys in 2021, 76 percent of prove in 2023-24 due to significant increas- curity. At least one of these risks will like- households reported a loss in their total es in oil revenues, more controlled security ly materialize, and concurrent shocks are a household income and 21 percent of spending and less political transition-relat- possibility. The economic consequences of households seeking health care could not ed expenditures. However, Chad will still the Russia-Ukraine war would primarily get access to it. need a significant debt restructuring to ser- be through higher global food (grains/fer- vice its debts while increasing social and tilizer) and energy prices. The projections investment spending needs, and to reduce already reflect recent sharp increases in oil oil price volatility risk. and gas, agriculture and metal and miner- Outlook The extreme poverty rate is expected to al prices since January 2022. Chad should increase to 38 percent in 2022 due to neg- benefit from higher global oil prices and Based on current projections for oil ative GDP per capita growth. The num- direct this benefit towards inclusive prices, the global recovery, and the Gov- ber of poor will likely increase to 6.4 mil- growth to reduce poverty. ernment’s gradual fiscal consolidation lion. Continued high food inflation, low program, the economy is expected to coverage of social protection programs, TABLE 2 Chad / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 3.2 -1.6 -1.2 2.8 3.5 3.9 Private Consumption 1.4 0.5 1.6 2.8 2.9 3.3 Government Consumption 1.7 11.1 3.7 3.7 0.2 0.0 Gross Fixed Capital Investment 6.6 -14.7 -4.5 0.7 5.3 7.2 Exports, Goods and Services 6.0 1.1 -0.4 3.9 4.6 3.7 Imports, Goods and Services 4.0 1.8 5.1 3.5 4.0 3.0 Real GDP growth, at constant factor prices 3.3 -1.6 -1.2 2.8 3.5 3.9 Agriculture 0.1 3.9 6.2 5.0 4.3 4.3 Industry 7.3 -0.1 -4.6 1.3 2.8 1.6 Services 2.5 -7.0 -4.4 2.1 3.3 5.6 Inflation (Consumer Price Index) -1.0 3.5 1.0 3.5 3.0 3.0 Current Account Balance (% of GDP) -4.9 -7.8 -6.0 3.6 1.4 -2.1 Fiscal Balance (% of GDP) -0.6 1.2 -4.3 1.2 3.2 3.1 Debt (% of GDP) 51.1 49.9 52.1 51.6 53.2 47.6 Primary Balance (% of GDP) 1.0 2.9 -2.7 2.8 4.8 4.7 a,b International poverty rate ($1.9 in 2011 PPP) 33.1 35.5 37.8 37.9 37.6 36.9 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 66.4 68.2 70.1 70.2 69.9 69.3 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 87.9 88.9 89.9 89.9 89.8 89.5 GHG emissions growth (mtCO2e) 3.8 4.0 4.2 4.2 4.2 4.2 Energy related GHG emissions (% of total) 1.6 1.5 1.5 1.5 1.5 1.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2018) with pass-through = 0.7 based on GDP per capita in constant LCU. MPO 19 Apr 22 ary pressures that would reflect price trends in commodities and freight costs, COMOROS Key conditions and the possible spread of new COVID-19 vari- ants that would restrain international trav- challenges el and trigger stringent restrictions at the national and global levels, and there is a Table 1 2021 Comoros is a small and fragile island high risk of sovereign debt distress. Population, million 0.9 with significant structural challenges hin- GDP, current US$ billion 1.3 dering its development. The GDP per GDP per capita, current US$ 1444.6 capita growth rate which was, around International poverty rate ($1.9) a 19.1 0.5 percent, over the last two decades, Recent developments a 39.7 is a result of institutional and economic Lower middle-income poverty rate ($3.2) a 64.6 weaknesses, poor infrastructure provi- While Comoros has been relatively spared Upper middle-income poverty rate ($5.5) Gini index a 45.3 sion, and natural shocks. by the COVID-19, the pandemic still School enrollment, primary (% gross) b 99.5 Low domestic revenue mobilization, stem- weighed on the economy through the im- b 64.3 ming from weak administrative capacity pact of national restrictive measures on Life expectancy at birth, years as well as poor economic performance, consumption. Thus, driven by an expan- Total GHG Emissions (mtCO2e) 0.7 translated into low human and physical sionary fiscal policy and a sluggish private Source: WDI, Macro Poverty Outlook, and official data. capital. Consequently, between 2002 and consumption, the economy expanded by a/ Most recent value (2014), 2011 PPPs. b/ WDI for School enrollment (2018); Life expectancy 2018, the country’s produced physical cap- 2.4 percent in 2021. The service sector, (2019). ital per capita declined by 27.7 percent which was the main driver of the growth, while the human capital wealth per capita recovered slightly, growing by 2.8 percent increased by only 0.16 percent. Thus, hu- in 2021 in comparison to -2.2 percent in The COVID-19 is still weighing on Co- man and physical capital’s contribution to 2020. Compared to 2020, the poverty rate moros, as the economy grew below its Comoros growth has been marginal. remained stable at 39.7 percentage points Growth is primarily led by private con- in 2021. potential in 2021. Driven by an expan- sumption, and private remittances are fu- Moreover, the pandemic and its impacts sionary fiscal policy, growth is expected eling the consumption-driven growth tra- on the global supply chain fueled short- to pick up in 2022-2024. However, the jectory. On the supply side, growth is ages and the inflation rate reached 7.1 per- recovery could be constrained. The heavily driven by the service and agricul- cent (y-o-y) in December 2021 from -4.8 ture sectors while there is an important un- percent in December 2020. The price in- country, already at a high risk of debt tapped potential in the fishing and tourism crease was primarily driven by food and distress, is facing growing imbalances. industries. Realizing a sustainable and in- non-alcoholic beverage products (+12.2 In addition, Comoros will however face clusive growth would require tapping in percentage points), health prices (+7.6 per- several external headwinds. Poverty will those industries while improving human centage points) and transport prices (+5.3 decline in 2022 due to improvement in and physical capital, better leveraging the percentage points). Though, it remained diaspora potential, and improving the in- low, on average, in 2021 (1.4 percent). economic growth. The expansionary fiscal policy led to a stitutional quality. Comoros outlooks face several headwinds higher fiscal deficit (2.5 percent of GDP in related to the risks for additional inflation- 2021 from 1.0 percent in 2020). This policy FIGURE 1 Comoros / Selected macroeconomic indicators FIGURE 2 Comoros / Actual and projected poverty rates and real GDP per capita Percent of GDP Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 40 1 70 500000 35 0 495000 60 30 -1 490000 -2 50 25 485000 -3 40 20 -4 480000 15 30 -5 475000 10 -6 20 470000 5 -7 10 465000 0 -8 2017 2018 2019 2020 2021e 2022f 2023f 2024f 0 460000 Debt (% of GDP) 2014 2016 2018 2020 2022 2024 Current Account Balance (% of GDP, rhs) International poverty rate Lower middle-income pov. rate Fiscal Balance (% of GDP, rhs) Upper middle-income pov. rate Real GDP pc Sources: National authorities, and staff estimates and forecasts. Source: World Bank. Notes: see Table 2. MPO 20 Apr 22 was characterized by an increase in trans- increased to 9.6 months of imports at economy is expected to grow at a rate of fers (+0.7 percent of GDP) and capital ex- end-September 2021, in comparison with 3.4 percent in 2023-2024 when the vacci- penditures (+4.5 percent of GDP). More- 9 months at end-2020. This improvement nation rate will increase, and if advanced over, the government kept the freight cost in the overall external position stems economies fully recover, and tourists, valuation for imports to pre-March 2021 from the Special Drawings Rights alloca- mainly the ones from the diaspora, can levels to reduce inflationary pressures. tion of US$24 million. return to Comoros for the different cycles The increased fiscal needs (13.0 percent of of Grand Marriage. GDP in 2021) stemming from this poli- A deterioration of the fiscal deficit is pro- cy was financed by external partners (10.7 jected to increase to 4.9 percent of GDP percent of GDP), including the World Outlook on the back of an increase in domestical- Bank support for the vaccine rollout. The ly financed investment. With an increase deficit was contained through the imple- The economy is projected to expand by in the import bill due to the expansion- mentation of some tax and customs ad- 2.8 percentage points in 2022 on the back ary fiscal policy, and a decline of remit- ministration reforms under the IMF Staff of an expansionary fiscal policy. This tances, a deterioration of the external po- Monitored Program. With a sluggish slow recovery also reflects difficulties in sition is projected, and the current ac- growth and expansionary fiscal policy, the service sector that would grow below count deficit is forecasted to increase to public debt increased to 24.9 percent of its potential because of structural sectoral 6.6 percent of GDP in 2022 and reach 7.0 GDP in 2021 from 22.1 percent in 2020. issues, existing COVID-19 restrictions, percent in 2023. There is a high risk of public debt distress and a lower purchasing power due to in- Against this backdrop, the poverty rate is due to the signature of a non-concessional creased inflationary pressures at the glob- expected to decrease only moderately over loan for the tourism sector. al and national levels. In fact, the Russian the next two years. By 2023, poverty is pro- Following the decrease in remittances invasion, war, and associated sanctions jected to return to its pre-COVID levels at and the increase in the import bill, Co- will impede Comoros recovery through 39.5 percent (when measured against the moros recorded a deterioration of its cur- its consequences on increased inflationary poverty line for lower middle-income rent account deficit to 3.4 percent of GDP pressures, less remittances from France countries of USD 3.2 a day per capita in in 2021, from 2.0 percent in 2020. How- which hosts a substantial share of the Co- PPP terms). Poverty rate is expected to ever, Comoros’ overall external position morian diaspora, and the resulting slow- continue to decrease to about 39.3 percent has marginally improved as reserves had er increase in the domestic demand. The in 2024. TABLE 2 Comoros / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 1.8 -0.3 2.4 2.8 3.1 3.7 Private Consumption 3.8 3.8 1.6 2.1 4.6 3.3 Government Consumption 3.5 4.1 2.3 12.1 -1.1 5.3 Gross Fixed Capital Investment -8.4 -14.4 2.5 6.2 8.1 -1.7 Exports, Goods and Services 6.8 -46.3 23.1 28.4 9.8 4.9 Imports, Goods and Services 5.7 -9.3 0.9 13.8 9.7 0.8 Real GDP growth, at constant factor prices 1.9 -0.8 2.4 2.8 3.1 3.7 Agriculture 0.9 4.3 1.6 -4.5 0.4 4.9 Industry 4.0 -5.6 2.1 6.3 3.1 3.2 Services 1.9 -2.2 2.8 5.6 4.3 3.2 Inflation (Consumer Price Index) 3.7 0.8 1.4 6.4 3.3 1.0 Current Account Balance (% of GDP) -2.4 -2.0 -3.4 -6.6 -7.0 -6.3 Fiscal Balance (% of GDP) -4.3 -1.0 -2.5 -4.9 -4.4 -2.9 Debt (% of GDP) 20.6 22.0 24.9 29.3 33.2 35.1 Primary Balance (% of GDP) -4.1 -0.8 -2.2 -4.5 -3.7 -1.9 a,b International poverty rate ($1.9 in 2011 PPP) 18.4 19.2 19.2 18.9 18.6 18.1 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 38.9 39.7 39.7 39.4 39.0 38.2 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 63.9 64.8 64.7 64.6 64.2 63.8 GHG emissions growth (mtCO2e) 3.5 2.4 2.6 3.2 3.1 3.1 Energy related GHG emissions (% of total) 42.4 42.3 42.5 43.0 43.4 43.8 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2014-EESIC. Actual data: 2014. Nowcast: 2015-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2014) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 21 Apr 22 stability. Therefore, improving domestic revenue mobilization to widen fiscal DEMOCRATIC Key conditions and space is crucial. Poverty remains widespread, including in challenges REP. OF CONGO urban areas. Significant geographical dis- parities exist between provinces, with ex- The Democratic Republic of the Congo treme poverty concentrated in central and (DRC) has suffered from decades of con- northwestern provinces. DRC is second Table 1 2021 flict, poor governance, and volatile eco- only to Nigeria in Sub-Saharan Africa in Population, million 92.4 nomic growth, which has led to persistent- the number of extreme poor. Despite some GDP, current US$ billion 59.5 ly high levels of poverty. The economy is improvements in recent years, social and GDP per capita, current US$ 644.2 highly dependent on mineral extraction: human development indicators remain International poverty rate ($1.9) a 77.2 copper and cobalt constitute over 80 per- weak: in 2020, infant mortality was 63.8 a 91.4 cent of exports, with China absorbing 40 per 1000 live births, higher than the Sub- Lower middle-income poverty rate ($3.2) a percent of exports. With its huge agricul- Saharan average of 50.3, while the HCI of Upper middle-income poverty rate ($5.5) 97.9 a ture potential untapped, DRC is a net food 0.37 is among the lowest of Sub-Saharan Gini index 42.1 importer, which increases vulnerabilities African countries. b 118.5 School enrollment, primary (% gross) to external and climatic shocks. Structural b 60.7 Life expectancy at birth, years constraints have led to an underdeveloped Total GHG Emissions (mtCO2e) 683.4 private sector and fostered a large informal Source: WDI, Macro Poverty Outlook, and official data. economy. Improving the business environ- Recent developments a/ Most recent value (2012), 2011 PPPs. ment and closing gaps in infrastructure b/ WDI for School enrollment (2018); Life expectancy (2019). and human capital are needed to achieve Economic activity in DRC recovered economic diversification and reduce com- strongly in 2021 with real GDP growth modity dependence. estimated at 5.7 percent. The mining DRC is led by a fragile coalition and po- sector was a key driver of growth- cop- Economic activity rebounded in 2021, with litical risks are high, a legacy of DRC’s per and cobalt production rose by 12.0 higher prices and production of copper and protracted periods of political unrest. and 7.6 percent, respectively, as domes- cobalt lifting GDP growth to an estimated Reaching political consensus and increas- tic production capacity increased with 5.7 percent and supporting a narrower cur- ing the presence and credibility of the the launch in mid-2021 of the Kamoa- rent account deficit. Reserves increased, state, including through improved gover- Kakula mining project. The easing of nance, will be key to maintain stability COVID restrictions, and higher revenues easing pressures on the currency and infla- and advance structural reforms that will from the mining sector, which also ben- tion. Fiscal consolidation was achieved de- attract investments and create jobs. The efited from rising prices, supported spite higher social and infrastructure need for the state to deliver more and bet- growth of non-mining sectors by 3.9 spending. Continued uncertainty around ter services to citizens means that expen- percent (2020: -1.3 percent). diture-led adjustments to revenue short- The CAD narrowed to about 1.0 percent of the pandemic and local and international falls or external conditions could jeopar- GDP in 2021 (2020: 2.2) due to improved conflicts represent important risks to dize not only long-term growth prospects terms of trade and higher mining exports growth and poverty reduction. and pro-poor spending but also political volumes. Despite a small decline in foreign FIGURE 1 Democratic Republic of Congo / Real GDP FIGURE 2 Democratic Republic of Congo / Actual and growth and sectoral contributions to real GDP growth projected poverty rates and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 8 100 170000 6.9 6.4 6.1 95 160000 6 5.8 5.7 6.0 90 150000 4.4 4 3.8 3.8 85 3.7 3.5 3.6 3.1 140000 2.4 2.5 2.7 2.5 2 80 1.7 130000 1.3 75 0 120000 70 -2 65 110000 -2.2 60 100000 -4 2012 2014 2016 2018 2020 2022 2024 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 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, World Bank. Source: World Bank. Notes: see Table 2. MPO 22 Apr 22 direct investment, the narrower current ac- poverty increase in 2020 with job losses Despite the lasting adverse effect of count and the IMF’s SDR allocation boost- and reduced food consumption for 10 the pandemic, high population growth, ed international reserves, which reached and 20 percent of households, respective- and the Russian invasion, extreme 6.4 weeks of imports in 2021 (2020: 2.1 ly, according to COVID-19 High Frequen- poverty is projected to decrease by 2.8 weeks). With a slower depreciation rate of cy Phone surveys in Kinshasa, favorable percentage points by 2024 given favor- the CDF and a deceleration in inflation (to economic prospects made it possible to able economic prospects. 9.1 in 2021), the Central Bank progressively reverse the trend by 2021. DRC’s economy remains vulnerable to cut its policy rate from 18.5 percent in Jan- commodity price movements and growth uary 2021 to 8.5 percent in mid-June 2021 performance of its major trading partners and to 7.5 percent in early 2022. which might be disturbed by geopolitical Fiscal accounts were balanced in 2021 Outlook conflicts and a resurgence of the pandemic. (2020: -1.2 percent) owing to higher rev- The economic consequences of the Russian enues despite pressure on social and pub- GDP growth is estimated to accelerate to invasion and associated sanctions, through lic infrastructure spending that lifted pub- 6.4 percent by 2023 driven by the services rising global food costs and higher oil lic expenditure up to 13.1 percent of GDP sector (mostly trade and telecommunica- prices, could exert strong pressure on in- in 2021 (2020:10.1). Domestic revenue col- tion). The mining sector is expected to ex- flation and on households’ consumption, lection increased to 11.2 percent of GDP pand further in 2022 and pick up pace by raising the burden on expenditures by up (2020: 8.7) with higher income and value- 2024 as Kamoa-Kakula - aiming to become to 15 percent and subsequently reducing added tax collections and a better perfor- the second largest copper mine in the private consumption growth. mance in non-tax revenue (of which min- world- enters its second phase of produc- With the agriculture sector employing over ing revenue accounts for 30 percent). tion in late-2022. 60 percent of the working age population, The latest World Bank projections put The fiscal deficit could widen to about 2.7 vulnerability to climate change related poverty at 72.1 percent in 2021, a 0.8 percent by 2022 as the government is likely risks (floods, droughts) is substantial. Fi- percentage points decrease compared to to provide some cushion to higher oil and nally, continued political uncertainty 2020.1Despite adverse effects of the food prices. The CAD is projected to nar- ahead of planned 2023 presidential elec- COVID-19 pandemic, explaining a slight row further in 2022 with a slight surplus tions, might delay reform efforts, worsen estimated at 0.1 percent as higher com- fiscal imbalances and generate arrears. modity prices improve terms of trade DRC’s immediate challenge is to maintain (higher oil prices might accelerate further political and macroeconomic stability 1/ The projections, estimated using macroeconomic forecasts, are preliminary and as more data come from the demand for cobalt, a key component in while stepping up ongoing reforms to en- the ground, poverty projections will be updated. rechargeable batteries). sure sustainable growth. TABLE 2 Democratic Republic of Congo / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 4.4 1.7 5.7 6.0 6.4 6.1 Private Consumption 17.3 -8.0 1.6 1.5 2.0 2.2 Government Consumption 6.6 4.1 20.9 11.7 2.6 7.2 Gross Fixed Capital Investment 6.3 31.3 33.6 13.1 17.2 11.3 Exports, Goods and Services 1.4 8.0 14.9 12.5 8.0 8.0 Imports, Goods and Services 25.2 12.0 30.7 11.4 12.4 8.7 Real GDP growth, at constant factor prices 4.6 2.3 5.6 5.9 6.2 6.0 Agriculture 3.1 2.5 2.4 2.5 2.6 2.7 Industry 4.1 4.2 6.6 7.2 7.5 7.0 Services 5.7 0.1 5.6 5.7 6.1 6.0 Inflation (Consumer Price Index) 4.7 11.2 9.1 9.5 7.0 6.0 Current Account Balance (% of GDP) -3.4 -2.2 -1.0 0.1 -0.5 -0.8 Fiscal Balance (% of GDP) -2.0 -1.2 0.0 -2.7 -1.6 -1.1 Debt (% of GDP) 19.5 22.4 21.7 21.2 19.8 16.0 Primary Balance (% of GDP) -1.8 -1.0 0.2 -2.2 -1.1 -1.1 a,b International poverty rate ($1.9 in 2011 PPP) 72.5 72.9 72.1 71.1 70.1 69.2 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 89.0 89.2 88.9 88.4 87.8 87.3 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 97.1 97.2 97.1 96.8 96.5 96.3 GHG emissions growth (mtCO2e) 0.1 0.0 0.2 0.2 0.1 0.1 Energy related GHG emissions (% of total) 2.2 2.2 2.3 2.3 2.4 2.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2012-E123. Actual data: 2012. Nowcast: 2013-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2012) with pass-through = 0.7 based on GDP per capita in constant LCU. MPO 23 Apr 22 human capital and infrastructure, as well as to improve the business environment REPUBLIC OF Key conditions and for faster, sustained, and inclusive eco- nomic growth. The pandemic continues to challenges CONGO be a risk to the ROC’s economic stability, especially given the slow pace of vaccina- The Congolese economy, which is highly tion, with only about 12 percent of the pop- oil-dependent, has been contracting since ulation fully vaccinated as of March 17, Table 1 2021 the fall of oil prices in mid-2014, with GDP 2022. Diversifying the economy away from Population, million 5.7 growth averaging -4.8 percent in 2015–21. oil remains a key challenge to reduce the GDP, current US$ billion 12.1 The exposure to large swings in oil prices country’s vulnerability to volatile oil prices GDP per capita, current US$ 2132.9 and weak governance, reflected in high and production, which was highlighted by International poverty rate ($1.9) a 39.6 levels of non-concessional borrowing, led the 6.2 percent economic contraction a 64.1 the debt to become unsustainable and the recorded in 2020. Lower middle-income poverty rate ($3.2) a country into debt distress, with its debt-to- Upper middle-income poverty rate ($5.5) 83.9 a GDP ratio increasing from 42.3 percent in Gini index 48.9 2014 to 113.2 percent in 2020. While debt School enrollment, primary (% gross) b b 93.7 restructuring agreements concluded in Recent developments Life expectancy at birth, years 64.6 2021, higher oil prices, and improved debt Total GHG Emissions (mtCO2e) 20.4 management (including restricting new The Congolese economy is estimated to Source: WDI, Macro Poverty Outlook, and official data. external financing on concessional terms) have contracted by 3.5 percent in 2021, a a/ Most recent value (2011), 2011 PPPs. have restored debt sustainability, ROC deeper recession compared to the World b/ WDI for School enrollment (2018); Life expectancy (2019). however remains in debt distress due to Bank fall forecast of -1.2 percent, owing to outstanding arrears with some external lower-than-expected oil production. De- and domestic creditors. Natural resource spite higher oil prices and increased glob- revenues have not translated into higher al demand, oil production declined by The Republic of Congo’s (ROC) econo- income per capita growth, and human cap- 10.8 percent, year-on-year, in 2021 due my contracted by an estimated 3.5 per- ital development remains below that of to postponed investments, technical chal- cent in 2021. The poverty rate increased peer countries, owing to low government lenges, and maturing oil fields. By con- from 51.9 percent in 2020 to an esti- spending efficiency and weak governance trast, non-oil growth reached an estimat- mated 53.9 percent in 2021. The ROC in key sectors. The proportion of the pop- ed 3.4 percent in 2021, the first year of ulation living below the international ex- growth since 2014, driven by the resump- is expected to make a gradual recovery treme poverty line of US$1.90 PPP per day tion of economic activities (following the from the COVID-19 crisis, with GDP increased from 39.1 percent in 2015 to 53.9 significant disruptions caused by the pan- growth projected at 3.7 percent in percent in 2021, with the poverty rate in- demic), increased use of locally sourced 2022-24. A prolonged war in Ukraine creasing by 5.2 percentage points between inputs by large firms, and progress in the 2019 and 2021 alone, driven by the pan- repayment of domestic arrears. The over- could increase inflationary pressures in demic. The social and economic cost of all GDP growth contraction resulted in the country, but high oil prices may fur- COVID-19 further highlights the impor- an increase in extreme poverty from 51.9 ther sustain the recovery. tance of reforms to protect and develop percent in 2020 to 53.9 percent in 2021. FIGURE 1 Republic of Congo / Real GDP growth and FIGURE 2 Republic of Congo / Actual and projected sectoral contributions to real GDP growth poverty rates and real GDP per capita Percent, percentage point Poverty rate (%) Real GDP per capita (constant LCU) 10 100 1400000 8 1200000 6 80 4 1000000 2 60 800000 0 -2 40 600000 -4 400000 -6 20 -8 200000 -10 0 0 Oil GDP Non-oil GDP -12 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 Net Taxes Real GDP -14 International poverty rate Lower middle-income pov. rate 2015 2016 2017 2018 2019 2020 2021e 2022f 2023f 2024f Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see table 2. MPO 24 Apr 22 Overall inflation remained contained at slightly decline to an average of 53.4 per- 2.0 percent in 2021, but disruptions in cent in 2022–24, consistent with GDP per global supply chains and high interna- Outlook capita growth. The return of real GDP tional commodity and agricultural prices per capita to the pre-COVID level of exerted inflationary pressures on domes- The ROC is expected to gradually recov- US$1,800 by 2030 will require the econo- tic food prices, which increased by about er from the COVID-19 crisis, with GDP my to grow by 4.5 percent, on average, 3.4 percent, especially affecting the poor. growth projected at 3.5 percent in 2022 starting in 2025. Meanwhile, the pover- Despite the fall in oil production, govern- and an average of 3.8 percent in 2023-24. ty rate is projected to return to pre-pan- ment revenues increased due to higher oil Oil sector growth (expected at 4.0 per- demic levels by 2028. prices, which, together with a moderation cent in 2022 and an average of 4.9 per- The fiscal balance is expected to remain in public spending, led to a fiscal surplus cent in 2023-24) would be driven primar- positive at 4.1 percent of GDP in 2022 estimated at 2.1 percent of GDP in 2021 ily by the resumption of investments by and an average of 2.3 percent in 2022–24 (compared to a deficit of 2.4 percent of oil companies, including for asset mainte- due to higher oil revenues, fueled by GDP in 2020). Public debt fell sharply from nance, which had been postponed due to higher oil prices (resulting from the con- 113.2 percent of GDP in 2020 to 98.5 per- the pandemic and negotiations with oil flict in Ukraine) and improved non-oil cent of GDP in 2021, driven by high exter- companies over taxation arrangements. revenue mobilization (resulting from tax nal debt service payments tied to oil prices Non-oil economic growth (expected at administration reforms). Higher oil prices and the increase in nominal GDP. In the 3.0 percent in 2022 and 2.5 percent, on are also projected to widen the current external sector, high export receipts result- average, in 2023-24) will be spurred by account surplus to 15.3 percent of GDP ing from higher oil prices led to an estimat- the removal of COVID-19 restrictions in in 2022, before it narrows to an average ed current account surplus of 9.0 percent of early 2022, continued progress in repay- of 4.6 percent of GDP in 2023-24, as in- GDP in 2021 (compared to a surplus of 0.9 ment of domestic arrears, and the re- vestments in new oil fields will lead to percent of GDP in 2020). The Bank of Central sumption of public investments (partially an increase in equipment imports. African States tightened its monetary policy due to an increase in fiscal space from Downside risks include uncertainties relat- in late 2021 over concerns about the evolu- higher oil revenues). However, the war ed to the pandemic and oil production. A tion of foreign exchange reserves, which, in Ukraine may also translate into higher prolonged war in Ukraine represents both despite higher oil prices and the Interna- inflation of about 2.8 percent in 2022 downside and upside risks. While it would tional Monetary Fund’s 2021 Special Draw- and an average of 3.0 percent in 2023-24. further raise international agricultural ing Rights allocation (equivalent to US$1.4 Food inflation is expected to rise even prices, adding substantial inflationary billion), represented just above 3 months’ higher, impacting the country’s food se- pressures, it could also sustain high oil worth of the region’s imports of goods and curity, given that food accounts for about prices, potentially strengthening the eco- services by end-December 2021 (roughly 30 percent of the ROC’s merchandise im- nomic recovery. the same as by end-December 2020). ports. The poverty rate is expected to TABLE 2 Republic of Congo / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices -0.1 -6.2 -3.5 3.5 3.0 4.5 Private Consumption 1.6 -6.9 7.5 5.0 4.5 5.5 Government Consumption -18.7 -33.1 9.7 9.4 4.6 4.1 Gross Fixed Capital Investment -2.3 -45.0 12.7 6.9 10.9 10.9 Exports, Goods and Services 7.4 -11.1 -9.6 4.7 3.4 6.0 Imports, Goods and Services 3.2 -36.3 5.0 11.0 9.8 11.5 Real GDP growth, at constant factor prices -0.6 -5.1 -3.5 3.5 3.0 4.5 Agriculture 0.2 4.5 1.5 2.7 2.1 2.0 Industry 0.2 -3.7 -9.2 4.0 3.5 6.3 Services -1.8 -9.2 3.9 3.0 2.6 2.7 Inflation (Consumer Price Index) 2.2 1.4 2.0 2.8 3.0 3.0 Current Account Balance (% of GDP) -0.8 0.9 9.0 15.3 6.6 2.7 Net Foreign Direct Investment (% of GDP) 3.4 2.4 5.5 5.0 5.7 5.9 Fiscal Balance (% of GDP) 3.4 -2.4 2.1 4.1 2.8 1.9 Debt (% of GDP) 81.9 113.2 98.5 82.6 77.6 71.9 Primary Balance (% of GDP) 8.0 -0.6 4.3 6.0 4.7 3.5 a,b International poverty rate ($1.9 in 2011 PPP) 48.7 51.9 53.9 53.6 53.5 52.9 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 72.1 74.1 75.8 75.5 75.5 74.8 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 89.6 90.9 91.5 91.5 91.4 91.1 GHG emissions growth (mtCO2e) 2.3 -1.2 0.1 1.5 1.4 1.8 Energy related GHG emissions (% of total) 21.3 19.9 19.5 20.1 20.7 21.6 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2011-ECOM. Actual data: 2011. Nowcast: 2012-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2011) with pass-through = 0.7 based on GDP per capita in constant LCU. MPO 25 Apr 22 will continue fueling inflationary pres- sures. While the vaccination rollout is CÔTE D'IVOIRE Key conditions and among the highest in West Africa, vul- nerabilities from new infection waves re- challenges main. Heightened regional and securi- ty tensions and climate-related factors Table 1 2021 One of the fastest-growing economies in could also dampen the outlook. In the Population, million 27.1 sub-Saharan Africa for almost a decade - medium term, the roll out of the NDP GDP, current US$ billion 66.2 with real GDP growth averaging 8.2 per- will depend on adequate financing, GDP per capita, current US$ 2445.4 cent annually over 2012–19 (5.7 percent in premised on greater domestic revenue a 9.2 International poverty rate ($1.9) per capita terms) - Cote d’Ivoire exits the mobilization and private financing. a 34.9 global COVID-19 crisis facing a renewed Lower middle-income poverty rate ($3.2) a 67.4 imperative: addressing bottlenecks to en- Upper middle-income poverty rate ($5.5) Gini index a 37.2 able structural transformation and sustain School enrollment, primary (% gross) b 100.5 inclusive growth. Total factor productivity Recent developments b 57.8 growth has remained flat since 2017, and Life expectancy at birth, years economic complexity has stalled, below The economy rebounded strongly from the Total GHG Emissions (mtCO2e) 49.3 the level expected for its income level. The COVID-19-induced slowdown in 2020, Source: WDI, Macro Poverty Outlook, and official data. informal sector, although shrinking, still aided by fiscal and monetary policy sup- a/ Most recent value (2018), 2011 PPPs. b/ WDI for School enrollment (2020); Life expectancy accounts for up to 40 percent of GDP. port and less disruptive containment mea- (2019). Aiming to double GDP per capita by sures. Real GDP growth is estimated at 7.0 2030, the authorities adopted the National percent in 2021 (4.4 percent in per capita Development Plan (NDP) 2021-2025 in terms) against 2 percent in 2020 (-0.6 per- The recovery in 2021 registered 7.0 per- December 2021, based on leveraging pri- cent in per capita terms), owing to cent growth (4.4 percent per capita), with vate investment, capital deepening, im- stronger-than-expected domestic demand. provements in human capital, addressing Private consumption and investment were a rebound in domestic demand. Inflation climate risks, and strengthening gover- supported by strong credit (+13 percent) reached a 10-year high, casting a shadow nance. Improving factor accumulation and employment (+7.5 percent) growth; over the gains for poor households. Head- while reducing allocative inefficiencies while public consumption and invest- winds prevail in the short-term from the created by market distortions should im- ments remained high. Net exports were prove productivity, and support the de- negative at end-November, as exports of surge in global commodity prices, the velopment of higher-value added sectors cocoa and cashew nuts were offset by in- tightening of financial markets, and sup- in services and manufacturing. vestment-driven imports (+15.1 percent). ply-side disruptions resulting from the Downside risks in the short term have The supply side was marked by a strong Ukraine conflict, along with heightened risen due to the Ukraine conflict’s im- expansion in commerce and services, in- geopolitical and security tensions from pact on global commodity prices and cluding trade and telecom despite tempo- supply-side disruptions to agricultural rary disruptions in electricity supply the Sahel. caused by climate-related factors in the inputs. A tightening of global financial conditions could increase debt vulnera- first half of the year. Agriculture’s perfor- bilities, while higher oil and food prices mance was more mixed with weak food FIGURE 1 Côte d'Ivoire / Real GDP growth and FIGURE 2 Côte d'Ivoire / 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 million LCU) 20 90 1.80 80 1.60 15 70 1.40 10 60 1.20 50 1.00 5 40 0.80 30 0.60 0 20 0.40 10 0.20 -5 2015 2018 2021 2024 0 0.00 Gov. cons. Exports GFCF 2008 2010 2012 2014 2016 2018 2020 2022 2024 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 22 crop production contrasting that of export exceeding the annual target by more than in 2022 due to the Ukraine conflict and its crops. The current account deficit is ex- 15 percent, mostly due to tax buoyancy. global effects. Trade flows with Ukraine pected to have widened to 3.8 percent of Meanwhile, expenditure increased on ac- and Russia are small, but the indirect im- GDP in 2021 from 3.2 percent in 2020, re- count of further security and health pact through higher food and fuel prices flecting lower trade surplus and higher needs, and public investment. Capital ex- would still impact the external and real primary and secondary deficits due to low- penditure outpaced their target by 20.3 sectors. The current account deficit should er official grants and net remittances flows percent, linked to PND projects. In- widen due to higher import prices in the as well as higher interest payments. creased financing needs were covered by short term. Coupled with worsening re- Inflation reached a 10-year high of 4.2 per- recourse to the regional market, the al- gional tensions and insecurity on the cent, 1.2 percentage points above the re- location of IMF SDRs (1.3 percent of northern borders compounding supply gional target, mainly driven by foodstuffs GDP) and Eurobond issuances. As a re- disruptions, inflation could become a ma- because of a water deficit that affected pro- sult, public debt also increased to 52.6 jor threat forcing the BCEAO to tighten duction, and disruptions in the cultivation percent of GDP. monetary policy earlier, increasing financ- schedules of some crops because of mobil- The incidence of extreme poverty mea- ing costs of domestic debt. ity restrictions lingering since 2020 and in- sured with the US$1.9 a day per capita The fiscal deficit is now expected to in- creased security in the northern borders. (2011 PPP) international poverty line de- crease in 2022, with fiscal consolidation de- Côte d’Ivoire’s monetary and exchange clined from 8.95 percent in 2019, to 8.75 layed as a result of the external shock. It rate policies are managed by the Central percent in 2021, slightly higher in compar- should converge towards the WAEMU tar- Bank of West African States (BCEAO), ison to pre-COVID (2019) poverty projec- get of 3 percent of GDP one year later, in which maintains a fixed peg between the tions of 8.6 percent. The recent inflation 2025, with PPG debt only gradually sta- CFA Franc and the Euro. Its reserves spike is estimated to have increased ex- bilizing around 52 percent of GDP in reached 5.8 months of imports in 2021 ow- treme poverty rate by 0.2 ppt point over 2023-24. In the medium term, creating fis- ing to increased exports, the August 2021 the 2020-21 period. cal space and preserving debt sustainabil- SDR allocation, and Eurobond issuances in ity would require additional revenue mo- the region (by Benin, Côte d’Ivoire, Sene- bilization. Increased borrowing in the do- gal and the BOAD). mestic market could potentially crowd out High expenditure levels to support eco- Outlook private investment. Poverty alleviation nomic recovery were offset by higher- should continue in the medium term on than-expected revenue collection, allow- The medium-term outlook is broadly posi- the back of the economic recovery and the ing for a decline of the fiscal deficit to tive, supported by the PND and a commit- rollout of the new social development plan 5.1 percent of GDP in 2021. Tax revenues ment to macroeconomic stability, but re- (PSGOUV2). significantly increased (+20 percent yoy), al GDP growth is projected to decelerate TABLE 2 Côte d'Ivoire / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 6.2 2.0 7.0 5.7 6.8 6.6 Private Consumption 6.0 1.9 5.0 4.2 4.5 4.3 Government Consumption 4.1 0.3 1.3 3.1 2.1 -0.2 Gross Fixed Capital Investment 5.5 12.2 21.3 9.1 7.8 6.0 Exports, Goods and Services 5.7 -1.3 3.7 9.8 17.1 15.6 Imports, Goods and Services 4.4 8.8 12.7 9.2 10.8 7.5 Real GDP growth, at constant factor prices 6.3 2.0 7.0 5.7 6.8 6.6 Agriculture 5.3 2.7 1.9 2.0 2.8 2.9 Industry 11.5 1.6 6.2 6.6 10.0 10.9 Services 4.7 1.9 8.7 6.4 6.6 5.8 Inflation (Consumer Price Index) 0.8 2.4 4.2 5.5 3.5 3.0 Current Account Balance (% of GDP) -2.3 -3.2 -3.8 -4.7 -4.2 -4.0 Net Foreign Direct Investment (% of GDP) 1.3 1.2 1.5 1.3 1.4 1.7 Fiscal Balance (% of GDP) -2.3 -5.6 -5.1 -5.7 -4.8 -3.9 Debt (% of GDP) 38.8 47.6 52.0 52.6 52.7 51.8 Primary Balance (% of GDP) -0.8 -3.7 -3.0 -3.4 -2.8 -2.1 a,b International poverty rate ($1.9 in 2011 PPP) 8.9 9.0 8.8 8.5 8.3 8.0 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 34.5 34.5 34.1 33.7 33.3 32.8 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 66.6 66.7 65.9 65.0 64.2 63.4 GHG emissions growth (mtCO2e) 0.3 -0.5 -0.4 -0.3 0.3 0.0 Energy related GHG emissions (% of total) 21.3 20.2 19.6 18.8 18.1 17.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2015-ENV and 2018-EHCVM.Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. b/ Projection using point to point elasticity at regional level with pass-through = 1 based on GDP per capita in constant LCU. MPO 27 Apr 22 months during the crisis, and only 14 per- cent of students continued their education EQUATORIAL Key conditions and (either in person or from home). In the con- text of data paucity to track poverty, the challenges GUINEA Living Standard Measurement Survey (ex- pected in 2022) will be key to benchmark Since the oil price drop in 2014, Equato- poverty incidence. rial Guinea’s economic growth has been Table 1 2021 negative amid a declining trend of the Population, million 1.5 dominant hydrocarbon sector. While the GDP, current US$ billion 10.7 country is classified as upper-middle-in- Recent developments GDP per capita, current US$ 7408.7 come, the long recession has likely cur- School enrollment, primary (% gross) a 61.8 tailed progress in shared prosperity and The economy is estimated to have re- a 58.7 poverty reduction, with GDP per capita mained in recession in 2021 as GDP Life expectancy at birth, years growth averaging -6.1 percent over the contracted by an estimated 1.6 percent Total GHG Emissions (mtCO2e) 20.6 past decade. Human capital outcomes are (an improvement from a contraction of Source: WDI, Macro Poverty Outlook, and official data. weak and undermined by insufficient so- 4.9 percent in 2020), mainly due to a a/ WDI for School enrollment (2015); Life expectancy (2019). cial spending and poor public service de- decline in hydrocarbon production (de- livery. Public health spending represents spite positive performance in liquified only 0.7 percent of GDP, significantly natural gas [LNG]). A new wave of The economy is estimated to have record- lower than the average of 3.3 percent of COVID-19 at the end of the year, a GDP for upper-middle-income countries, slowdown in construction (due to mod- ed its seventh consecutive year of negative while life expectancy at birth is low at erate public investment), and the Bata growth in 2021 amid disappointed hydro- only 58.9 years. The unfavorable busi- explosions (which occurred in March carbon production. Barring new substan- ness environment and poor governance 2021 and caused widespread damage tial hydrocarbon discoveries, growth is (with corruption perception levels among in Equatorial Guinea’s largest city) also the worst in the world) weigh down pri- contributed to dampening economic projected to remain negative over the vate sector development. The dependen- growth. The revival of the service sector medium term. Uncertainties related to cy on the hydrocarbon sector has made that followed the end of mobility restric- the Russian invasion of Ukraine, along the country highly vulnerable to volatile tions, including the full reopening of in- with a deterioration of the financial sector oil prices, and the social and economic ternational borders, limited the extent of and fiscal position associated with a pro- toll of COVID-19 has highlighted the ur- the economic downturn. gent need to diversify the economy away Notwithstanding higher global food longed COVID-19 crisis, represent down- from the hydrocarbon industry. and energy prices, inflation rate in side risks to the outlook. There are no reli- Poverty is likely to have increased during Equatorial Guinea is estimated at 1.8 able data to track poverty. the COVID-19 pandemic, with phone sur- percent in 2021 (lower than 4.8 percent veys conducted in 2020 showing a signif- in 2020), driven mainly by the phasing icant impact on employment and school- out of restrictive COVID-19-related ing. Indeed, almost half of the working measures. The authorities made timid population stopped working for up to 6 progress on the gradual repayment of FIGURE 1 Equatorial Guinea / Hydrocarbon production (in FIGURE 2 Equatorial Guinea / Non-income poverty thousands of barrels per day of oil equivalent) indicators Thousands of barrels Percentage points 250% 310000 EQG relative to Sub-Saharan Africa average 290000 200% EQG relative to Middle income countries 270000 average 150% 250000 100% 230000 210000 50% 190000 0% 170000 Mortality rate, under- Maternal mortality Prevalence of anemia 5 (per 1,000 live ratio (modeled among children (% of 150000 births) estimate, per 100,000 children ages 6-59 2020 2021e 2022f 2023f 2024f live births) months) Sources: National authorities and World Bank. Source: World Bank. MPO 28 Apr 22 domestic arrears (currently at 36 per- 3 months’ worth of regional imports of The outlook could worsen if the global cent of total public debt), helping to goods and services by end-December COVID-19 crisis lingers and the govern- gradually reduce the share of non-per- 2021 (roughly the same as by end-De- ment fails to resolve the elevated outstand- forming loans and improve the liquid- cember 2020). ing arrears, which could intensify financial ity and solvency of the banking sector. sector risks. Moreover, international donor More favorable oil prices (resulting in budget support may fail to materialize (in higher oil revenues), coupled with gov- particular, IMF lending program-related ernment expenditure moderation (in par- Outlook disbursements) if progress on key fiscal ticular public investment), significantly and governance reforms remains slow. Fi- improved the government’s fiscal posi- Economic growth is expected to re- nally, negative medium-term growth tion compared to the previous year, with bound in 2022 (1.8 percent) due to high- prospects and associated rising fiscal pres- the fiscal deficit narrowing from 3.3 per- er hydrocarbon production (especially sures could hamper the government’s cent of GDP in 2020 to 1.2 percent of LNG) and sustained high oil and gas plans to raise social spending, undermin- GDP in 2021. In addition to higher year- prices owing to the conflict in Ukraine, ing social outcomes. Upside risks include on-year oil exports in 2021, lower im- which should have positive spillover ef- the use of the IMF SDR allocation to re- ports also had a favorable impact on the fects on domestic demand. Barring new solve government arrears and stronger- external deficit, which narrowed to 2.4 substantial discoveries, hydrocarbon than-projected oil revenues stemming percent of GDP (from 10.9 percent of production will continue to decline as from both higher-than-expected oil prices GDP in 2020). some of the country’s largest oil fields and oil production. A prolonged war in The Bank of Central African States tight- are reaching maturity. As a result, GDP Ukraine presents both downside and up- ened its monetary policy in late 2021 growth is projected to contract by an av- side risks. While it would raise internation- over concerns about the evolution of for- erage of 2.4 percent in 2023-24. In the al agricultural prices (adding inflationary eign exchange reserves, which, despite absence of significant diversification ef- pressures in Equatorial Guinea), it could higher oil prices and the International forts or investments into new hydrocar- also sustain high oil prices (which would Monetary Fund (IMF) 2021 Special Draw- bon reserves, GDP per capita will take increase oil revenues). ing Rights (SDR) allocation (equivalent nearly two decades to return to its pre- to US$1.4 billion), represented just above pandemic level. TABLE 2 Equatorial Guinea / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices -6.0 -4.9 -1.6 1.8 -2.6 -2.1 Private Consumption 3.4 3.4 1.0 1.4 1.2 0.7 Government Consumption -4.5 -5.3 2.3 0.4 -8.5 -5.8 Gross Fixed Capital Investment -55.8 -42.1 -18.0 -6.0 -17.0 -20.0 Exports, Goods and Services -6.2 -9.0 -1.7 2.9 -0.8 -0.9 Imports, Goods and Services -9.0 -7.8 2.0 2.0 1.0 0.5 Real GDP growth, at constant factor prices -6.0 -5.0 -1.6 1.9 -2.6 -2.1 Agriculture -5.8 0.4 2.8 1.4 1.4 1.4 Industry -8.7 -6.8 -0.6 3.0 -2.0 -2.4 Services -1.2 -2.1 -3.5 0.0 -4.0 -1.7 Inflation (Consumer Price Index) 1.2 5.8 1.8 2.8 2.5 2.5 Current Account Balance (% of GDP) -1.6 -10.9 -2.4 1.4 -1.2 -2.1 Net Foreign Direct Investment (% of GDP) 5.3 3.9 5.9 5.0 5.4 5.6 Fiscal Balance (% of GDP) 2.0 -3.3 -1.2 -0.6 -1.4 -1.5 Debt (% of GDP) 45.9 52.3 47.4 43.2 47.9 45.9 Primary Balance (% of GDP) 2.7 -2.0 0.4 0.8 0.2 0.1 GHG emissions growth (mtCO2e) -8.5 -2.5 -0.1 0.5 -1.0 0.6 Energy related GHG emissions (% of total) 21.6 17.4 18.2 19.4 19.5 20.8 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. MPO 29 Apr 22 led to data production capacity con- straints. National accounts data are lim- ERITREA Key conditions and ited to unofficial GDP estimates by the Ministry of Finance, inflation estimates challenges cover only the capital, Asmara, and full balance of payments accounts are miss- Table 1 2021 After UN sanctions were lifted in Novem- ing. The last population census in Eritrea Population, million 3.6 ber 2018, Eritrea started emerging from a took place more than 25 years ago. GDP, current US$ billion 2.3 decade of international isolation. Efforts to Therefore, little is known about poverty. GDP per capita, current US$ 632.6 shift from a centrally planned to a market- Data from 1996/97, covering only urban a 68.4 School enrollment, primary (% gross) led economy have been slow and sporadic, areas, suggests that poverty was wide- a 66.3 and large SOEs dominate economic activi- spread with around 70 percent of the Life expectancy at birth, years Total GHG Emissions (mtCO2e) 8.3 ty. Monetary policy is characterized by ad- population living in poverty. Source: WDI, Macro Poverty Outlook, and official data. ministrative measures, fiscal dominance, a/ WDI for School enrollment (2018); Life expectancy and a fixed exchange rate regime pegged (2019). to the US dollar, enabled by severe import restrictions in a context of low foreign ex- Recent developments change reserves. The banking system Real GDP rebounded by 2.9 percent in largely lends to government and lacks in- After contracting by 0.6 percent in 2020 2021 after a 0.6 percent contraction in ternational correspondent banks, while amid the Covid-19 crisis, real GDP re- payment and settlement systems are ab- bounded by an estimated 2.9 percent in 2020, aided by external demand uptake sent. The country is among the most vul- 2021, supported by external demand up- and resumption of domestic activity. A nerable and least adapted to climate take and the resumption of economic ac- significant boost to growth is expected in change in Sub-Saharan Africa, and fre- tivity as the restrictions imposed at the 2022 from new mining developments and quent weather shocks pose a heavy burden onset of the pandemic were lifted. Infla- rising prices of mineral exports. However, for the economy and rural livelihoods. The tionary pressures that build up following mining sector, which started operating in the closure of the border with Ethiopia af- rising food inflation, climate vulnerabili- 2011, accounts for over 90 percent of total ter its temporary opening for two months ties and geopolitical tensions cloud the exports, yet contributions to budget rev- in 2019 eased in 2021, and inflation hov- medium-term outlook. National accounts enues are limited. ered at 4.5 percent. The external current and poverty statistics have not been pro- The Covid-19 crisis hit Eritrea amid a hia- account surplus increased to 13.6 percent tus in its reengagement with development of GDP in 2021 from 11.4 percent the year duced over the last decade. partners, leaving it without needed exter- before as commodity exports grew faster nal funding. In addition, informal cross- than the recovering imports. Reserves are border trade was affected by the conflict in estimated to hover at about two months northern Ethiopia. Yet, Eritrea’s isolation of imports. moderated the magnitude of the initial ex- The UN Food and Agriculture Organiza- ternal shock. tion said in early March 2022 that the The emergency conditions prevailing in desert locust upsurge that ravaged the the country over the past decade have Horn of Africa for more than two years FIGURE 1 Eritrea / Evolution of total public debt FIGURE 2 Eritrea / Primary and overall fiscal balances Percent of GDP Percent of GDP 350 6 300 4 250 2 200 0 150 -2 100 50 -4 0 -6 2017 2018 2019 2020 2021e 2022p 2023p 2017 2018 2019 2020 2021e 2022p 2023p Domestic debt External debt Total public debt Overall fiscal balance Primary fiscal balance Sources: Ministry of Finance, Planning and Economic Development, World Bank Sources: Ministry of Finance, Planning and Economic Development, World Bank staff estimates. staff estimates. MPO 30 Apr 22 has ended as drier conditions prevail, but outcomes remain uncertain given fre- household’s consumption, exacerbating recommended vigilance as few residual quent data revisions due to reporting lags poverty and food insecurity. Over the infestations may linger. As part of efforts driven by widespread manual processes. medium term, growth could continue in to reinvigorate the partnership between the range of 3.6 to 3.8 percent, supported the UN and Eritrea and prepare for a by sustained mineral exports and potential new Sustainable Development Coopera- spillovers from the new potash mine to fer- tion Framework for 2022-2026, a 24-per- Outlook tilizer production, which could enhance son mission to Asmara led by UN Re- agricultural productivity, improving liveli- gional Directors took place end-January Real GDP growth is expected to accelerate hoods and food security. 2022, with discussions covering to 4.7 percent in 2022 as the Colluli and Nevertheless, downside risks are signifi- COVID-19 vaccination, regional dynamics Asmara mines start exporting at full ca- cant. Rising global geopolitical tensions in the Horn of Africa, regional trade in- pacity. Rising international prices of zinc, and new Covid-19 variants could further tegration and ACFTA, human rights, cli- gold and copper, which jointly account for reduce global growth, negatively impact- mate action, and data for development. over 90 percent of Eritrea’s exports, will ing exports. Eritrea’s continued involve- However, Eritrea remains mostly isolated strengthen the current account and soften ment in the northern Ethiopia conflict internationally. On November 12, 2021, the negative impact from rising prices of could attract renewed international sanc- the US imposed sanctions on four promi- oil and wheat, which are among the coun- tions, while escalation of war in Europe nent Eritrean entities and two individuals try’s top imports, stemming from the Rus- could further push up oil and wheat in response to their role in the ongoing sia-Ukraine war. Similarly, the hike in prices, with potentially dire effects on human rights crisis in Ethiopia. potash prices, which have trebled over the poverty and food insecurity. The absence The rebounding economic activity sup- past year and have low prospects of com- of a Covid-19 vaccination campaign ported stronger revenues in 2021, driving ing down soon as sanctions weigh heavily heightens risks to lives and livelihoods, a decline of fiscal deficit to 3.7 percent on Russia and Belarus, the second and while severe climate vulnerabilities that of GDP from 4.2 in 2020. Construction third world producers of the commodity, burden Eritrea could worsen in coming work associated to the Colluli and As- could further boost Eritrea’s growth and years. The fragile macroeconomic situation mara mines continued to drive capital ex- external accounts, bolstering government and severe credit constraints leave the penditures. Public debt is estimated at revenue and providing much needed for- country with little space to boost prepared- around 243 percent of GDP, of which eign exchange. However, the increasing ness facing these risks, and to control dam- nearly 80 percent is owed to domestic food inflation and possible shortages of ages should they materialize. banks. However, fiscal and domestic debt key commodities will weigh negatively on TABLE 2 Eritrea / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 3.8 -0.6 2.9 4.7 3.6 3.7 Private Consumption 5.5 -1.9 3.0 7.2 5.6 5.9 Government Consumption 39.3 16.4 9.9 3.5 4.0 2.2 Gross Fixed Capital Investment 67.5 152.2 39.1 -18.0 1.6 1.3 Exports, Goods and Services -5.0 -5.4 49.7 25.7 3.8 1.6 Imports, Goods and Services 1.4 -3.5 42.6 28.0 2.0 3.1 Real GDP growth, at constant factor prices 3.7 -0.7 2.9 4.7 3.6 3.7 Agriculture 27.0 -0.5 4.5 3.1 2.5 3.3 Industry 13.0 -0.7 1.4 10.2 7.6 6.7 Services -26.0 -1.1 2.0 0.6 0.2 0.3 Inflation (Consumer Price Index) -16.4 4.8 4.5 6.2 3.5 2.2 Current Account Balance (% of GDP) 13.0 11.4 13.6 13.6 13.3 12.4 Net Foreign Direct Investment (% of GDP) 3.9 3.8 3.7 3.4 3.3 3.2 Fiscal Balance (% of GDP) 0.7 -4.2 -3.7 -0.8 0.3 1.0 Debt (% of GDP) 269.5 260.7 242.7 215.4 198.9 186.6 Primary Balance (% of GDP) 2.5 -2.6 -2.3 0.6 1.4 2.1 GHG emissions growth (mtCO2e) 4.3 -2.8 3.1 4.9 3.7 1.0 Energy related GHG emissions (% of total) 26.1 26.3 26.6 27.5 27.8 28.5 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. MPO 31 Apr 22 poverty has been slow, with close to a third of the population living below ESWATINI Key conditions and the US$1.90/day (2011 PPP) international poverty line. At about 27 percent, Eswa- challenges tini has the world’s highest HIV preva- lence rate among adults aged 15 to 49, a Table 1 2021 Eswatini has largely relied on government driver and consequence of high poverty Population, million 1.2 investment and consumption to drive and inequality. GDP, current US$ billion 4.7 growth since the end of apartheid in South GDP per capita, current US$ 4009.7 Africa, as foreign private investment de- a 29.2 International poverty rate ($1.9) clined and relocated back to South Africa. Lower middle-income poverty rate ($3.2) a 52.1 Private investment remains constrained by Recent developments a 72.0 an unfavorable investment climate and Upper middle-income poverty rate ($5.5) Gini index a 54.6 governance challenges. The risk of recur- Despite the continued COVID-19 pandem- School enrollment, primary (% gross) b 114.5 rence of political unrest in Eswatini and ic and the June 2021 political unrest, eco- b 60.2 heightened global risks create uncertainty nomic growth is estimated to have re- Life expectancy at birth, years for medium-term private sector invest- bounded to 3.1 percent in 2021 from a con- Total GHG Emissions (mtCO2e) 3.0 ment and economic growth. traction of 1.9 in 2020. The third and fourth Source: WDI, Macro Poverty Outlook, and official data. The fiscal situation has been fragile due to COVID-19 wave containment measures a/ Most recent value (2016), 2011 PPPs. b/ Most recent WDI value (2019). overreliance on volatile Southern African were not as restrictive as those of earlier Customs Union (SACU) revenues, which waves, allowing firms to ramp up produc- translates into significant fluctuations in tion in 2021Q4. A recovery in external de- GDP growth is estimated to have re- public spending and pose a challenge to mand supported export-oriented manu- the management of fiscal operations and facturing activities. The vaccination cam- bounded to 3.1 percent in 2021, reflecting growth potential. Volatile SACU receipts paign, which reached about 25.3 percent the easing of COVID-19 restrictions and have been met by rigid government expen- of the population at end December 2021, subsequent boost on external demand. diture, leading to persistent fiscal deficits helped to contain the spread of the virus The fiscal deficit declined in 2021, as the in the recent past (Figure 1). SACU rev- and eased uncertainties on both demand enues consist of external trade and excise and supply prospects. Though the June-Ju- government implemented expenditure duties on imported goods, as well as a de- ly political unrest resulted in the destruc- cuts in line with its three-year fiscal ad- velopment component derived from excise tion of physical assets, theft of inventory, justment plan. Poverty remains stagnant taxes. The volatility in SACU revenues and constrained operational hours, its im- due to slow growth of per capita GDP. largely reflects the volatility in imports pact on production was partly mitigated as The economy is projected to continue to and the impact of exchange rate on custom firms accessed a Reconstruction Fund set receipts. The fall in SACU revenue was up by the government to cushion business recover in 2022, albeit at a slower pace, amplified by declining trade and growth from damages of the political unrest. slowing poverty reduction. during the COVID-19 pandemic. Inflationary pressures weakened in 2021 as Poverty, unemployment, inequality, and the government kept the rental price con- HIV prevalence levels have historically stant, resulting in annual inflation slowing been high. Progress toward reducing to 3.7 percent, from 3.9 percent in 2020. FIGURE 1 Eswatini / Fiscal deficit and SACU revenue FIGURE 2 Eswatini / Actual and projected poverty rates and real GDP per capita Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 25 90 40000 20 80 35000 15 70 30000 60 10 25000 50 5 20000 40 0 15000 30 20 10000 -5 10 5000 -10 0 0 -15 2009 2011 2013 2015 2017 2019 2021 2023 2000 2003 2006 2009 2012 2015 2018 2021p 2024p International poverty rate Lower middle-income pov. rate Fiscal Deficit SACU Upper middle-income pov. rate Real GDP pc Sources: Eswatini Ministry of Finance, and the World Bank staff projections. Source: World Bank. Notes: see Table 2. MPO 32 Apr 22 Year-on-year inflation started to increase in 6.5 percent in 2020 due to the decline in as at mid- February 2022) is expected to December 2021 (to 3.5 percent from 3 per- SACU revenues. strengthen certainty on demand and sup- cent in November 2021) after declining for Poverty remains stagnant, in a context ply chains. Poverty is projected to remain three consecutive months from September with limited growth in per capita GDP. at around 28 percent, reflecting the slow 2021. Inflation increased further in January About 28.5 percent of the population is es- economic recovery in the medium term. 2022 to 3.6 percent, prompting the Central timated to live below the poverty line The fiscal deficit is projected to further Bank to increase the repo rate (for the first ($1.90/day). decline in 2022, as authorities implement time since July 2020) in January 2022, from the revenue and expenditure-led fiscal 3.75 percent to 4.0 percent. adjustment plan. Although the second- The fiscal deficit is estimated to have de- round effects of the pandemic are antic- clined in FY2021/22 mainly due to under- Outlook ipated to manifest through a further re- spending on capital expenditure. The fiscal duction in SACU revenues in 2022, the deficit is estimated at 5 percent of GDP, Real GDP growth is projected to slow to 2 fiscal deficit is projected to fall, as do- lower than the 6.5 percent of GDP initially percent in 2022, reflecting the implementa- mestic revenues recover, and the authori- projected in the original budget. The un- tion of the government’s three-year fiscal ties continue to maintain a tight expendi- derspending on capital expenditure re- adjustment program that will dampen ture framework. Public debt is projected flects low disbursements due to delays in growth of sectors linked to government to reach a peak in 2022 of 46 percent of the procurement process on foreign fi- operations, such as construction and pub- GDP and will start to decline from 2023, nanced projects. It also reflects commit- lic administration. In addition, inflation is reflecting declining fiscal deficit. ment to the fiscal adjustment plan that expected to rise to 4.7 percent in 2022, dri- The current account balance is projected to aims to limit the accumulation of expen- ven by higher international oil (partly trig- turn into a deficit of 1.2 percent of GDP in diture arrears. At the same time, revenue gered by the Russia-Ukraine conflict), ad- 2022—the first time since the 2010/11 fiscal collections declined mainly due to the pan- ministered utility prices, and continued crisis—partly reflecting declining SACU demic and subsequent economic chal- supply shocks due to the COVID-19 pan- revenues. The current account surplus is lenges. The current account surplus de- demic. Nevertheless, the continuation of projected from 2023 onward on the back of clined to 0.9 percent of GDP in 2021 from the vaccination program (at 28.6 percent recovering SACU revenue. TABLE 2 Eswatini / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 2.6 -1.9 3.1 2.0 1.8 1.8 Private Consumption -1.5 0.5 2.7 2.2 2.4 1.4 Government Consumption -2.0 6.7 2.2 -0.5 -1.0 -0.5 Gross Fixed Capital Investment 1.0 -5.9 3.8 2.1 -0.8 1.5 Exports, Goods and Services 16.3 -2.4 2.7 3.6 3.9 4.3 Imports, Goods and Services 1.5 -0.7 2.1 2.5 2.3 2.3 Real GDP growth, at constant factor prices 2.7 -1.7 3.1 2.0 1.8 1.9 Agriculture 0.9 -5.4 3.3 3.5 4.5 3.6 Industry 5.5 -9.7 7.8 1.5 1.6 2.0 Services 1.1 4.5 0.2 2.1 1.4 1.5 Inflation (Consumer Price Index) 2.6 3.9 3.7 4.7 4.3 4.4 Current Account Balance (% of GDP) 4.7 6.5 0.7 -1.2 0.4 1.1 Net Foreign Direct Investment (% of GDP) -2.4 -0.2 -0.7 -0.8 -0.8 -0.8 Fiscal Balance (% of GDP) -6.2 -6.7 -5.1 -4.4 0.7 2.1 Debt (% of GDP) 40.0 41.7 42.8 45.7 44.7 42.2 Primary Balance (% of GDP) -4.9 -4.5 -3.3 -1.4 3.4 4.5 a,b International poverty rate ($1.9 in 2011 PPP) 27.5 28.6 27.9 27.5 27.2 26.9 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 51.1 52.0 51.4 51.1 50.7 50.7 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 70.9 71.8 71.1 70.9 70.9 70.5 GHG emissions growth (mtCO2e) 0.5 0.2 -0.5 0.1 0.2 0.3 Energy related GHG emissions (% of total) 45.7 45.9 46.0 46.1 46.2 46.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2016-HIES.Actual data: 2016. Nowcast: 2017-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2016) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 33 Apr 22 Downside risks loom large over the out- look presented below. While has been a ETHIOPIA Key conditions and significant de-escalation in the armed con- frontation between federal and allied re- challenges gional forces and Tigrayan forces since De- cember and both sides seem to be more Table 1 2021 Ethiopia has been among the fastest open to seek a solution through diploma- Population, million 117.9 growing countries in the world, with cy, the risks associated to a protracted con- GDP, current US$ billion 114.6 GDP expanding at an average rate of 10 flict remain significant. Impacts on agricul- GDP per capita, current US$ 972.5 percent during FY04-FY20. Growth has ture are also being compounded by the on- a 30.8 International poverty rate ($1.9) been driven by large-scale public invest- going drought affecting the Horn of Africa. a 68.9 ment in infrastructure. While poverty de- Finally, there are risks that macroeconomic Lower middle-income poverty rate ($3.2) a 90.2 clined by about 10 percentage points dur- stability is affected and economic reforms Upper middle-income poverty rate ($5.5) Gini index a 35.0 ing 2004-2016, gains are modest when are delayed or reversed. School enrollment, primary (% gross) b 119.4 compared to other countries that saw fast b 66.6 growth, and inequality has increased in Life expectancy at birth, years recent years. Total GHG Emissions (mtCO2e) 213.6 The limitations of the state-led develop- Recent developments Source: WDI, Macro Poverty Outlook, and official data. ment model in Ethiopia have become ap- a/ Most recent value (2015), 2011 PPPs. b/ WDI for School enrollment (2020); Life expectancy parent in recent years. Structural trans- At 6.3 percent according to official figures, (2019). formation remains incipient, and the role growth surprised on the upside in FY21, of the private sector is constrained by as agriculture performance in the second SOE dominance and an uneven playing part of the year was better-than-expected. An increased import bill and a decline field. The financing of the large capital The few available high-frequency indica- in official aid flows have led to a weak- investments coupled with a loss in com- tors suggest growth has been sluggish in petitiveness, caused by an overvalued ex- the second half of 2021, as electricity gen- ening of the balance of payments and a change rate, have put the country at eration dropped, capital imports contract- significant drawdown in reserves. high risk of debt distress. Acknowledging ed, and regional authorities in Amhara re- Growth in FY22 is expected to ease these shortcomings, the authorities ported that 41 million quintals of agricul- from 6.3 percent in FY21, impacted by launched a Homegrown Economic Re- ture production (or about 10 percent of the form Agenda in September 2019, aiming production of the previous year) had been the armed conflict, and inflation is likely to foster efficiency and introduce com- lost due to the conflict. to remain high, as oil and wheat prices petition in key growth-enabling sectors Merchandise exports grew at 21.8 percent increase. This is expected to result in a (energy, logistics, and telecom), improve year-on-year (y-o-y) during July-Novem- slowdown in poverty reduction. the business climate, and address macro- ber 2021. While gold exports have de- economic imbalances. Among other mea- clined after the surge in FY20, exports sures, authorities are expected to adopt of coffee, meat, and vegetables have been a market-determined exchange rate and strong in both volumes and values, and introduce a modern monetary policy textile and flower exports have rebound- framework by end-2022. ed. Merchandise imports have expanded FIGURE 1 Ethiopia / Gross foreign exchange reserves FIGURE 2 Ethiopia / Evolution of inflation, y-o-y percentage change Million US$ Months of imports Percent change 4,500 3.0 45 4,000 40 2.5 3,500 35 3,000 2.0 30 2,500 25 1.5 2,000 20 1,500 1.0 15 1,000 10 0.5 500 5 0 0.0 0 Jul-16 Jul-17 Jul-18 Jul-19 Jul-20 Jul-21 Jul-16 Jul-17 Jul-18 Jul-19 Jul-20 Jul-21 In million US$ In months of imports General Food Nonfood Source: National Bank of Ethiopia. Source: Central Statistical Agency of Ethiopia. MPO 34 Apr 22 fast (24.3 percent y-o-y), driven by a larg- a supplementary budget comprising addi- Bank of Ethiopia bonds, which will likely er fuel and cereal bill as international tional outlays on defense and reconstruc- hold back economic activity. Prices are prices climb up. This has resulted in a sig- tion amounting to about US$2.5 billion (2.3 expected to keep rising the coming nificant widening of the current account percent of GDP). months, as monetary policy has loosened deficit. During the first five months of FY22, About 30 percent of households continue again, crop production has likely been a significant drawdown of reserves was reporting inability to purchase essential impacted by the conflict, and internation- needed, as official transfers halved (-47.8 items (food, medicines), and in the April al commodity prices remain high. The percent y-o-y), and despite robust FDI in- 2021 round of the high-frequency survey economic consequences of the Russian in- flows (26.9 percent y-o-y). Reserves stood in there was a surge in the number of house- vasion of Ukraine, war and associated November at US$1.8 billion (about one holds mentioning high prices were their sanctions are expected to result in further month of imports). main impediment. The ongoing armed deterioration of the balance of payments Inflation has averaged above 30 percent dur- conflict has had a severe impact on food se- and inflationary pressures. This outlook ing the first seven months of FY22, driven by curity: the World Food Program (WFP) es- expects some rebound in economic ac- food prices, a recent increase in fuel prices, timated that as of November 2021, 9.4 mil- tivity in FY23 assuming the conflict in and expectations. Despite continued nomi- lion people needed humanitarian food as- Tigray does not reignite. nal depreciation, high inflation has resulted sistance in northern Ethiopia. The poverty trajectory is uncertain due to in the real exchange rate remaining broadly offsetting factors. On one hand, armed unchanged during this period. After some conflict, persistent droughts in lowland re- slowdown over the summer, base money gions and rising inflation, are expected to growth has picked up again, reaching 33.4 Outlook have driven a large number of people into percentduringthefirstfivemonths ofthefis- poverty. On the other hand, growth in oth- cal year. Broad money growth eased to 24 The growth figure for FY22 has been re- er sectors and parts of the country is ex- percent, impacted by the temporary instruc- vised down on account of the intensi- pected to alleviate poverty. Whether the tion to freeze bank loan disbursements, fication of the conflict during the first poverty effect of growth can fully offset the which was lifted in December. months of the fiscal year, the introduction impact of the conflict, droughts and infla- Revenue collection remains sluggish, of more stringent foreign exchange sur- tion is unclear, but their intensity suggests growing at an estimate of 15 percent, in rendering requirements, and the new re- that progress in poverty reduction will be nominal terms, during the first half of quirement for banks to invest 1 percent lower than in previous periods. FY22. In January, the parliament approved of outstanding credit on Development TABLE 2 Ethiopia / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2018/19 2019/20 2020/21 2021/22e 2022/23f 2023/24f Real GDP growth, at constant market prices 9.0 6.1 6.3 3.3 5.2 5.9 Private Consumption 5.1 5.0 3.0 2.5 2.8 3.3 Government Consumption 7.2 0.6 12.2 21.1 3.8 3.1 Gross Fixed Capital Investment 15.1 5.6 7.6 -1.0 8.3 9.8 Exports, Goods and Services 3.0 3.4 5.5 6.2 6.8 7.5 Imports, Goods and Services 5.4 -1.9 2.0 3.8 4.2 5.1 Real GDP growth, at constant factor prices 9.0 6.1 6.3 3.3 5.2 5.9 Agriculture 3.8 4.3 5.5 2.5 4.0 4.0 Industry 11.5 9.6 7.3 5.5 9.5 9.5 Services 12.0 5.2 6.3 2.4 3.0 4.7 Inflation (Consumer Price Index) 12.5 19.9 20.2 34.2 25.6 16.9 Current Account Balance (% of GDP) -5.1 -4.1 -2.7 -4.5 -4.1 -3.8 Fiscal Balance (% of GDP) -2.5 -2.8 -2.8 -4.2 -3.3 -2.9 Debt (% of GDP) 57.3 56.5 56.6 56.0 55.6 53.2 Primary Balance (% of GDP) -2.0 -2.4 -2.2 -3.6 -2.7 -2.3 a,b International poverty rate ($1.9 in 2011 PPP) 25.9 25.2 24.5 24.4 23.9 23.3 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 63.7 63.0 62.2 62.0 61.5 60.8 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 83.4 82.4 81.4 81.2 80.5 79.5 GHG emissions growth (mtCO2e) 2.0 1.1 1.2 0.6 1.2 1.5 Energy related GHG emissions (% of total) 24.6 23.2 21.7 19.9 18.4 17.0 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2015-HICES, 2018-, and 2015-HICES. Actual data: 2015. Nowcast: 2016-2021. Forecasts are from 2022 to 2024. b/ Projection using point to point elasticity at regional level with pass-through = 1 based on GDP per capita in constant LCU. Note: Growth projections are based on limited information and stand to be updated/revised based on improved data availability. MPO 35 Apr 22 stepped up to reduce fiscal vulnerabilities. The reintegration of Gabon into the Extrac- GABON Key conditions and tive Industries Transparency Initiative in October 2021 was an important step, and challenges the authorities need to ensure the effective implementation of all membership oblig- Table 1 2021 Gabon’s economic recovery is underway, ations. Despite reaching historic highs in Population, million 2.3 although inadequate governance and a 2020, public debt remains sustainable, al- GDP, current US$ billion 17.6 poor business climate remain major chal- though vulnerabilities are high. GDP per capita, current US$ 7734.3 lenges to channel resource wealth to sus- a 3.4 International poverty rate ($1.9) tainable development and ensure broad- a 11.2 based improvements in living conditions. Lower middle-income poverty rate ($3.2) Upper middle-income poverty rate ($5.5) a 32.2 Given the country’s young workforce and Recent developments Gini index a 38.0 fast-growing population, increasing hu- School enrollment, primary (% gross) b 139.9 man capital is a priority to meet the chal- Following a recession in 2020 caused by b 66.5 lenge of economic diversification and re- the COVID-19 pandemic and oil price Life expectancy at birth, years duce the risk of social unrest in a context shocks, the Gabonese economy expanded Total GHG Emissions (mtCO2e) 13.2 of high unemployment. Higher global oil by an estimated 1.5 percent in 2021. Source: WDI, Macro Poverty Outlook, and official data. prices expected for the forecast horizon Growth was driven by the non-oil sector, a/ Most recent value (2017), 2011 PPPs. b/ WDI for School enrollment (2011); Life expectancy might delay the implementation of mea- in particular the booming mining and (2019). sures to diversify exports, strengthen so- forestry sectors. Oil production is esti- cial safety nets, and promote competition. mated to have declined by 5.5 percent Sustained implementation of reforms to in 2021, year-on-year (y-o-y), to meet the Gabon’s economy expanded by an esti- strengthen public financial management OPEC+ quota. mated 1.5 percent in 2021, driven by the and the efficiency of public investment New measures to encourage vaccination is crucial to meet the country’s devel- have been in place since the beginning of booming mining and forestry sectors. The opment needs and improve its growth 2022, but the number of fully vaccinated fiscal balance deteriorated slightly in prospects. Efforts to improve reporting people remains low at 13 percent of the 2021. Public debt remains sustainable, and procurement practices are required population in early March 2022. The but risks are high. The spike in agricul- to modernize and strengthen public in- poverty rate is estimated to reach 34.1 per- vestment management. cent in 2021. Living conditions have not tural commodity prices due to the Despite the challenging global economic yet returned to their pre-COVID-19 crisis Ukraine conflict could add to food insecu- context, it is crucial for Gabon to accelerate levels, when employment levels suffered rity and disproportionally affect the most its efforts to manage the macroeconomic from restrictive measures, resulting in ma- vulnerable. While higher oil prices will volatility due to external shocks. Key to his jor income losses, especially for self-em- support the recovery, the transformation is building fiscal buffers, by strengthening ployed and informal workers. domestic revenue mobilization and ensur- Despite higher global food and energy of Gabon’s growth model to foster green prices, inflation remained contained in ing a more selective allocation of tax ex- and inclusive growth and accelerate job emptions. Efforts to foster transparency in 2021. The consumer price index in- creation is crucial. natural resource management need to be creased by 2.0 percent in January 2022, FIGURE 1 Gabon / Debt and fiscal balance FIGURE 2 Gabon / Actual and projected poverty rates and real GDP per capita External and domestic debt (in CFAF billion) Fiscal balance (in percent) Poverty rate (%) Real GDP per capita (millions constant LCU) 8,000 8 60 3 7,000 6 50 3 6,000 4 40 3 5,000 2 4,000 30 3 0 3,000 20 3 -2 2,000 10 2 1,000 -4 0 2 0 -6 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2010 2012 2014 2016 2018 2020 2022f 2024f International poverty rate Lower middle-income pov. rate External debt Domestic debt Fiscal balance (rhs) Upper middle-income pov. rate Real GDP pc Sources: Official government data and World Bank calculations. Note: e = esti- Source: World Bank. Notes: see table 2. mate, f = forecast. MPO 36 Apr 22 y-o-y, as food prices rose moderately continued easing of OPEC+ oil production by 2.4 percent. The Bank of Central cuts, and a resumption of investments in African States tightened its monetary Outlook wood and agri-business. policy in late 2021 over concerns about Against this backdrop, the share of the evolution of foreign exchange re- Gabon’s economy is projected to gain mo- Gabonese households living on less than serves, which, despite higher oil prices mentum and grow by an average of 2.8 US$5.5 per day is expected to decline grad- and the 2021 Special Drawing Rights percent in 2023-24. Higher global oil ually to 33.4 percent by 2024, which is 1.0 allocation, represented just above 3 prices due to the conflict in Ukraine are percentage point higher than the pre-pan- months’ worth of imports of goods and expected to have spillover effects on in- demic rate estimated for 2019. services by end-December 2021. ternal demand. Medium-term growth The outlook is subject to high levels of un- The fiscal balance deteriorated slightly to critically depends on the government’s certainty. Gabon’s fiscal sustainability an estimated 2.5 percent of GDP in 2021. commitment to structural reforms and could deteriorate if global financing con- High oil prices partially compensated for economic diversification. ditions tighten substantially. While higher- lower oil production and contributed to Measures to strengthen domestic revenue than-expected global oil prices will favor- higher than initially anticipated oil rev- collection and rationalize tax exemptions ably impact the country’s fiscal and exter- enue while tax revenues remained fragile. would contribute to higher tax revenues, nal balances, high global food and energy The government continued its efforts to and oil-revenue would be favorably im- prices due to the Ukraine conflict pose in- keep spending under control while invest- pacted by higher global oil prices. There flation risks and will disproportionally af- ment spending increased. Public debt is es- may be pressure on the wage bill in 2022 fect Gabon’s most vulnerable population timated to have declined to 70.5 percent of as the public servants’ hiring freeze is dis- and increase food insecurity. The emer- GDP at end-2021. continued. Fiscal balances and debt are ex- gence of new COVID-19 variants may also In 2021, the strong performance of the pected to improve gradually over the have a negative impact on domestic activ- wood and manganese industries, com- medium term. Concrete efforts to improve ity if the government were to impose new bined with higher commodity prices, con- public debt management and budget exe- restrictions. Uncertainty surrounding the tributed to an overall increase in export cution should prevent the accumulation of 2023 presidential election and weak insti- earnings, while imports rose slightly com- new domestic and external arrears. tutional capacity could slow the govern- pared to the previous year. The current ac- The current account is projected to post ment’s implementation of structural re- count deficit is estimated to have narrowed a surplus in the medium term, supported forms aimed at diversifying away from oil, to 4.9 percent of GDP in 2021. by higher oil and manganese prices, the thereby jeopardizing future growth. TABLE 2 Gabon / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021 2022e 2023f 2024f Real GDP growth, at constant market prices 3.9 -1.8 1.5 3.3 2.6 3.0 Private Consumption 0.9 -2.0 -1.0 0.1 3.3 2.6 Government Consumption 6.1 5.5 1.3 0.5 1.5 0.1 Gross Fixed Capital Investment 21.5 -16.7 10.8 -0.2 3.2 5.0 Exports, Goods and Services 14.0 10.1 0.6 6.4 1.8 0.9 Imports, Goods and Services 21.5 -16.7 34.8 0.1 2.7 2.3 Real GDP growth, at constant factor prices 4.2 -1.9 1.5 3.3 2.6 3.0 Agriculture 7.9 5.9 6.7 5.2 4.2 4.8 Industry 6.8 -2.2 0.4 3.0 1.5 2.9 Services 2.3 -2.8 1.3 3.1 2.9 2.7 Inflation (Consumer Price Index) 1.0 1.6 2.0 3.0 2.8 2.5 Current Account Balance (% of GDP) -0.9 -6.0 -4.9 4.1 3.1 1.2 Net Foreign Direct Investment (% of GDP) -7.4 -8.4 -7.5 -4.9 -5.0 -4.0 Fiscal Balance (% of GDP) 1.4 -2.1 -2.5 0.5 2.4 1.8 Debt (% of GDP) 59.8 77.4 70.5 61.6 60.0 59.0 Primary Balance (% of GDP) 3.6 1.2 0.4 3.2 5.0 4.5 a,b International poverty rate ($1.9 in 2011 PPP) 3.4 3.6 3.6 3.6 3.6 3.5 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 11.3 12.0 12.1 12.0 11.9 11.9 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 32.3 33.8 34.0 33.8 33.7 33.4 GHG emissions growth (mtCO2e) -1.3 -2.4 -2.1 -1.7 -1.4 -1.2 Energy related GHG emissions (% of total) 17.6 14.7 12.1 9.6 7.4 5.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2017-EGEP.Actual data: 2017. Nowcast: 2018-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2017) with pass-through = 0.7 based on GDP per capita in constant LCU. MPO 37 Apr 22 occurred mostly in the low-productive agriculture sector (employing 35.5 percent THE GAMBIA Key conditions and of workers), and not in the higher-paid ser- vices sector, slowing the pace of poverty challenges reduction. Moreover, high food inflation exposes poor households – who spend 65 Table 1 2021 Semi-enclaved within Senegal, The Gam- percent on food - to the risk of sliding Population, million 2.5 bia is a small, fragile, densely populated deeper into poverty. GDP, current US$ billion 2.0 country with historically low and volatile As the risk of debt distress and inflation re- GDP per capita, current US$ 821.4 economic growth, characterized by limited main high, The Gambia has limited fiscal a 10.3 International poverty rate ($1.9) economic diversification, insufficient cap- and monetary policy buffers to respond to a 38.4 ital accumulation, and low productivity. the spillovers from war. The outlook is Lower middle-income poverty rate ($3.2) a 72.7 Since the democratic transition of 2017, the subject to downside risks from vaccine-re- Upper middle-income poverty rate ($5.5) Gini index a 35.9 Government has taken steps to restore sistant virus mutations, slower vaccine School enrollment, primary (% gross) b 103.5 macroeconomic stability and reignite roll-out, higher commodity prices, slower b 62.0 growth (6 percent during 2017-2019). The reform pace, and frequent climatic shocks. Life expectancy at birth, years 2019 debt restructuring helped The Gambia Total GHG Emissions (mtCO2e) 3.6 to exit debt distress in early 2020 and paved Source: WDI, Macro Poverty Outlook, and official data. the way for an IMF program. A successful a/ Most recent value (2015), 2011 PPPs. b/ WDI for School enrollment (2020); Life expectancy 2021 election will further these gains. Recent developments (2019). Despite progress with COVID19 vaccina- tion in tourist markets, it is slow within GDP grew by 5.6 percent (2.6 percent in The Gambia at 13.5 percent, and the re- per capita terms) in 2021, after falling Economic recovery accelerated towards covery will be gradual due to uncertainty by 0.2 percent in 2020 (-3 percent pc). end-2021. However, the pace of recovery around new variants and the Russia- All sectors grew, as tourist arrivals were Ukraine conflict. The 2021/22 tourist sea- above-expectations, rainfall was higher will slowdown owing to commodity son (October to March) performed above than average (supporting poor, rural and prices and supply shocks. High fiscal expectations in 2021, however future travel industrial workers) and record-high re- deficits have led to domestic borrowing restrictions, a potential downturn in mittances continued to support the con- that could risk sustainability. Inflation tourist markets, and the rising cost of liv- struction and distributive trade sectors. ing globally could slow the recovery. GDP On the demand side, growth was sup- may erode household incomes amidst a growth estimates for 2021 were revised up ported by private consumption and in- slow recovery in employment and hinder compared to the Fall, reflecting higher- vestment while imports grew. poverty reduction. The outlook is subject than-projected tourist arrivals, remit- The current account deficit (CAD) to downside risks from the speed of global tances, FDI, project implementation and a widened slightly in 2021 despite a rebound recovery, the pandemic, and global conta- private credit rebound. However, contin- in tourism. FDI financed the deficit, while ued commodity price and supply shocks the exchange rate remained stable. Remit- gion from the Russia-Ukraine conflict. tances increased by 31 percent y/y bolster- will constrain future agricultural growth. Recovery in the labor market remains slow ing reserves to above 6 months of next and unequal as increases in employment year’s imports at end-2021. Remittances FIGURE 1 The Gambia / Actual and projected fiscal and FIGURE 2 The Gambia / Actual and projected poverty rates primary balance and real GDP per capita Percent of GDP Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 2 90 90 30000 1 80 29000 85 70 28000 0 60 27000 -1 80 50 26000 -2 75 40 25000 -3 30 24000 70 20 23000 -4 10 22000 -5 65 0 21000 2019 2020 2021 e 2022 f 2023 f 2024 f 2010 2012 2014 2016 2018 2020 2022 2024 Fiscal balance (% of GDP) Primary balance (% of GDP) International poverty rate Lower middle-income pov. rate Debt (% of GDP, rhs) Upper middle-income pov. rate Real GDP pc Sources: Gambian authorities and World Bank estimates. Source: World Bank. Notes: see table 2. MPO 38 Apr 22 were the same for almost half of the bot- ongoing cash transfers in rural areas, and capital transfers. Reserves should re- tom 20 percent households responding to where most of the poor live, is likely to main above 4 months of imports. high-frequency phone surveys. have contributed to the decline in poverty. The fiscal deficit will increase further in The fiscal deficit doubled as capital expen- 2022 as subsidies/transfers increase to diture accelerated, mainly for locally-fund- partially offset rising fuel, fertilizer and ed infrastructure projects, and tax rev- food prices. Starting 2023, fiscal consol- enues and grants declined. Recurrent Outlook idation will resume, supported by im- spending fell as pandemic-related support proved tax expenditure monitoring and was withdrawn. While public debt-to-GDP The conflict in Ukraine will slow the revenue administration, and public fi- declined, short-term domestic borrowing recovery as the terms-of-trade worsen, nance reforms. The primary deficit is pro- increased significantly, elevating risks to The Gambia being a net oil, fertilizer, jected to reach 0.8 percent of GDP by debt sustainability. and food importer. It has, however, 2024, with public debt-to-GDP remaining Headline inflation rose, driven by high weak direct investment, tourism and high but on a declining path. food prices (+3 percentage points). A nega- trade links with Russia or Ukraine. Inflation is expected to continue rising tive output gap implies inflation is mostly Private and public consumption would from high commodity prices and structur- imported. The central bank has thus sus- grow in 2022 to counter the shock, while al challenges at Banjul Port. Rising food tained the 10 percent policy rate since May large infrastructure projects are imple- prices will limit the ability of vulnerable 2020. Broad money continued to grow in mented. Over the medium-term, growth households to increase their real incomes. 2021, supported by the banking sector’s will be driven by services, industry and Surveys show that as of December 2021, 78 high level of net foreign assets. agriculture, and the pandemic-induced percent of households reported food prices Poverty increased in 2020 – for the first adoption of digital technologies, assuming as the main shock affecting their wellbeing. time since 2016 - driven largely by implementation of structural reforms and The economic recovery is expected to off- COVID-19. Survey data indicate large normal weather. Real GDP will grow by set the negative distributional effects of in- employment losses and near universal in- 5.6 percent in 2022 (2.7 percent in pc) and flation, so the poverty rate is expected to come losses at the peak of the pandem- 6.2 percent in 2023 (3.2 percent in pc). continue declining, reaching 7.8 percent in ic. However, the extreme poverty rate de- The CAD will widen further, driven by 2022 and 6.2 percent by 2024. The planned clined from 9.2 percent in 2020 to 8.5 per- commodity imports and the high import expansion in cash transfers to urban areas cent in 2021, lifting over 10,000 people content of public investments, and by de- will provide some cushion against price in- out of poverty, driven by the recovering clining grants and private inflows over creases and support poverty reduction. agriculture labor market. Additionally, time. The deficit will be financed by FDI TABLE 2 The Gambia / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 6.2 -0.2 5.6 5.6 6.2 6.5 Private Consumption 4.0 -2.4 4.3 7.0 6.0 4.7 Government Consumption 14.6 10.8 -2.8 2.6 6.1 7.4 Gross Fixed Capital Investment 28.7 40.7 21.0 7.1 6.5 4.2 Exports, Goods and Services -10.6 -51.3 6.2 15.5 11.0 7.6 Imports, Goods and Services -1.7 16.2 7.9 11.2 7.2 1.8 Real GDP growth, at constant factor prices 6.2 -0.2 5.6 5.6 6.2 6.5 Agriculture -0.5 12.0 1.0 2.0 2.8 3.2 Industry 14.8 9.9 10.7 4.9 6.8 7.0 Services 6.1 -7.3 5.6 7.2 7.2 7.4 Inflation (Consumer Price Index) 7.1 5.9 7.4 8.0 8.0 6.3 Current Account Balance (% of GDP) -6.2 -3.7 -4.6 -12.3 -12.7 -10.9 Fiscal Balance (% of GDP) -2.5 -2.2 -4.4 -4.6 -3.6 -3.4 Debt (% of GDP) 83.0 85.0 83.0 80.4 74.5 68.7 Primary Balance (% of GDP) 0.6 1.0 -2.0 -1.9 -1.0 -0.8 a,b International poverty rate ($1.9 in 2011 PPP) 8.4 9.2 8.5 7.8 7.0 6.2 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 33.2 35.5 33.6 32.3 30.7 28.8 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 69.2 70.7 69.3 67.6 65.3 63.7 GHG emissions growth (mtCO2e) 2.5 2.1 3.4 2.7 2.9 2.5 Energy related GHG emissions (% of total) 30.4 30.3 30.1 30.2 30.2 30.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2015-IHS. Actual data: 2015. Nowcast: 2016-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2015) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 39 Apr 22 prior inflationary pressures and financing constraints. The developments are expected GHANA Key conditions and to raise global prices for several key com- modities (including food, fuels, fertilizers, challenges and metals used in manufacturing), lower- ing households’ and firms’ purchasing Table 1 2021 Ghana has experienced strong economic power and increasing poverty; these pres- Population, million 31.7 growth over the past three decades, lead- sures have already hastened monetary pol- GDP, current US$ billion 73.0 ing to a near doubling of GDP per capita. icy tightening. Higher fertilizer and metal GDP per capita, current US$ 2299.2 However, in the past decade, GDP growth prices are expected to negatively impact a 12.7 International poverty rate ($1.9) fluctuated between 2.7 and 6.5 percent (ex- construction, manufacturing, and agricul- a 29.3 cept 0.4 percent in 2020 as a result of the ture. Although Ghana will enjoy a current Lower middle-income poverty rate ($3.2) a 55.1 pandemic), partially due to dependence on account boost from rising commodity Upper middle-income poverty rate ($5.5) Gini index a 43.5 natural resources and exposure to external prices (particularly for oil and gold), bene- School enrollment, primary (% gross) b 103.4 shocks. Moreover, Ghana’s growth has not fits to real GDP are likely to be counteracted b 64.1 created sufficient job opportunities for the by domestic inflation and Ghana’s falling Life expectancy at birth, years growing and young population, and the oil production until at least 2025. Total GHG Emissions (mtCO2e) 18.0 economy is not sufficiently diversified: Source: WDI, Macro Poverty Outlook, and official data. gold, cocoa, and oil exports accounted for a/ Most recent value (2016), 2011 PPPs. b/ WDI for School enrollment (2020); Life expectancy over 75 percent of all goods exports over (2019). 2015–2017, with limited manufacturing ex- Recent developments ports. Labor has continued to move out of agriculture and into low value-added Ghana’s economy rebounded in 2021, after Economic growth rebounded to 4.1 per- services, and some manufacturing while the COVID-induced slowdown in 2020. cent in 2021, but significant macroeco- some services subsectors have experienced Growth is estimated at 4.1 percent for 2021 fast growth (ICT, Financial and Profession- – below pre-pandemic trends. Inflation av- nomic imbalances remain. The fiscal al Services) but they employ very few eraged 10 percent in 2021, and accelerated deficit and debt remained elevated, and workers. Macroeconomic management has further in early 2022, driven by exchange inflation rose to double digits. Medium- been uneven. Recently, relatively large fis- rate depreciation and food and non-food term growth prospects are strong, but cal imbalances and elevated public debt price hikes. Inflation reached 15.7 percent have put Ghana at high risks of debt dis- in February, its highest rate since 2016 and there are important risks related to fiscal tress. Ghana’s sovereign spreads widened well above the Central Bank’s target band and external vulnerabilities. Poverty re- in the second half of 2021 effectively shut- of 6 – 10 percent. duction has stagnated in recent years as ting the economy off from the Eurobond The fiscal deficit was 11.3 percent of GDP in important regional disparities persist; the market and risking further strain on exter- 2021, reflecting significant budget rigidities, recent surge in food and fuel prices is nal sustainability. debt service obligations, and revenue mobi- Ghana’s economy continues to suffer im- lization challenges. The deficit had doubled likely to have a significant impact on the from 7.6 percent of GDP in 2019 to 15.2 per- pacts of the pandemic, and the war in poor and vulnerable households. Ukraine and associated sanctions are fur- cent in 2020, due to pandemic-related ther complicating the outlook, exacerbating spending and financial and energy sector 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 Percentage points Percent Poverty rate (%) Real GDP per capita (constant LCU) 40 7 80 7000 20 6 70 6000 5 60 0 5000 4 50 -20 4000 3 40 3000 -40 30 2 2000 -60 20 1 10 1000 -80 0 2019 2020 2021e 2022f 2023f 2024f 0 0 Private cons. Gov. cons. GFCF 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 Exports Imports Statistical disc. International poverty rate Lower middle-income pov. rate Inventories GDP Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see table 2. MPO 40 Apr 22 cleanups. Debt-to-GDP rose by 15.6 per- above 50 percent. Using the international medium-term (2022-2024), compared to centage points to 78.8 percent of GDP in poverty line (US$1.9 PPP), poverty de- the Authorities’ target of 5.8 percent. 2020. New debt has been increasingly con- clined from 12.7 percent to 10.2 percent Ghana’s external position is projected to tracted from the domestic sector, at higher from 2016 to 2021, reflecting slow but worsen after a temporary improvement in (nominal) rates and shorter maturities. steady real GDP per capita growth. 2021. The current account deficit is ex- The 2021 Balance of Payments surplus pected to widen to 4 percent of GDP in is estimated at 2.1 percent of GDP. The 2022 and to remain elevated through to trade balance was positive but narrowed 2024, due to a gradual decline in oil ex- as imports recovered more quickly than Outlook port volumes and recovery of imports to exports. The Current Account Deficit was pre-pandemic levels. In the coming years, 3.8 percent of GDP in 2021, reflecting Growth is projected to reach 5.5 in 2022 there will be pressure to erode foreign re- high investment income outflows, includ- and an average of 5.3 over 2022-2024. serves due to the widening current ac- ing debt servicing. The Capital and Fi- Growth is expected to be broad-based, led count deficit and constrained access to the nancial Accounts enjoyed a US$3.7 billion by agriculture and services and a stronger Eurobond market. surplus by 2021Q3 and foreign reserves industry sector supported by higher ex- Using the international poverty line were US$11.0 billion (4.9 months' import tractives prices. Higher fertilizer prices (US$1.9 PPP), poverty rate is projected to coverage) by September 2021, up from due to the Ukraine crisis may slightly de- decrease from 10.2 in 2021 to 8.8 in 2024. US$8.6 billion in December 2020. The ex- press agricultural output in 2023. with the uptick in growth. However, the change rate was relatively stable in 2021 The government’s 2022 budget set forth an ongoing conflict between Russia and (supported by US$4 billion in Eurobond ambitious consolidation plan, which may Ukraine places increased pressure on issuances and Special Drawing Rights al- prove difficult to achieve. The government prices. Year-on-year food inflation had al- locations) but fell substantially in late aims to raise revenue from 16 percent of ready nearly tripled between May 2021 2021 and early 2022 (17 percent against GDP in 2021 to 20 percent in 2022, which, and February 2022 to 17.4 percent. Given the dollar from end December 2021 to combined with spending cuts, would re- that Ghanaians devote nearly half their March 2022). duce the deficit to 4.5 percent of GDP by budget to food, this will tighten the budget Poverty reduction has slowed in recent 2024. However, a significant revenue mea- of millions of Ghanaians vulnerable to years, with persistent spatial inequalities sure (an e-levy ) has faced steep opposi- poverty. Combined with other pressures and increasing vulnerabilities. More than tion, preventing its introduction so far, from the Russia–Ukraine conflict and asso- 20 percent live under the national poverty while targets for other revenue measures ciated sanctions, these risks imperiling the line. The poor are concentrated in the three are optimistic. More conservatively, the fis- poverty reduction achieved by Ghana dur- northern regions, where poverty rates are cal deficit may average 7.5 percent in the ing the 21st century. TABLE 2 Ghana / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 6.5 0.4 4.1 5.5 5.2 5.0 Private Consumption 13.9 1.3 5.8 6.2 6.0 4.0 Government Consumption 5.4 6.4 -15.9 -2.6 -3.0 -1.2 Gross Fixed Capital Investment -27.9 -40.7 5.9 12.4 4.4 7.7 Exports, Goods and Services 6.7 -12.8 7.6 5.2 5.2 5.2 Imports, Goods and Services 1.7 -8.8 4.9 4.2 4.9 2.3 Real GDP growth, at constant factor prices 6.5 0.4 4.1 5.5 5.2 5.0 Agriculture 4.6 7.4 5.4 5.0 5.3 4.3 Industry 6.4 -3.6 -0.5 5.7 4.8 4.2 Services 7.6 0.9 8.0 5.6 5.5 6.2 Inflation (Consumer Price Index) 7.9 10.4 10.0 12.8 12.1 11.0 Current Account Balance (% of GDP) -2.7 -3.3 -3.8 -4.0 -4.2 -3.0 Fiscal Balance (% of GDP) -7.6 -15.2 -11.3 -10.6 -6.5 -5.5 Debt (% of GDP) 63.3 78.8 83.5 84.9 86.4 87.4 Primary Balance (% of GDP) -1.9 -8.8 -3.7 -1.4 0.3 1.1 a,b International poverty rate ($1.9 in 2011 PPP) 10.2 10.5 10.2 9.5 9.2 8.8 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 25.0 25.5 24.9 23.8 23.0 22.3 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 49.1 49.8 49.0 47.3 46.1 44.7 GHG emissions growth (mtCO2e) 16.1 9.6 -2.0 15.2 13.8 8.2 Energy related GHG emissions (% of total) 148.7 143.9 144.2 137.6 132.3 129.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2016-GLSS-VII. Actual data: 2016. Nowcast: 2017-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2016) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 41 Apr 22 COVID-19 affected the non-mining sec- tor and exacerbated existing develop- GUINEA Key conditions and ment challenges. Enacting structural re- forms to diversify the economy and pro- challenges mote inclusive growth has become more pressing. Guinea is at moderate risk Table 1 2021 Growth averaged 8 percent 2016-2020, 5.1 of external debt distress with limited Population, million 13.5 percent in per capita terms, supported by space to absorb shocks. This assessment GDP, current US$ billion 16.1 a mining boom and low fiscal deficits (1.3 hinges on commitments to maintain a GDP per capita, current US$ 1194.6 percent in 2016–2020). However, econom- prudent borrowing plan that maximizes a 23.2 International poverty rate ($1.9) ic growth had a limited impact on pover- concessional borrowing. a 60.4 ty reduction and shared prosperity, with Lower middle-income poverty rate ($3.2) a 89.8 the national poverty rate declining from Upper middle-income poverty rate ($5.5) National GINI (2018/2019) 27.2 48.5 percent in 2014 to 43.7 percent in School enrollment, primary (% gross) b 100.8 2018/19, equivalent to a growth elastici- Recent developments b 61.6 ty of poverty of 0.47. The pandemic most Life expectancy at birth, years likely erased those gains. About 32 per- Growth decelerated to 3.1 percent in 2021 Total GHG Emissions (mtCO2e) 45.8 cent of the population suffered depriva- (0.3 percent in per capita terms). Bauxite Source: WDI, Macro Poverty Outlook, and official data. tions in education, health, and access to exports (in tons) grew by 4 percent in 2021 a/ Most recent value (2018), 2011 PPPs. b/ WDI for School enrollment (2020); Life expectancy basic infrastructure in 2018. compared to 24 percent in 2020 because (2019). Guinea shares many of the economic fea- of a slowdown in economic activity after tures of resource-dependent countries. Ex- the coup. Gold exports (in ounces) grew ports are dominated by few products (e.g., 11 percent in 2021, reflecting a strong ar- A slowdown in bauxite production and a bauxite and gold) and concentrated in few tisanal production. Inflation accelerated modest recovery in services slowed markets (China and the United Arab Emi- from 10.6 percent in 2020, to 12.6 percent rates), exposing the country to commodity in 2021 due to higher food prices (15.1 per- growth to 3.1 percent in 2021. The fiscal price shocks. The mining boom and high cent) and supply disruptions (domestic deficit narrowed, reflecting lower capital inflation have affected the competitiveness and external). The Ukraine conflict will spending, but public debt increased to of other sectors through an appreciating likely increase food price inflation in 2022, 43.1 percent due to PPP infrastructure local currency— a phenomenon known as affecting disproportionally the poorest and ‘Dutch disease’. Guinea also has low levels threating food security. projects. Mining-related FDI is expected of human capital and widespread gender The overall fiscal deficit (including to support growth over the medium term, gaps in education, earnings, agricultural grants) improved to 1.6 percent of GDP in lowering poverty. Down-side risks in- productivity, and political representation. 2021, even though tax revenues remained clude a prolonged political transition, Governance challenges were brought to low (11.4 percent of GDP). Weak tax ad- persisting COVID-19 impacts, delayed the forefront by the coup d’état in Sep- ministration and mining tax exemptions tember 2021. Other constraints to inclu- explain low tax revenues. Electricity sub- structural reforms, and spillovers of the sidies doubled in 2021 to 20 percent of sive growth include weak tax revenues, Ukraine conflict. an underdeveloped financial sector, and spending, reflecting low electricity tariffs large infrastructure gap. and higher electricity generation from the FIGURE 1 Guinea / Primary and overall fiscal balance FIGURE 2 Guinea / Food security status of the population (January 2021) Percent of GDP Percent of population 0.0 -0.5 Urban -1.0 -1.5 Rural -2.0 -2.5 Guinea -3.0 -3.5 0 20 40 60 80 100 2017 2018 2019 2020 2021e 2022p 2023p 2024p Food Secure Midly food insecure Fiscal balance Primary balance Moderately food insecure Severely food insecure Sources: Guinean authorities and World Bank staff projections. Source: World Bank staff calculation based on HFPS 2021. Note: the household high-frequency phone survey (HFPS) includes a module to capture the Food In- security Experience Scale (FIES) following the FAO (2017) methodology. MPO 42 Apr 22 Kaleta-Souapiti hydropower project. Un- per year in 2018/19), the national poverty reduce private investment, and spending der-executed capital spending helped off- rate is estimated to have increased 4 per- in social programs. Inflation is expected to set those subsidies. Spending on social centage points, disproportionately affect- remain high, but to decline gradually to 8.8 safety nets is small (0.5 percent of public ing rural populations. percent by 2024. spending in 2020). The debt-to-GDP ratio The external current account deficit is pro- increased from 38.4 percent of GDP in 2018 jected to widen to 13.3 percent of GDP in to 43.3 percent in 2021, reflecting borrow- 2022, reflecting lower exports, higher im- ing related to the pandemic and disburse- Outlook ports for infrastructure spending, and high- ment for the Souapiti hydropower project. er energy and food costs due to the Russia- The current account deficit improved to 9.4 Mining-related FDI will continue to drive Ukraine war. The deficit is projected to sta- percent of GDP in 2021, due to lower im- growth. As the service sector and mining bilize thereafter, with exports projected to ports of intermediate goods. Mining-relat- production recover, growth will accelerate grow slower than imports, particularly for ed FDI continued to be the main source of in 2022. But the Ukraine conflict lowered renewed infrastructure spending for road external financing and increased from 9.9 growth projections to 4.4 percent in 2022, and railways. FDI inflows could increase, percent of GDP in 2020 to 10.8 percent in and to 5.8 percent in 2023–2024 and could reflecting planned new mining projects, 2021. Estimated international reserves de- affect the operations of Rusal, a Russian and support financing requirements. cline slightly in 2021 while the currency conglomerate that accounts for 7 percent Extreme poverty is projected to decline to appreciated in nominal terms. of bauxite exports. Investment in energy 19.0 percent by 2023. Downward risks to Based on GDP per capita growth projec- and transport could support growth in the poverty reduction include the persistence tions, the extreme poverty rate (percent- construction sector. Better provisioning of of high inflation and the deferral of social age of the population living below the in- fertilizer stocks could improve agricultural reforms. Higher fertilizer prices due to the ternational poverty line US$1.90 per capi- productivity, but higher fertilizer prices Ukraine conflict could constraint farmers, ta per day, 2011 PPP) is estimated to could dampen earnings. Rising oil prices disrupting the food industry. Following have remained stagnant at 21.1 percent in could increase fuel subsidies, widening the the COVID-19 crisis, 84 percent of Guinean 2020 and 2021. However, when consider- fiscal deficit. Uncertainties around the po- households cited higher input prices as the ing that the pandemic most likely pushed litical transition could also decelerate the most common challenge in farming and into poverty nonpoor vulnerable popula- implementation of reforms to strengthen the prospects for a prolonged period of tions close to the national poverty line governance and the financial performance food insecurity is high. (estimated at 5,006,362 GNF per capita of the public electricity utility, which could TABLE 2 Guinea / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 5.6 4.6 3.1 4.3 5.9 5.8 Private Consumption 5.4 3.5 5.5 4.1 4.6 4.7 Government Consumption -6.3 42.9 -1.3 11.8 9.5 9.4 Gross Fixed Capital Investment -8.4 -10.2 19.0 18.4 26.4 22.8 Exports, Goods and Services -0.6 33.5 3.4 3.8 4.0 4.0 Imports, Goods and Services -9.5 39.4 7.2 10.2 10.1 10.1 Real GDP growth, at constant factor prices 6.5 4.6 3.1 4.4 5.8 5.8 Agriculture 7.6 -1.6 5.4 5.8 6.0 6.0 Industry 7.2 18.5 4.2 5.0 6.7 6.7 Services 5.5 -3.4 1.2 3.3 4.9 4.9 Inflation (Consumer Price Index) 9.5 10.6 12.6 12.0 10.0 8.8 Current Account Balance (% of GDP) -10.8 -14.0 -9.4 -13.2 -13.4 -12.3 Net Foreign Direct Investment (% of GDP) 9.0 10.1 10.8 13.2 13.2 12.3 Fiscal Balance (% of GDP) -0.5 -2.9 -1.6 -2.2 -2.1 -1.9 Debt (% of GDP) 33.8 40.0 43.1 42.6 41.6 42.2 Primary Balance (% of GDP) 0.0 -2.3 -0.7 -1.2 -1.0 -1.0 a,b International poverty rate ($1.9 in 2011 PPP) 21.8 21.1 21.1 20.2 19.0 18.1 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 58.7 57.9 57.8 57.0 55.4 53.9 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 89.2 88.7 88.6 88.3 87.6 86.8 GHG emissions growth (mtCO2e) 3.0 3.7 4.0 4.0 4.0 4.0 Energy related GHG emissions (% of total) 14.7 14.6 14.4 14.3 14.0 13.8 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2018) with pass-through = 0.7 based on GDP per capita in constant LCU. MPO 43 Apr 22 started as a response to COVID-19 and continued into 2021. A systemic bank is GUINEA-BISSAU Key conditions and undercapitalized. High levels of non-per- forming loans, 21.8 percent in all banks challenges across the country and 10.3 percent exclud- ing the undercapitalized bank, also repre- Table 1 2021 Exports of raw cashew nuts, which ac- sent an important vulnerability. A deterio- Population, million 2.0 count for 90 percent of merchandise ex- ration in this situation would generate con- GDP, current US$ billion 1.6 ports, determine economic performance. tingent liabilities, adding to fiscal and pub- GDP per capita, current US$ 793.9 Cashew production is dispersed among lic debt pressures. a 24.7 International poverty rate ($1.9) smallholder farmers, whose income sup- a 59.5 ports overall economic activity. Annual Lower middle-income poverty rate ($3.2) a 86.0 GDP grew 5.4 percent on average be- Upper middle-income poverty rate ($5.5) Gini index a 34.8 tween 2015 and 2017 (3.2 percent in per Recent developments School enrollment, primary (% gross) b 118.7 capita terms) as cashew prices reached b 58.3 record highs, but Guinea-Bissau is struc- Economic activity expanded to 3.8 percent Life expectancy at birth, years turally vulnerable to terms-of-trade in 2021 (1.5 percent in per capita terms) Total GHG Emissions (mtCO2e) 4.6 shocks and climatic risks. Raw cashew from 1.5 percent in 2020. Strong cashew Source: WDI, Macro Poverty Outlook, and official data. prices had been on a downward trajec- production, up 23.5 percent from 2020, and a/ Most recent value (2018), 2011 PPPs. b/ WDI for School enrollment (2010); Life expectancy tory since 2018, adversely affecting eco- high international prices drove growth, (2019). nomic growth, poverty, and government causing an upward revision of growth finances, until a recovery in 2021. Around forecasts. On the demand side, capital in- 15 percent of tax revenue is directly relat- vestments and net imports were the main Growth is expected to continue to recover ed to cashew exports. drivers of growth. Inflation rose from 1.5 over the medium-term, as international Limited diversification and low agricul- percent in 2020 to 3.3 percent in 2021, dri- tural productivity keep the country high- ven by an increase in food (+2 percentage cashew demand and production rebound, ly dependent on food and capital im- points) and oil prices. rising to around 4.5 percent and bolstered ports. Responding to the COVID-19 pan- Increased cashew exports only partially by fiscal consolidation and structural re- demic and externally financed infrastruc- offset the increase in oil and food import forms. The outlook is subject to signifi- ture projects led to high primary deficits prices and the current account deficit and considerable debt accumulation in (CAD) is estimated to have increased from cant downside risks stemming from con- 2021. Entrenched political instability has 2.9 percent of GDP in 2020 to 4 percent in tinued inflationary pressures, notably for taken the country through multiple 2021. The CAD was financed by conces- food and petroleum, potentially exacerbat- coups, including a failed attempt in Feb- sional loans and grants. The IMF SDR allo- ed by conflict in Ukraine, new ruary 2022, and precluded the implemen- cation of USD $38.4 million (2.4 percent of COVID-19 variants, external shocks af- tation of structural reforms. GDP) contributed to closing the external fi- The banking sector is a looming risk. The nancing gap. fecting international cashew prices, polit- The fiscal deficit fell from 9.9 percent of sector continues to depend on the accom- ical instability, and climatic shocks. modative stance of the central bank inject- GDP in 2020 to 5.3 percent in 2021, dri- ing liquidity into the economy, which ven by an increase in tax revenues and FIGURE 1 Guinea-Bissau / Evolution of main economic FIGURE 2 Guinea-Bissau / Actual and projected poverty indicators rates and real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 8 100 460000 6 90 4 440000 80 2 70 420000 0 60 -2 50 400000 -4 40 380000 -6 30 -8 20 360000 10 -10 2013 2015 2017 2019 2021e 2023f 0 340000 GDP growth (%) 2010 2012 2014 2016 2018 2020 2022 2024 Fiscal balance (% of GDP) International poverty rate Lower middle-income pov. rate Current account balance (% of GDP) 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 22 a reduction in current expenditure. Pub- to further dampen the pace of recovery in 2023 and 2024, reflecting faster growth lic debt as a share of GDP increased from in sectors such as tourism, thereby af- in imports and a reduction in net capital 78.3 percent in 2020 to 79.8 percent in fecting poverty reduction. inflows (as a percent of GDP), as the envi- 2021, driven by the depreciation of the ronment for Eurobond issuances remains euro against the dollar and the rephasing uncertain. Growth-friendly fiscal consoli- of legacy arrears. Although the risk of ex- dation and the implementation of structur- ternal and total debt distress is high, pub- Outlook al reforms are key to maintaining reserves lic debt remains sustainable. at an optimal level. Guinea-Bissau’s monetary and exchange The Ukrainian conflict will have a negative The authorities are committed to a medi- rate policies are managed by the Central effect on the economy. Real GDP growth um-term fiscal consolidation, which in- Bank of West African States (BCEAO), has been revised down from 4 percent in cludes enhanced management of fiscal which maintains a fixed peg between the 2022, to 3.5 percent and medium-term risks, notably from SOEs, revenue mobi- CFA franc and the euro. Its reserves growth from 5 percent to 4.5 percent, de- lization and control of the wage bill. The reached 5.8 months of imports of goods spite high forecasted cashew prices and in- primary deficit is projected to decline from and services in 2021, because of increased frastructure investments. The crisis will al- 2.3 percent of GDP in 2022, to 1.8 by 2024 exports, the August 2021 SDR allocation, so cause inflation to rise to 4 percent in with the public debt-to-GDP ratio expect- and portfolio inflows linked to Eurobond 2022, reflecting higher food and oil prices. ed to fall to 75 percent of GDP by 2024. issuances in the region (by Benin, Côte The outlook is subject to substantial down- Sustained agricultural growth should con- d’Ivoire, Senegal and the BOAD). side risks stemming from political insta- tinue to reduce poverty rates in 2022, to Using updated poverty indicators from bility, climate shocks, new COVID-19 vari- 22.6 percent and reaching 20.5 percent by 2018/19 (previous MPOs used 2010 in- ants, and non-performing loans in the fi- 2024, lifting an additional 22,000 people dicators), extreme poverty ($1.9/day PPP nancial sector. out of poverty. Significant downside risks poverty line) declined from 24.1 percent The CAD will reach 5 percent of GDP in exist, notably related to the pace of the eco- in 2020 to 23.4 percent in 2021, lifting 2022 and 4.6 by 2024. External financing nomic recovery, political and security in- over 3,000 people out of extreme pover- needs will continue to be met by conces- stability, and the poor, who spend nearly ty. The decline in poverty indicates a sional loans and grants in 2022. WAEMU 60 percent of their expenditure on food, are slow recovery in the economy. Addi- reserves are expected to fall to around 5.5 most vulnerable to rising food prices. tionally, recent political events are likely months of imports in 2022 and 5.3 months TABLE 2 Guinea-Bissau / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 4.5 1.5 3.8 3.5 4.5 4.5 Private Consumption 1.4 -1.0 3.0 1.0 2.5 2.5 Government Consumption 16.6 9.0 -0.4 16.2 3.2 10.2 Gross Fixed Capital Investment 33.8 7.3 14.1 7.2 16.2 8.4 Exports, Goods and Services 8.7 -2.5 5.3 5.5 6.0 7.0 Imports, Goods and Services 14.1 -1.0 5.9 6.0 6.4 6.4 Real GDP growth, at constant factor prices 4.5 1.5 3.8 3.5 4.5 4.5 Agriculture 5.8 -0.2 4.4 4.6 5.1 5.1 Industry 4.2 -0.2 3.5 3.6 4.4 4.4 Services 3.5 3.5 3.4 2.6 4.0 4.0 Inflation (Consumer Price Index) 0.3 1.5 3.3 4.0 2.0 2.0 Current Account Balance (% of GDP) -8.8 -2.9 -4.0 -5.0 -4.9 -4.6 Fiscal Balance (% of GDP) -4.1 -9.9 -5.3 -4.2 -4.1 -3.7 Debt (% of GDP) 65.9 78.3 79.8 80.9 76.1 75.0 Primary Balance (% of GDP) -2.9 -8.3 -3.7 -2.3 -2.1 -1.8 a,b International poverty rate ($1.9 in 2011 PPP) 23.6 24.1 23.4 22.6 21.6 20.5 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 58.2 58.7 57.9 57.4 56.2 54.9 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 85.4 85.8 85.1 84.7 84.0 83.1 GHG emissions growth (mtCO2e) 1.0 1.2 0.4 1.1 1.3 1.5 Energy related GHG emissions (% of total) 12.8 12.9 13.0 13.1 13.2 13.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2018) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 45 Apr 22 and business environment (including by reducing corruption and excessive red KENYA Key conditions and tape), and enhancing access to finance. Kenya’s economy relies on tourism and challenges rainfed agriculture, and is vulnerable to climate change and extreme weather Table 1 2021 Kenya was making strong economic events such as the severe drought current- Population, million 55.0 progress prior to the COVID-19 pan- ly affecting the north-east of the country. GDP, current US$ billion 110.3 demic, with real GDP growing at an Over the past decade, climate-related an- GDP per capita, current US$ 2005.8 annual average rate of 5 percent and nual losses have been 3-5 percent of GDP, a 37.1 International poverty rate ($1.9) major achievements in human develop- despite Kenya’s negligible contribution to a 66.5 ment (the highest Human Capital Index global GHG emissions. Climate-related Lower middle-income poverty rate ($3.2) a 86.6 score in continental sub-Saharan Africa); priorities include phasing out the remain- Upper middle-income poverty rate ($5.5) Gini index a 40.8 in energy access and sustainability (ac- ing fossil fuel power supply, increasing School enrollment, primary (% gross) b 103.2 cess to electricity almost doubled to 75 tree-cover, adopting climate-smart agricul- b 66.7 percent of households in 2018, based on ture, and making the transportation and Life expectancy at birth, years a nearly 90 percent green energy mix); waste management systems more efficient Total GHG Emissions (mtCO2e) 77.2 and in poverty reduction (the share of and sustainable. Source: WDI, Macro Poverty Outlook, and official data. the population living below the $1.90 a a/ Most recent value (2015), 2011 PPPs. b/ WDI for School enrollment (2016); Life expectancy day poverty line fell from 45.2 percent (2019). in 2009 to 34.4 percent in 2019). Kenya aspires to become an upper middle-in- Recent developments come country by 2030, which will re- Kenya’s economy was severely disrupted quire a shift away from the economy’s Whilst the pandemic stalled growth in by the COVID-19 shock but it has recent reliance on debt-financed public 2020, the economy has recovered, and investment and towards more private output is well above pre-pandemic levels. staged a strong recovery, and the pover- investment to sustainably generate jobs The economy grew by an estimated 6.7 ty rate is projected to fall below its pre- and income growth. percent in 2021, supported by a strong pandemic level in 2022. However, pro- To support structural transformation to- recovery of the services sector (Figure longed drought in the north-east has wards a more inclusive and resilient pri- 1), particularly education, and growth in vate sector-led economy, it is critical to manufacturing and construction. Agricul- caused severe hardship in affected areas. reinforce fiscal consolidation, since fiscal tural output, however, contracted by 1.5 Progress on fiscal consolidation will be space has eroded and debt risks have percent in 2021, due to below-average essential to achieve a durable, private mounted. Measures are also needed to rains. Disruption caused by the omicron sector-led recovery, and to restore space strengthen productivity and private in- variant of COVID-19 led to some moder- for pro-poor spending and investment in vestment, by addressing economic distor- ation of economic activity in the fourth tions (including those which arise from quarter of 2021. human capital. Monetary policy remained accommoda- an uneven playing field between the pri- vate sector and a large and inefficient tive. Inflation pressures remained con- SOE sector), improving the regulatory tained overall but the prices of some staple FIGURE 1 Kenya / Real GDP growth and sectoral FIGURE 2 Kenya / Actual and projected poverty rates and contributions to real GDP growth real private consumption per capita Percent, percentage points Poverty rate (%) Real private consumption per capita (constant LCU) 8 100 160000 90 140000 6 80 120000 70 4 100000 60 50 80000 2 40 60000 30 0 40000 20 10 20000 -2 2020 2021 2022 2023 2024 0 0 Net taxes Services 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 Industry Agriculture International poverty rate Lower middle-income pov. rate Real GDP growth (percent) Upper middle-income pov. rate Real priv. cons. pc Sources: Kenya National Bureau of Statistics and World Bank. Source: World Bank. Notes: see Table 2. MPO 46 Apr 22 products have risen significantly, affected expected to narrow to 4.4 percent of by global supply chain challenges and be- GDP by FY2023/24, through a mix of low-average rains. The below-average Outlook expenditure restraint and revenue mea- rains have also resulted in deteriorating sures, including further rationalization food security, especially in the north and The course of the pandemic remains key to of tax expenditures and introduction of east of Kenya which has been affected by the outlook but increasing COVID-19 vac- a digital tax. Public debt is expected to a severe drought (USAID’s Famine Early cinations will help to mitigate the risks. decline as a share of GDP, benefiting from Warning Systems Network). The global fu- The government targets to vaccinate all economic growth, fiscal consolidation and el and food price shocks caused by Rus- adults by end-2022 and with the improve- reduced borrowing costs due to increases sia’s invasion of Ukraine will increase im- ment in vaccine supply, the proportion of in concessional debt in the financing mix. port costs and prices, including of Kenya’s adults fully vaccinated increased from 15.3 Lower domestic borrowing by govern- significant net fuel and wheat imports, percent in December 2021 to 27.8 percent ment will create more room for banks to fi- though the duration and magnitude of the in February 2022. nance private sector investment. price effects are highly uncertain. With GDP growth projected to average 5.2 Domestic risks facing the outlook stem The fiscal outturn in the first half (H1) of percent over 2022–24, growth in real per from election-related disruptions and ad- FY2021/22 improved, driven largely by the capita incomes will help reverse the rising verse weather conditions (currently af- economic recovery, a strong rebound in rev- poverty rates caused by the pandemic. fecting north-eastern Kenya). External enues, and new tax policy and administra- Poverty is expected to fall to 33.4 percent uncertainty will stem from re-intensifi- tion measures implemented under the gov- in 2022, below the pre-crisis level of 34.4 cation of the pandemic, and the global ernment’s medium-term fiscal consolida- percent (2019). The baseline projections as- price and trade shocks emanating from tion program. Total expenditures have re- sume that normal rains support good agri- the Russia-Ukraine conflict with poten- mained broadly steady at 10.8 percent of cultural harvests to drive food processing, tially adverse impacts on inflation, the GDP in H1, with an increase in recurrent sustain export growth, help anchor infla- current account balance, and the fiscal spending being offset by reduced develop- tion expectations, and support house- deficit (depending on extent to which ment spending and below-target transfers holds’ consumption. global oil price increases are passed on to county governments. As a result, the fiscal Progress on fiscal consolidation will bol- to retail fuel consumers). deficit in H1 FY2021/22 decreased to 2.5 per- ster confidence and resources for private cent of GDP from 3.2 percent a year earlier. sector investment. The fiscal deficit is TABLE 2 Kenya / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 5.0 -0.3 6.7 5.0 5.2 5.5 Private Consumption 4.9 -2.7 7.3 5.5 5.6 5.8 Government Consumption 7.0 4.3 4.2 4.9 3.6 3.5 Gross Fixed Capital Investment 3.8 3.4 6.4 4.1 6.7 7.6 Exports, Goods and Services -3.2 -8.2 8.0 6.8 7.1 7.4 Imports, Goods and Services 1.8 -8.5 7.5 7.0 8.0 8.3 Real GDP growth, at constant factor prices 5.2 0.3 6.7 5.0 5.2 5.5 Agriculture 2.6 4.8 -1.5 3.6 3.8 4.2 Industry 3.4 4.0 6.6 3.5 4.0 4.3 Services 6.7 -2.2 9.6 5.9 6.0 6.2 Inflation (Consumer Price Index) 5.2 5.3 6.4 6.0 5.5 5.0 Current Account Balance (% of GDP) -5.3 -4.6 -5.5 -6.0 -5.5 -5.0 Net Foreign Direct Investment (% of GDP) 0.9 0.5 0.2 0.6 0.8 0.9 Fiscal Balance (% of GDP) -7.4 -7.9 -8.2 -7.5 -5.5 -4.3 Debt (% of GDP) 59.5 65.8 68.2 68.0 66.8 63.9 Primary Balance (% of GDP) -3.2 -3.9 -3.7 -2.8 -0.6 0.5 a,b International poverty rate ($1.9 in 2011 PPP) 34.4 35.7 34.3 33.4 32.5 31.6 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 65.1 65.8 65.1 64.7 64.2 63.7 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 85.9 86.2 85.8 85.6 85.3 85.0 GHG emissions growth (mtCO2e) 3.8 2.2 2.2 2.1 2.5 2.4 Energy related GHG emissions (% of total) 41.2 39.8 42.1 43.0 44.4 45.8 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2005-IHBS and 2015-IHBS.Actual data: 2015. Nowcast: 2016-2021. Forecasts are from 2022 to 2024. b/ Projection using annualized elasticity (2005-2015) with pass-through = 1 based on private consumption per capita in constant LCU. MPO 47 Apr 22 October 2022 and more splits in the cur- rent ruling coalition have emerged ahead LESOTHO Key conditions and of the elections. Even before the pandemic, Lesotho grap- challenges pled with high poverty and unemploy- ment rates. The unemployment rate was Table 1 2021 Real GDP contracted by 6.5 percent in 2020 22.5 percent in 2019 (strict definition), ris- Population, million 2.2 because of the effects of the COVID-19 ing to 38.3 percent (when the expanded de- GDP, current US$ billion 2.4 pandemic. According to the National finition that includes discouraged job seek- GDP per capita, current US$ 1111.8 COVID-19 Secretariat (NACOSEC), about ers is used). About a third of the popula- a 27.2 International poverty rate ($1.9) 56 percent of Lesotho’s eligible population tion lives on less than US$1.90/person/day a 49.9 have been vaccinated as at mid-March (in 2011 PPP terms). Rural and mountain- Lower middle-income poverty rate ($3.2) a 73.2 2022. Even though the number of positive ous regions tend to be the poorest, given Upper middle-income poverty rate ($5.5) Gini index a 44.9 COVID-19 cases has been low in recent their poorer access to basic infrastructure School enrollment, primary (% gross) b 120.9 months, possibility of new waves of infec- and services, limited economic opportuni- b 54.3 tion cannot be ruled out yet, and this is ex- ties, and vulnerability to climatic shocks Life expectancy at birth, years pected to weigh down Lesotho’s exports, which weighs down agricultural produc- Total GHG Emissions (mtCO2e) 5.0 lower remittances and capital inflows and tivity. Remittances from migrant workers, Source: WDI, Macro Poverty Outlook, and official data. present downside risks to growth. which play a crucial safety net role, have a/ Most recent value (2017), 2011 PPPs. b/ WDI for School enrollment (2017); Life expectancy The COVID-19 pandemic has exacerbated been hard hit by the pandemic. (2019). an already dire fiscal position. Southern African Customs Union (SACU) receipts – the major source of government revenues – Economic growth has been modest in re- have declined further, from 22.1 percent of Recent developments cent years. Domestic economy is expect- GDP in 2020 to 18.8 percent in 2021. Pub- lic expenditure remains elevated at about Lesotho’s economy has been in recession ed to recover and register a modest 54.8 percent of GDP in 2021. Consequently, even before the emergence of the growth of 1.6 percent in 2021. However, the financing gap remains wide in the face COVID-19 pandemic. Real GDP contract- political instability, fiscal challenges, of limited government buffers and limited ed by an average 0.6 percent annually be- and the COVID-19 pandemic present domestic borrowing capacity. Public debt tween 2017 and 2019 before the sharp 2020 has increased – from 48.1 percent of GDP recession. The downturn continued into significant downside risks. With modest in 2019 to 60.5 percent of GDP in 2021, the first quarter of 2021, after when some growth expected in 2022, the poverty reflecting growing current spending and recovery was observed in sectors like infor- ratio will stary around 30 percent, us- large capital projects. mation technology and communications, ing the international poverty line. The country has, in recent years, expe- mining, and manufacturing sectors which rienced unstable governments, character- recorded double-digit quarterly growth ized by weak coalitions and frequent rates. It is estimated that the economy re- change in government and/or cabinet bounded by 1.6 percent in 2021. reshuffles which delays developmental Annual inflation rate averaged 6.0 per- progress. National elections are slated for cent in 2021 compared with 5.0 percent FIGURE 1 Lesotho / Real GDP growth and sectoral FIGURE 2 Lesotho / Actual and projected poverty rates and contributions to real GDP growth real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 15 80 10600 10 70 10400 60 10200 5 50 10000 0 40 9800 -5 30 9600 -10 20 9400 -15 10 9200 0 9000 -20 2017 2019 2021 2023 2019 2020 2021 2022 2023 2024 International poverty rate Lower middle-income pov. rate Agriculture Industry Services GDP Growth Upper middle-income pov. rate Real GDP pc Source: World bank. Source: World Bank. Notes: see table 2. MPO 48 Apr 22 in 2020, driven by higher food and en- of food insecurity particularly among the business and consumer confidence as the ergy prices, and by increased adminis- rural population. vaccination rollout improves. On the tered prices domestically. The inflation downside, infection waves of the rate has accelerated to 7.6 percent in Jan- COVID-19 pandemic coupled with emer- uary 2022. The current account deficit gence of new strains of the virus will narrowed from 3.4 percent of GDP in Outlook challenge economic recovery. 2019 to 2.0 percent in 2020 primarily due Key inflationary pressures are expected to to a decline in imports. The economic recovery is expected to emanate from food prices, administered The fiscal situation remains challenging pick up momentum over the medium prices and spill-over effects of invasion of with a fiscal deficit of 5.9 percent of GDP term. Through 2024, real GDP growth is Ukraine by Russia which will likely drive- expected in 2021. Central Bank of Lesotho expected to average 2.1 percent annual- up food and energy prices. The precarious reduced the policy rate four times from ly, driven by strong agricultural sector fiscal situation and political uncertainly 6.25 to 3.5 percent (by 275 basis points) be- growth on account of good seasonal rain- are also weighing down the economic out- tween March and July 2020. The policy rate fall (even though some parts of the coun- look. A wider fiscal deficit of 8.0 percent has since been increased twice to 4.0 per- try experienced droughts while others ex- of GDP is expected in 2022. Public debt is cent per annum to ensure that the domes- perienced floods), the expansion in the projected to increase steadily to 63.1 per- tic cost of funds remains aligned with the horticulture industry which is anticipated cent of GDP by 2023 before moderating. rest of the region. to come from the Fresh Produce Market Other downside risks include (a) general Despite the modest recovery in 2021, Centre that was launched in 2021, and a elections- that would adversely affect pro- poverty levels are estimated to have de- growing domestic medicinal cannabis in- ject implementation; (b) heavy rains expe- creased only marginally from 30.4 percent dustry. Growth in the mining industry is rienced in the beginning of 2022. in 2020 to 30.1 percent in 2021 (based on anticipated as several mines resume pro- Poverty rates is expected to trend down- the US$1.90/person/day, 2011 PPP terms). duction. Construction activities associated wards but will remain higher than in 2019 Other factors – such as rising food prices with the second phase of Lesotho High- as pressure on food and energy prices as and slow labor market recovery from lands Water Project (LHWP-II) should im- well as a fragile economic environment COVID-19-related lockdown measures – pact growth positively in the medium slow the pace of poverty reduction. The limit poverty reduction. Recurring climat- term, as will the construction of roads, US$1.90/person/day (in 2011 PPP terms) ic hazards which adversely affect per- the Mafeteng solar power plant, and poverty rate is projected to fall slightly to formance of the agricultural sector exac- Maseru district hospital. Services sector is 29.6 percent in 2022 and further to 28.4 per- erbate the challenge and increase levels also expected to recover due to improved cent in 2024. TABLE 2 Lesotho / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 2.6 -6.5 1.6 2.3 2.1 2.0 Private Consumption 2.6 4.8 -2.0 3.6 3.6 3.6 Government Consumption 7.8 19.7 -5.3 13.4 6.3 -0.4 Gross Fixed Capital Investment -12.2 -42.8 -1.7 -6.4 38.6 49.8 Exports, Goods and Services -13.3 -17.5 38.1 1.6 2.2 2.2 Imports, Goods and Services -1.4 -0.5 15.0 6.8 10.3 10.3 Real GDP growth, at constant factor prices 2.6 -6.5 1.6 2.3 2.1 2.0 Agriculture 0.8 8.3 2.3 2.4 2.4 2.4 Industry -5.9 -12.0 7.5 4.8 5.0 5.0 Services 6.1 -5.9 -0.4 1.4 1.0 0.8 Inflation (Consumer Price Index) 5.2 5.0 6.0 5.3 5.3 5.5 Current Account Balance (% of GDP) -3.4 -2.0 -4.9 -9.6 -7.7 -6.4 Net Foreign Direct Investment (% of GDP) 1.5 1.3 1.5 1.6 1.7 1.6 Fiscal Balance (% of GDP) -5.6 -1.1 -5.9 -8.0 -3.6 -0.4 Debt (% of GDP) 48.1 49.7 60.5 60.0 63.1 45.3 Primary Balance (% of GDP) -4.4 -0.2 -4.9 -7.2 -2.8 0.3 a,b International poverty rate ($1.9 in 2011 PPP) 27.3 30.4 30.1 29.6 29.0 28.4 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 49.9 52.2 52.0 51.4 51.0 50.8 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 73.3 75.9 75.5 75.0 74.4 74.0 GHG emissions growth (mtCO2e) -1.3 -5.5 0.1 1.5 1.8 1.9 Energy related GHG emissions (% of total) 66.9 64.1 63.1 62.9 63.0 63.2 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2017-CMSHBS. Actual data: 2017. Nowcast: 2018-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2017) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 49 Apr 22 and human capital, increased produc- tivity in agriculture and other informal LIBERIA Key conditions and sector activities, accelerated formal job creation, strengthened socioeconomic re- challenges silience, improved governance, and ex- panded institutional capacity. Table 1 2021 Liberia's economy is still recovering from Population, million 5.2 years of poor economic and social perfor- GDP, current US$ billion 3.5 mance. Between 2014 and 2020, the econo- GDP per capita, current US$ 673.1 my contracted by an average of 0.4 percent Recent developments a 44.4 International poverty rate ($1.9) per year, and per capita GDP fell by 12.3 a 75.6 percent cumulatively, owing in part to re- After contracting by 3.0 percent in 2020, Lower middle-income poverty rate ($3.2) a 93.2 peated exogenous shocks such as the Ebola GDP growth recovered to 4.0 percent in Upper middle-income poverty rate ($5.5) Gini index a 35.3 outbreak, the collapse of iron ore and rub- 2021, on the back of improved external de- School enrollment, primary (% gross) b 85.1 ber prices, the drawdown of United Na- mand, higher prices for Liberia’s exports, b 64.1 tions peacekeeping forces, and the and the resumption of normal domestic ac- Life expectancy at birth, years COVID-19 pandemic. As a result, by 2020, tivity. Rubber production increased by 38 Total GHG Emissions (mtCO2e) 22.5 the poverty rate is projected to have risen percent, year-on-year [y/y], palm oil (12 Source: WDI, Macro Poverty Outlook, and official data. to 52 percent, wiping out nearly half of percent, y/y), iron ore (3 percent, y/y), and a/ Most recent value (2016), 2011 PPPs. b/ WDI for School enrollment (2017); Life expectancy the gains made post-conflict where pover- gold (79 percent, y/y), boosting agricultur- (2019). ty decreased from 71 percent to 42 percent al and mining output. Cement, beverages, between 2007 and 2014. Non-monetary and electricity production all increased poverty indicators such as access to health- significantly, reflecting the materialization Liberia’s economy is recovering. GDP care, education, electricity, and basic util- of pent-up demand and activity in the ser- growth is projected to increase from an ities continue to be low by regional and vices sector. Inflation fell to single digits at international standards, with rural/urban 7.9 percent in 2021, down from 17.4 per- estimated 4.0 percent in 2021 to 4.4 and gender disparities exacerbated by un- cent in 2020 due to the appreciation of the percent in 2022, driven by mining and equal access to productive assets, infra- Liberian dollar and prudent fiscal and continued recovery from the pandemic. structure, public services, and markets. monetary policies. The Central Bank of Meanwhile, inflation declined from 17.4 Liberia continues to face complex de- Liberia maintained the monetary policy velopment challenges, including inade- rates at 20 percent in 2021, well above the percent in 2020 to 7.9 percent in 2021, quate physical and human capital, a inflation rate, and began the implementa- and it is expected to stay in single dig- highly concentrated export structure, a tion of a currency changeover to help curb its in 2022 due to prudent monetary narrow revenue base, significant spend- disruptive cash shortages and boost confi- and fiscal policies. However, there are ing needs, weak governance, and a chal- dence in the financial sector. While the re- downside risks and uncertainties associ- lenging business environment. Transi- bound in growth and moderation in infla- tioning to an economic path that reliably tion led to a small recovery in consump- ated with the Ukraine-Russia conflict, tion, poverty levels remained high. generates broad-based improvements in the ongoing currency changeover, and poverty and social outcomes would re- The government’s fiscal deficit and public the COVID-19 pandemic. quire significant investments in physical debt ratio improved in 2021. The overall FIGURE 1 Liberia / Real GDP growth and sectoral FIGURE 2 Liberia / Actual and projected poverty rates and contributions to real GDP growth real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 6 120 900 5 800 100 4 700 3 80 600 2 500 60 1 400 0 40 300 -1 200 20 -2 100 Agriculture Industry -3 0 0 Services Real GDP growth 2007 2009 2011 2013 2015 2017 2019 2021 2023 -4 International poverty rate Lower middle-income pov. rate 2019 2020 2021 2022f 2023f 2024f Upper middle-income pov. rate Real GDP pc Source: World Bank staff calculations based on IMF and CBL data. Source: World Bank. Note: see table 2. MPO 50 Apr 22 fiscal deficit narrowed from 3.8 percent of of 5.0 percent in 2023-24. Per capita GDP Russia is very limited, as these two GDP in 2020 to 2.9 percent in 2021, mainly will return to pre-crisis levels by 2023. countries together account for 1.5 per- thanks to strong revenue performance and The positive outlook is underpinned by cent of the country’s imports and less successful efforts to contain the public sec- significant tailwinds for mining, the gov- than 1 percent of exports. The Ukraine- tor wage bill. As a result, the public debt- ernment’s planned scale-up of public in- Russia conflict will affect Liberia mainly to-GDP ratio declined from 55.0 percent in vestment, and the implementation of through changes in commodity prices, 2020 to 53.3 percent in 2021. structural reforms. Specifically, the gov- with a likely positive net effect on trade. Liberia’s current account deficit worsened ernment has ratified a new mining con- FDI is expected to increase due to the despite stronger-than-expected export cession that would triple the production recent expansion of a mining project. growth. The current account deficit of iron ore, boost employment, and at- The country’s foreign exchange reserves widened from 16.3 percent of GDP in 2020 tract FDI over the next decade. The sharp are projected to cover around four to 17.7 percent in 2021, mainly due to a increase in metal prices, especially iron months of imports in the medium term. worsening trade deficit. While exports in- ore, presents terms of trade gains and The fiscal deficit will remain at 2021 lev- creased by 5.4 percentage points of GDP, improved prospects for the mining sec- els in 2022 as the national budget for on the back of higher export prices (e.g., tor. Inflation is expected to increase due the year targets a significant increase in of gold and iron ore), imports also surged. to rising global food and fuel prices, but revenue. Domestic revenues are project- The deficit was financed mainly by foreign it is projected to remain in single dig- ed to increase, reflecting an increase in direct investment (FDI) (7.3 percent of its as the government’s commitment to both tax and non-tax revenue, thanks GDP) and capital grants. In 2021, Liberia regulate the prices of some commodi- to royalties and rents from the mining benefited from a new Special Drawing ties (e.g., fuel, rice, and transport) helps sector. Meanwhile, total expenditure is Rights (SDR) allocation from the Interna- mitigate the pressure on domestic prices. projected to increase driven by the rise tional Monetary Fund of SDR 247.7 million Even so, the conduct of the currency in government consumption expenditure (approximately US$350 million or 7.3 per- changeover is crucial for limiting infla- despite a reduction in the public sector cent of GDP). The additional SDR alloca- tion. Fueled by a buoying economy, pri- wage bill. Domestically financed capital tion sharply increased the coverage of in- vate consumption per capita is also ex- expenditure is also projected to increase ternational reserves from 2.1 months of im- pected to increase in 2022, despite higher dramatically by 2.2 percentage points of ports in 2020 to 4 months in 2021. inflation. This will likely push the pover- GDP. Nevertheless, the Ukraine-Russia ty rate below 50 percent for the first time crisis could trigger higher inflation and since the pandemic began. The outlook fiscal overruns. is subject to the path of the pandemic at Outlook home and abroad. The current account deficit is expected The economy is projected to expand by to remain around 16 percent of GDP. 4.4 percent in 2022 and reach an average Liberia’s direct exposure to Ukraine and TABLE 2 Liberia / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices -2.5 -3.0 4.0 4.4 4.8 5.2 Private Consumption -2.8 -1.9 1.2 3.0 3.0 3.0 Government Consumption 4.0 -11.6 -3.7 1.3 -14.4 -5.8 Gross Fixed Capital Investment -7.8 -7.3 22.0 25.3 27.9 22.4 Exports, Goods and Services 1.6 1.2 15.4 2.0 2.0 2.0 Imports, Goods and Services 0.4 8.1 1.3 3.1 3.1 3.1 Real GDP growth, at constant factor prices -2.4 -3.0 4.0 4.4 4.8 5.2 Agriculture 0.2 2.4 1.9 3.6 4.8 5.2 Industry 1.0 0.2 16.3 9.0 9.0 6.0 Services -5.7 -8.8 1.1 3.1 2.8 4.8 Inflation (Consumer Price Index) 27.0 17.4 7.9 8.2 7.0 7.0 Current Account Balance (% of GDP) -20.5 -16.3 -17.7 -16.3 -15.8 -14.6 Fiscal Balance (% of GDP) -5.6 -3.7 -2.9 -2.9 -2.8 -2.3 Debt (% of GDP) 48.5 55.0 53.1 51.1 49.9 51.1 Primary Balance (% of GDP) -5.0 -2.5 -1.9 -1.1 -1.1 -0.7 a,b International poverty rate ($1.9 in 2011 PPP) 47.3 51.1 50.6 49.4 47.6 46.1 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 78.4 80.2 79.9 79.1 78.4 76.9 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 94.1 95.1 94.9 94.6 94.2 93.8 GHG emissions growth (mtCO2e) 0.0 -0.9 0.0 -0.3 -0.6 -0.6 Energy related GHG emissions (% of total) 35.9 35.0 33.0 30.6 28.0 25.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2016-HIES. Actual data: 2016. Nowcast: 2017-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2016) with pass-through = 1 based on GDP per capita in constant LCU. MPO 51 Apr 22 all of which require deep governance and institutional reforms. MADAGASCAR Key conditions and challenges Table 1 2021 Recent developments Development prospects in Madagascar Population, million 28.4 continue to be hampered by the country’s During 2021, Madagascar faced two addi- GDP, current US$ billion 14.1 low growth potential and exposure to fre- tional waves of COVID-19, one starting in GDP per capita, current US$ 494.5 quent, deep, and persistent shocks. March and another in November. Between a 78.8 International poverty rate ($1.9) Growth averaged about 3.5 percent from these two waves, domestic activity had a 91.5 the return to constitutional order in 2013 started to recover but private investment Lower middle-income poverty rate ($3.2) a 97.5 to the onset of the pandemic and was fol- remained weak and employment registra- Upper middle-income poverty rate ($5.5) Gini index a 42.6 lowed by a recession in 2020 that was tion started moderating again towards the School enrollment, primary (% gross) b 134.1 about 3 times deeper than in the rest of end of the year. The reopening of the Am- b 67.0 Sub-Saharan Africa. Activity had started to batovy mine in March 2021 and rising in- Life expectancy at birth, years recover in 2021 but was interrupted in 2022 ternational prices of nickel and cobalt bol- Total GHG Emissions (mtCO2e) 42.2 by a new wave of COVID-19, a series of ex- stered export revenues and industrial ac- Source: WDI, Macro Poverty Outlook, and official data. treme weather events and the fallout from tivity during most of the year. However, a/ Most recent value (2012), 2011 PPPs. b/ Most recent WDI value (2019). Russia’s invasion of Ukraine. Growth pro- agricultural production, which is the main jections was nearly halved for 2022 and are source of income for an overwhelming ma- significantly softer than previously-than- jority of the population, remained sub- An economic recovery started in 2021 but expected in 2023 and 2024. As a result, the dued, which notably reflected a weak rice poverty rate is now predicted to remain harvest. Severe droughts in the South also was interrupted in 2022 by the combined close to 80 percent over the next couple of led to widespread crop failure and grow- impact of a third wave of the pandemic, a years, compared with an average of 42 per- ing food insecurity. Households in most series of climate shocks, and the escalat- cent for the rest of Sub-Saharan Africa. affected areas ran out of food reserves and ing conflict in Ukraine. In this context, A further escalation of geopolitical ten- have resorted to desperate feeding prac- sions could heighten the risk of a hard tices. Many households have also been growth projections were downgraded to landing of the global economy, which forced to sell assets, accumulate debt, or 2.6 percent in 2022 and to an average of could jeopardize the recovery in Madagas- migrate in search for food. 4.4 percent in 2023-24, resulting in the car. At the national level, vulnerability to Despite an unprecedented sequence of poverty rate remaining close to 80 per- additional climate shocks, low vaccination shocks and growing financing needs, cent by 2024. rates, and policy uncertainty are among macroeconomic stability has been main- the key risks to the outlook. Beyond the tained throughout the crisis. Access to need to scale up the response to recent emergency lending allowed the govern- shocks, accelerating growth and reducing ment to increase public spending in both poverty will require urgent reforms sup- 2020 and 2021, in contrast with the experi- porting private investment, connectivity ence of previous recessions when a sharp infrastructures and access to basic services, contraction in public spending deepened FIGURE 1 Madagascar / Growth and income per capita FIGURE 2 Madagascar / Actual and projected poverty rates levels and real GDP per capita Percent Index = 100 in 1960 Poverty rate (%) Real GDP per capita (constant thousand LCU) 10 80 100 820 5 75 95 800 90 0 70 780 85 760 -5 65 80 740 75 -10 60 70 720 -15 GDP growth 55 GDP per capita growth 65 700 GDP per capita level (RHS) 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 -20 50 International poverty rate Lower middle-income pov. rate 2000 2005 2010 2015 2020 Upper middle-income pov. rate Real GDP pc Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Source: World Bank. Notes: see Table 2. Global Practices. MPO 52 Apr 22 the crisis. While helping to alleviate the it one of the most disruptive cyclonic sea- cent in 2024, with structural constraints impact of the crisis, this countercyclical in- sons in recent years. Russia’s invasion of and slowing external demand preventing crease in both current and capital spending Ukraine is also projected to have important a faster rebound. The growth potential of led the budget deficit to 4.1 percent in 2020 repercussions, as it will negatively impact the economy has been negatively impacted and 6.3 percent in 2021, which contributed economic prospects in the European by deteriorating human capital, private in- to an uptick in public debt to 52 percent Union, which is Madagascar’s main trad- vestment and public sector governance of GDP in 2021 (up from 38.5 percent in ing partner, and has already led to signif- during the crisis and is not expected to ex- 2019), but still well below risk thresholds icant upward pressure on global energy ceed 4 percent in the absence of a signifi- considered for a country like Madagascar. and food prices. This conflict will result cant reforms. in slowing export growth, deteriorating Against this backdrop, the poverty rate is terms of trade and rising inflation in projected to remain well above pre-crisis Madagascar. The effect on the trade deficit levels. The expected recovery in economic Outlook will be somewhat offset by a continued in- activity will translate into a gradual de- crease nickel and cobalt prices and a grad- cline in poverty rates, from an historical A third wave of the pandemic followed by ual pick up in tourism activity. In this con- high of 81 percent in 2020 to 80.2 percent a sequence of severe weather events and text, growth projections for 2022 were in 2023 and 79.9 percent in 2024, thereby the adverse effects from the conflict in downgraded to 2.6 percent, from 5.4 per- remaining above pre-crisis levels (Chart 2). Ukraine are expected to contribute to de- cent previously, which implies that GDP Progress with poverty reduction will celerating activity in 2022. In particular, per capita would stagnate and remain largely be determined by progress with the more than 450.000 people were affected by about 8.5 percentage points below pre-cri- policy response to recent crises, the capac- four tropical storm systems hitting Mada- sis levels (Chart 1). Growth is expected to ity of the economy to rebound and the ab- gascar since the start of the year, making pick up to 4.2 percent in 2023 and 4.6 per- sence of additional climate shocks. TABLE 2 Madagascar / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 4.4 -7.1 4.4 2.6 4.2 4.6 Private Consumption 1.2 -2.9 1.9 2.5 3.4 3.6 Government Consumption 1.9 1.8 15.5 -0.7 0.9 2.2 Gross Fixed Capital Investment 12.9 -10.1 3.0 5.2 8.9 8.5 Exports, Goods and Services 10.9 -22.6 11.6 4.9 5.4 6.4 Imports, Goods and Services 4.6 -13.8 7.4 4.5 5.4 6.1 Real GDP growth, at constant factor prices 4.3 -8.5 4.7 2.6 4.2 4.6 Agriculture 5.5 0.6 1.5 1.8 2.8 2.8 Industry 6.6 -29.5 13.2 5.0 5.6 5.9 Services 3.1 -6.2 4.4 2.4 4.5 5.1 Inflation (Consumer Price Index) 5.6 4.2 6.2 7.5 6.4 6.1 Current Account Balance (% of GDP) -2.3 -5.4 -5.3 -6.2 -6.1 -6.1 Fiscal Balance (% of GDP) -1.4 -4.1 -6.3 -6.0 -5.4 -4.4 Debt (% of GDP) 38.5 49.0 52.1 53.9 55.1 55.2 Primary Balance (% of GDP) -0.7 -3.4 -5.4 -5.0 -4.3 -3.4 a,b International poverty rate ($1.9 in 2011 PPP) 77.4 81.0 80.6 80.6 80.2 79.9 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 90.9 92.1 91.9 91.9 91.7 91.5 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 97.3 97.7 97.6 97.6 97.6 97.5 GHG emissions growth (mtCO2e) 2.8 -1.4 0.7 0.4 0.7 0.9 Energy related GHG emissions (% of total) 14.5 14.1 14.9 15.0 15.4 15.9 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2012-ENSOMD. The historical poverty rates have been revised with respect to their CPI to account for the fact that the 2012-ENSOMD survey work took place from September 2012-November 2013. Previously, CPI measures used the starting year (2012) of the survey field work only. b/ Projection using neutral distribution (2012) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 53 Apr 22 Associated higher debt servicing costs further reduce fiscal space for govern- MALAWI Key conditions and ment investment. Frequent weather shocks, along with challenges the slow pace of structural transfor- mation, have contributed to the high Table 1 2021 The economy continues to recover from and stagnant poverty rate in the last Population, million 19.6 the impacts of the COVID-19 pandemic. decade. Between 2010 and 2020, the GDP, current US$ billion 12.3 Cases surged during the spread of the share of people below the $1.90 per GDP per capita, current US$ 626.3 Omicron variant in late 2021, but symp- day poverty line increased from 72 a 73.5 International poverty rate ($1.9) toms associated with the strain were percent to 74 percent. a 90.4 milder and the government did not impose Lower middle-income poverty rate ($3.2) a 97.1 substantial additional mobility restric- Upper middle-income poverty rate ($5.5) Gini index a 38.5 tions. However, vaccine uptake is low, and School enrollment, primary (% gross) b 144.8 the country remains susceptible to new Recent developments b 64.3 strains of the virus. Life expectancy at birth, years Exports continue to recover slowly, Economic growth increased to 2.8 percent Total GHG Emissions (mtCO2e) 28.2 while imports have been increasing of GDP in 2021 despite three waves of Source: WDI, Macro Poverty Outlook, and official data. from a higher base, which continues to COVID-19 infections. Growth was driven a/ Most recent value (2019), 2011 PPPs. b/ Most recent WDI value (2019). weaken the current account balance. In- by the strong performance of the agricul- vestment is limited by a weak busi- tural sector, aided by favorable weather ness environment characterized by lim- and increased input use. This offset weak Malawi’s GDP growth rose to 2.8 percent ited access to credit, numerous non-tar- growth in industry and services, which iff barriers, and high transport costs. were more significantly impacted by re- in 2021, boosted by an improved agricul- Together with erratic electricity supply, strictions related to COVID-19. tural harvest and the diminishing impact this constrains diversification and in- Headline inflation increased to 13.0 per- of the COVID-19 pandemic. However, creased value addition despite the cent in February 2022, above the monetary growth is projected to stagnate in 2022 growth of some sectors, such as soya policy rate of 12 percent. Food inflation and mining. High reliance on subsis- reached 15.3 percent, largely due to an in- due to weather shocks and increased com- tence rain-fed agriculture, susceptible to crease in maize prices, while non-food in- modity prices, contributing to rising in- weather shocks, further impedes eco- flation has been driven by rising fuel flation and challenging the government’s nomic activity. prices. The official exchange rate remained fiscal consolidation efforts. These dynam- Implementation of expansionary policies relatively stable for the second half of 2021 ics reduce the impact of growth on pover- and weak fiscal management have con- but rising global commodity prices con- tributed to high fiscal deficits, resulting tributed to inflation, and the spread be- ty, which remains persistent and is in increased high-cost domestic debt. tween the official and cash exchange rate among the highest in the region. This has crowded out private invest- has widened. ment. The recent uptake of non-conces- The FY22 budget deficit is expected to sional external debt has pushed Malawi increase further, reaching 9.4 percent into high risk of public debt distress. of GDP. The government is optimistic FIGURE 1 Malawi / Fiscal deficit and public debt FIGURE 2 Malawi / Actual and projected poverty rates and real GDP per capita Percent of GDP Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 10 70 120 400000 9 390000 60 100 8 380000 7 50 80 370000 6 40 60 360000 5 30 350000 4 40 3 20 340000 2 20 330000 10 1 0 320000 - - 2010 2012 2014 2016 2018 2020 2022 2024 2010 2012 2014 2016 2018 2020 2022 2024 International poverty rate Lower middle-income pov. rate Fiscal Deficit (lhs) Public Debt (rhs) Upper middle-income pov. rate Real GDP pc Sources: Ministry of Finance, Economic Planning and Development, World Bank. Source: World Bank. Notes: See Table 2. MPO 54 Apr 22 that revenues (including disbursement elevated from pandemic-induced supply- of grants) will increase to 16.7 percent chain disruptions and increased global de- of GDP. Expenditure is expected to in- Outlook mand, are also rising due to the conflict. crease significantly to 26.0 percent of The current account deficit is estimated to GDP, driven by a surge in domestically Growth is projected to decline to 2.1 increase to 14.4 percent of GDP. Exports financed development expenditure, ris- percent in 2022, from 2.8 percent in are expected to maintain their current up- ing debt servicing costs, social benefits 2021. This reduction is largely due to ward momentum, but the cost of imports (including implementation of the Af- weather-related shocks, macro-fiscal im- is expected to increase, offsetting export fordable Input Program), and grants. balances, and the impacts of the Russia- gains. Rising commodity prices will also The resultant deficit will be financed us- Ukraine war. The late onset of rains has exert upward pressure on inflation. Sup- ing high-cost domestic resources, fur- been compounded by heavy rainfall and ply-related pressures on the agriculture ther exacerbating an already challenging floods caused by Tropical Cyclones Ana sector due to weather shocks could push public debt situation. and Gombe, which have negatively im- average annual inflation into double digits. The current account deficit remained pacted production of key export crops As a result of consolidation efforts on large in 2021, at 13.0 percent of GDP. and other sectors that rely on agri- both revenues and expenditures, the FY23 As mobility restrictions imposed to con- cultural inputs. Electricity disruptions fiscal deficit is expected to decline to 8.2 tain the pandemic were slowly eased, from the damaged Kapichira hydroelec- percent of GDP. Revenue is projected to the performance of exports improved. tric power station are affecting industry. increase to 16.8 percent of GDP driven Rising prices of goods such as fuel The Russia-Ukraine conflict has impacted by an increase in grant disbursements. and fertilizer have resulted in rising im- the economy through both direct price ef- Meanwhile, expenditure is expected to port costs. Rising food prices have im- fects and implications on downstream ac- drop to 25 percent of GDP. pacted households’ budget by reducing tivities. Instability in global commodity Due to the weather-related shocks affect- consumption levels, resulting in declin- markets is resulting in higher prices for fu- ing agricultural productivity and in- ing welfare and counteracting improve- el and fertilizer, further constraining for- comes, the share of the population below ments in economic growth. In turn, eign currency reserves and exerting down- the international $1.90 poverty line is pro- Malawi’s $1.90 international poverty ward pressure on the exchange rate. Glob- jected to stagnate around 74 percent in rate has remained at 74 percent. al commodity prices, which were already 2022 and 2023. TABLE 2 Malawi / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 5.4 0.8 2.8 2.1 4.3 4.2 Private Consumption 5.4 0.8 2.9 2.5 5.0 5.2 Government Consumption 5.4 0.8 -2.9 7.1 0.5 -3.6 Gross Fixed Capital Investment 5.4 0.8 6.1 0.8 2.5 6.2 Exports, Goods and Services 5.4 0.8 5.5 2.1 3.6 4.1 Imports, Goods and Services 5.4 0.8 4.3 3.6 4.0 5.2 Real GDP growth, at constant factor prices 6.0 0.8 2.8 2.1 4.3 4.2 Agriculture 5.9 3.4 5.2 -3.0 3.4 3.1 Industry 7.7 1.2 1.9 2.0 4.1 4.5 Services 5.5 -0.5 2.0 4.4 4.7 4.6 Inflation (Consumer Price Index) 9.4 8.6 9.3 12.6 11.5 9.8 Current Account Balance (% of GDP) -13.8 -11.7 -13.0 -14.4 -13.6 -13.4 Net Foreign Direct Investment (% of GDP) 0.3 0.6 0.3 0.8 0.6 0.6 Fiscal Balance (% of GDP) -4.4 -6.4 -7.1 -9.4 -8.2 -8.3 Debt (% of GDP) 45.3 52.8 53.6 61.5 60.3 58.9 Primary Balance (% of GDP) -1.5 -3.3 -3.3 -4.9 -2.9 -3.2 a,b International poverty rate ($1.9 in 2011 PPP) 73.5 74.3 74.3 74.4 74.0 73.4 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 90.4 90.7 90.7 90.8 90.5 90.3 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 97.1 97.2 97.2 97.2 97.1 97.1 GHG emissions growth (mtCO2e) 1.6 1.4 2.1 1.9 2.4 1.8 Energy related GHG emissions (% of total) 34.2 34.2 34.2 34.5 34.7 34.9 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2019-IHS-V.Actual data: 2019. Nowcast: 2020-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2019) with pass-through = 0.7 based on GDP per capita in constant LCU. MPO 55 Apr 22 January 2022 including border closure, suspension of commercial and financial MALI Key conditions and transactions, freeze of public assets and suspension of regional funding. challenges Table 1 2021 Insufficient investment in human and Population, million 20.9 physical capital has hindered Mali’s Recent developments GDP, current US$ billion 18.5 structural transformation. Subsistence GDP per capita, current US$ 887.2 farming with low productivity still dom- The economy grew by 3.1 percent, 0.1 a 16.3 International poverty rate ($1.9) inates agriculture, manufacturing is con- percent in per capita terms, in 2021, dri- a 49.5 centrated in low-value added textiles and ven by services and agriculture as the Lower middle-income poverty rate ($3.2) a 77.8 agri-food, while cotton and gold domi- cotton sector recovered. Private consump- Upper middle-income poverty rate ($5.5) Gini index a 36.1 nate exports. The services sector expand- tion and public investment also rebound- School enrollment, primary (% gross) b 75.6 ed rapidly over the last decade but lacks ed. The current account deficit (CAD) b 59.3 the skilled labor and infrastructure base widened in 2021 to 4.3 percent of GDP, Life expectancy at birth, years for sustained growth. The under-diversi- as the terms of trade deteriorated follow- Total GHG Emissions (mtCO2e) 47.6 fied economy remains vulnerable to com- ing the gold price stabilization and oil Source: WDI, Macro Poverty Outlook, and official data. modity price volatility and climate-relat- price rise. Exports declined from lower a/ Most recent value (2018), 2011 PPPs. b/ WDI for School enrollment (2018); Life expectancy ed shocks. Contingent liabilities related to gold and cotton exports, while imports (2019). the energy utility and the surge of domes- rose from higher domestic demand. tic debt constitute significant fiscal risks. The fiscal deficit stayed high, at 5.5 per- National monetary poverty has stagnated cent of GDP, with public expenditure es- Two military coups in August 2020 and over 2011-2020 while nonmonetary pover- timated at 27.9 percent of GDP, driven May 2021 and growing insecurity have ty indicators show mixed results: from by a larger wage bill, capital expenditure 2011 to 2020 the share of households with and quasi-fiscal measures to contain retail resulted in a stagnant economy, with a child not attending school fell from food and fuel prices. Revenues increased negligible per capita growth in 2021 and 62 to 41 percent, while the share with following improved indirect tax collec- projected for 2022, exacerbated by food sick members unable to receive healthcare tions. Financing was covered by conces- price inflation that particularly hurt the rose from 22 to 37 percent. sional credits, grants and domestic bor- Violent conflict and insecurity have ex- rowing. Public debt rose to 52.7 percent poor. The medium-term outlook is subject panded to central and southern regions, of GDP though Mali remains at moderate to significant downside risks, notably disrupting agriculture and service delivery risk of debt distress. with uncertainty over the political transi- outside Bamako. Though transfers to local Annual average inflation rose to 4 percent tion and regional sanctions, with poverty governments have increased, newly creat- in 2021, reaching 8.9 percent (y/y) in De- expected to decline only slightly due to ed administrative regions are not ade- cember, driven by food (5.2 percent), par- quately staffed to provide public services. ticularly cereals (8.9 percent), and ser- limited per capita income growth. vices. Mali’s monetary and exchange rate Following the postponement of national elections, due in February 2022, ECOWAS policies are managed by the BCEAO, imposed tough sanctions against Mali in which maintains a peg between the CFA FIGURE 1 Mali / GDP growth, fiscal and current account FIGURE 2 Mali / Actual and projected poverty rates and real balances GDP per capita Percent Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 6 0 100 290000 5 90 280000 4 -2 80 270000 70 3 60 260000 2 -4 50 250000 1 40 240000 0 -6 30 230000 20 -1 10 220000 -2 -8 2017 2018 2019 2020e 2021e 2022p 2023p 2024p 0 210000 GDP growth (%) 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Fiscal balance (% of GDP), rhs International poverty rate Lower middle-income pov. rate Current account balance (% of GDP), rhs Upper middle-income pov. rate Real GDP pc Sources: Malian government and the World Bank. Source: World Bank. Notes: see table 2. MPO 56 Apr 22 Franc and the Euro. Its reserves reached expire by the end of March 2022. Growth inflows, due to the uncertain envi- 5.8 months of imports of goods and ser- is expected to recover gradually, reaching ronment for Eurobond issuances. vices in 2021 following the recovery in ex- 5.2 percent on average over 2023-24. High The extreme poverty rate is projected to port repatriation proceeds. Mali’s WAE- levels of inflation will continue in 2022 stagnate at around 17.5 percent in 2022, MU membership was suspended as part but will normalize towards the regional due to the high projected population of the sanctions. Commercial banks still target (2 percent) by 2024. The CAD is growth rate of 2.9 percent over 2021-2023. benefit from the Central Bank’s refinanc- projected to stabilize around 4.2 percent Protracted sanctions may reduce employ- ing operations (at a reduced level), while of GDP in 2022 and narrow to 3.5 per- ment and incomes for the urban poor en- the government’s access to the regional cent of GDP by 2025 with the easing of gaged in construction, transport, com- market was suspended. oil prices. merce and hospitality. Internally displaced With near zero per capita income growth, The fiscal deficit is expected to narrow persons and refugees will increasingly the extreme poverty rate (US$1.90/day per to 4.5 percent of GDP in 2022, as part flock into Bamako when the government capita, 2011 PPP) remained at 17.6 percent, of a fiscal consolidation program that tar- is ill-equipped to mitigate humanitarian though high food inflation and insecurity gets returning to the regional ceiling of crises and support the vulnerable. disproportionately impact poor and vul- 3 percent of GDP by 2024. Tax revenue The outlook is subject to multiple down- nerable households, who spend 46 percent is expected to slightly decline due to the side risks, the most important being re- of the budget on food, compared with 31 slow recovery and trade embargo, while gional sanctions extending beyond March, percent for the non-poor. the suspension of international financial but also from intensified insecurity, further flows limits financing options. Spending climatic shocks, food insecurity and new should be reprioritized away from non- COVID outbreaks. It is likely that at least priority capital investment in response some of these risks will materialize and Outlook to the fiscal constraints. Public debt will concurrent shocks are possible. The Rus- subsequently decline to 48.2 percent of sia-Ukraine war presents additional risks In 2022, the economy is expected to grow GDP by 2024. through higher food and energy prices. at 3.3 percent, which reflects the impact WAEMU reserves are expected to fall The projections reflect recent sharp in- of regional sanctions on the construction to around 5.5 months of imports in creases in commodity prices since January and service sectors that depend on re- 2022 and 5.3 months in 2023 and 2022, though with a high degree of uncer- gional supply networks. However, this 2024, reflecting faster growth in im- tainty. Higher gold prices could help offset projection assumes that the sanctions will ports and a reduction in net capital the negative impact of surging oil prices. TABLE 2 Mali / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 4.8 -1.2 3.1 3.3 5.3 5.0 Private Consumption 3.8 1.9 5.0 4.0 4.0 4.0 Government Consumption 4.0 4.5 11.2 2.8 4.1 2.1 Gross Fixed Capital Investment 6.3 -1.2 3.8 -2.1 8.4 7.5 Exports, Goods and Services 2.3 0.5 -0.5 2.1 5.0 5.0 Imports, Goods and Services 5.9 -2.9 10.1 1.0 3.7 3.1 Real GDP growth, at constant factor prices 4.5 -1.1 3.1 3.3 5.3 5.0 Agriculture 4.0 -4.8 2.2 4.8 5.0 5.0 Industry 3.7 -0.1 0.7 2.6 6.0 4.0 Services 5.2 1.4 4.9 2.5 5.2 5.4 Inflation (Consumer Price Index) -2.9 0.5 4.0 7.0 2.5 2.0 Current Account Balance (% of GDP) -7.5 -2.3 -4.3 -4.3 -3.7 -3.9 Net Foreign Direct Investment (% of GDP) 5.0 3.1 2.4 2.4 2.4 2.6 Fiscal Balance (% of GDP) -1.7 -5.4 -5.5 -4.5 -3.5 -3.0 Debt (% of GDP) 40.7 47.3 52.7 49.8 49.0 48.2 Primary Balance (% of GDP) -0.7 -4.2 -4.0 -2.5 -1.8 -1.4 a,b International poverty rate ($1.9 in 2011 PPP) 15.7 17.6 17.6 17.5 16.3 15.5 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 48.3 50.8 50.8 50.6 49.3 47.9 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 77.4 78.7 78.5 78.4 77.8 77.3 GHG emissions growth (mtCO2e) 4.8 -1.5 6.4 4.0 4.3 4.4 Energy related GHG emissions (% of total) 17.6 17.6 17.9 18.1 18.5 19.0 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2018/19 EHCVM. This survey replaced the previous 2009-ELIM survey used to calculate poverty rates in previous years. b/ Projection using neutral distribution (2018) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 57 Apr 22 impact of climate related shocks on the primary sector, especially fisheries. MAURITANIA Key conditions and Poverty reduction is threatened by rising food and energy prices, a higher cost of challenges living, and supply disruptions. These im- ply a decline in extreme poverty rates of Table 1 2021 Macroeconomic stability had improved just 0.11 and 0.2 percent points per year be- Population, million 4.8 before the Covid-19 pandemic from im- tween 2022 and 2024 using the US$1.9/day GDP, current US$ billion 8.3 proved terms of trade and reforms to and US$3.2/day (2011 PPP) international GDP per capita, current US$ 1735.8 reduce fiscal deficits after the 2014-2015 poverty lines respectively. To meaningful- a 6.0 International poverty rate ($1.9) commodity price shock. Growth in- ly reduce the absolute number of the poor a 24.1 creased to 5.8 percent in 2019, driven by by 2024, agriculture sector reforms are nec- Lower middle-income poverty rate ($3.2) a 58.8 extractive sector growth of 14.9 percent. essary to support the mechanization, irri- Upper middle-income poverty rate ($5.5) Gini index a 32.6 However, with the pandemic, structur- gation, and the use of improved seedlings School enrollment, primary (% gross) b 100.4 al reforms were delayed, and the econo- to enhance domestic food production and b 64.9 my remains undiversified and reliant on resilience, and the consumption of cheaper Life expectancy at birth, years the extractives sector. Between 2015 and locally produced cereals and grains. Total GHG Emissions (mtCO2e) 14.1 2019, the Human Development Index re- Source: WDI, Macro Poverty Outlook, and official data. mained unchanged, ranking Mauritania a/ Most recent value (2014), 2011 PPPs. b/ Most recent WDI value (2019). 157th out of 189 countries. This may be partially explained by insufficient invest- Recent developments ment in human capital and basic infra- Growth rebounded in 2021 to 2.3 percent, structure, and the challenges of channel- Growth rebounded in 2021 to 2.3 percent ing economic gains to address develop- (-0.4 percent in per capita terms) from a supported by extractives and services, ment constraints. contraction of -1.8 percent in 2020. Services while extreme poverty remained at 5.8 The negative impact of the pandemic on contributed 1.1 percentage points (pp) to percent. Fiscal balances remained posi- human, economic, and social activities GDP growth supported by the relaxation tive, at 2.5 percent of GDP, supported by declined markedly in 2021, reflected by a of containment measures, vaccination of rebound in growth and government mit- the population, and the growing extrac- donor financing. Growth is expected to igations measures. The numbers of peo- tives sector. The main drivers of growth reach 7.7 percent by 2024 with the start ple in extreme poverty fell to 7,200 in were private investment, government con- of gas production. Downside risks include 2021 from 38,000 in 2020. Phone survey sumption and exports. The exchange rate rising inflation pressures, potentially ex- results suggest that 20 percent of house- remained stable in 2021, while average acerbated by a prolonged conflict in holds fell into extreme poverty in July headline inflation rose from 2.4 percent y/y 2020 compared to 16 percent in May 2021. in 2020, to 3.6 percent y/y in 2021, driven Ukraine, export price volatility, and re- Since 2021, the Government has been im- by higher food prices. gional insecurity. plementing priority programs to sustain The current account deficit (CAD) nar- growth by supporting inclusive job cre- rowed from 7.1 percent of GDP in 2020, ation, social protection, and infrastructure to 6.6 percent of GDP in 2021 on account development, as well as mitigating the of favorable exports prices. The CAD was FIGURE 1 Mauritania / Evolution of main macroeconomic FIGURE 2 Mauritania / Actual and projected poverty rates indicators and real GDP per capita Percent, percentage Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 10 0 70 60000 -2 58000 8 60 -4 56000 6 -6 50 54000 4 -8 40 52000 2 -10 30 50000 -12 0 48000 -14 20 46000 -2 -16 10 44000 -4 -18 2015 2016 2017 2018 2019 2020 2021e 2022p 2023p 2024p 0 42000 GDP growth (%) 2008 2010 2012 2014 2016 2018 2020 2022 2024 Primary fiscal balance (% of GDP) International poverty rate Lower middle-income pov. rate Current account balance (% of GDP, rhs) Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see Table 2. MPO 58 Apr 22 financed by foreign direct investment, poverty lines of US$1.9/day and US$3.2 alternatives. In the medium term, growth donor financing, the suspension of debt (2011 PPP), remained unchanged in 2021, at will be sustained by gas production start- service, and the allocation of special draw- 5.8 percent and 23.8 percent, respectively. ing in 2024, financial services and public ing rights. Gross international reserves in- sector investments. Inflation is expected creased to 6.2 months of imports of goods to gradually fall to 4 percent y/y in 2024 and services in 2021, from 4.8 months of from 5.3 percent in 2022. imports in 2020. Outlook The CAD is projected to deteriorate to 8.9 The overall fiscal balance remained in percent of GDP in 2022 with higher im- surplus at 2.5 percent of GDP in 2021 dri- The ongoing conflict in Ukraine is expect- ports of equipment for mining and gas in- ven by increases in taxes and mining rev- ed to have a mixed impact on Mauritania. dustry. It should improve to 4.3 percent of enues. Domestic revenues rose with in- It is projected to have negative impact on GDP in 2024 as new gas exports offset low- creased economic activity, stronger do- inflation, through higher imports prices of er projected prices for iron exports. FDI re- mestic demand, and higher dividend pay- food and crude oil, and a positive impact lated to the extractive industry and conces- ments. Expenditure increased from 19.5 through higher iron ore and gold export sional borrowing should finance the cur- percent of GDP in 2020 to 22.8 percent in prices. The net effect should be positive on rent account, with resulting gross interna- 2022, driven by higher current expendi- the current account, but negative on the tional reserves of more than 5 months of ture. Though at high risk of external debt fiscal account, as government fuel subsi- non-extractive imports. distress, public debt remains sustainable, dies may be increased to maintain a con- Fiscal balances are projected to slightly de- falling from 59.3 percent of GDP in 2020, stant administered price. teriorate to a deficit of 0.5 percent of GDP to 56.7 percent in 2021. The economy is expected to continue to in 2022, due to the scaling up of public in- The 2021 economic recovery was led by the rebound in 2022, by 4.5 percent (5.1 per vestment and stronger spending on educa- industrial sector, though it employs one capita terms) and over the medium term. tion, health, and social protection. The au- percent of the poor (Table 2). Agricultural Growth will be driven by a successful thorities are expected to continue renego- and services sectors, which employ 57 per- vaccine roll-out, higher gold and iron tiating for better financial terms for public cent and 42 percent of the poor, respective- production in response to rising interna- debt to lower costs and levels. As real GDP ly, grew by 0.7 percent and 2.5 percent. Ex- tional prices, and stronger substitution of per capita rises, poverty rates are projected treme poverty, based on the international imported cereals with locally produced to trend downwards (Figure 2). TABLE 2 Mauritania / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 5.8 -1.8 2.3 4.5 5.3 7.7 Private Consumption 2.7 2.7 2.5 2.3 2.4 2.7 Government Consumption 1.0 9.2 12.6 5.7 3.5 7.6 Gross Fixed Capital Investment 24.4 -8.9 12.8 5.2 6.4 6.9 Exports, Goods and Services 19.1 -1.9 -2.5 3.4 4.8 8.6 Imports, Goods and Services 11.7 2.0 2.1 2.4 2.5 2.4 Real GDP growth, at constant factor prices 6.6 -1.0 2.3 4.5 5.3 7.7 Agriculture 8.7 -4.0 0.7 0.9 1.0 1.1 Industry 5.6 2.7 3.3 3.9 4.0 6.1 Services 6.2 -1.5 2.5 6.4 7.8 11.2 Inflation (Consumer Price Index) 2.3 2.4 3.6 5.3 5.1 4.0 Current Account Balance (% of GDP) -10.5 -7.2 -6.6 -8.9 -7.8 -4.3 Net Foreign Direct Investment (% of GDP) 11.2 11.4 11.7 11.4 8.5 8.0 Fiscal Balance (% of GDP) 2.0 1.9 2.5 -0.5 -0.6 -0.4 Debt (% of GDP) 63.5 65.5 59.3 56.7 56.7 54.5 Primary Balance (% of GDP) 3.0 3.2 3.4 0.5 0.4 0.5 a,b International poverty rate ($1.9 in 2011 PPP) 5.7 5.8 5.8 5.8 5.7 5.6 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 23.6 23.8 23.8 23.7 23.6 23.4 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 57.6 58.2 58.2 57.9 57.7 57.1 GHG emissions growth (mtCO2e) 2.2 1.5 4.5 2.2 2.9 3.4 Energy related GHG emissions (% of total) 33.5 34.3 33.8 34.3 34.9 35.8 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2008-EPCV and 2014-EPCV.Actual data: 2014. Nowcast: 2015-2021. Forecasts are from 2022 to 2024. b/ Projection using point to point elasticity at regional level with pass-through = 0,7 based on GDP per capita in constant LCU. MPO 59 Apr 22 Investment Corporation owned by it, in- creased contingent liabilities. MAURITIUS Key conditions and Achieving inclusive growth will require overcoming constraints to a more inclusive challenges labor market. This includes increasing the participation of youth and women with Table 1 2021 Mauritius became a High-Income Country low educational attainments. Over 50,000 Population, million 1.3 in July 2020 based on 2019 data, but fell youth aged 16 to 29 are neither in educa- GDP, current US$ billion 11.1 back into Upper-Middle income category tion nor in employment, and about 1 out GDP per capita, current US$ 8654.6 in July 2021 as real GDP plunged by 14.9 of 3 of these has obtained at most a certifi- a 2.2 Lower middle-income poverty rate ($3.2) percentage points in 2020 amid the cate of primary education. Similarly, only a 12.7 Covid-19 pandemic. Even before the Covid 1 in 2 women participates in the labor mar- Upper middle-income poverty rate ($5.5) a 36.8 pandemic, several interrelated structural ket, and only 1 in 3 among women with Gini index School enrollment, primary (% gross) b 99.5 challenges had rendered the country’s low education. The impact of Covid-19 re- Life expectancy at birth, years b 74.2 growth trajectory more fragile. These in- versed recent gains in labor force partic- Total GHG Emissions (mtCO2e) 6.3 clude stagnating private investment, sus- ipation of women. Women were signifi- tained loss of export competitiveness, skill cantly more likely to be displaced during Source: WDI, Macro Poverty Outlook, and official data. a/ Most recent value (2017), 2011 PPPs. shortages coexisting with high structural this time, while men and women with a b/ Most recent WDI value (2019). unemployment, rising inequality, and better education were significantly less mounting pressure on public finances likely to be laid off overall. from high and increasing social security GDP grew 3.9 percent in 2021 aided by spending driven by the ageing population, leading to persistent fiscal deficits and a widespread Covid-19 vaccination, al- growing public debt to GDP ratio. Recent developments though subsequent virus waves dampened Mauritius’ handling of the Covid-19 tourism recovery and output remains be- health emergency was very successful, GDP grew an estimated 3.9 percent in low pre-pandemic levels. External factors and the extensive state support was ef- 2021, although subsequent Covid-19 fuel inflation, while public debt is at a fective in protecting livelihoods. Howev- waves dampened growth and output re- er, this came at high fiscal cost, caus- mains below pre-pandemic levels. A suc- historically high level. Recovery hinges on ing public debt to spike despite a Rs cessful Covid-19 vaccination campaign re- the creation of fiscal space to address 55 billion (12.6 of GDP) non-refundable sulting in 76 percent of the population be- longstanding structural challenges and transfer to government from the Bank of ing fully vaccinated by end-February 2022 boost preparedness for future shocks. The Mauritius in FY2020/21, which followed has been a cornerstone of recovery. How- a previous Rs 18 billion transfer (3.9 of ever, a large output gap remains in effects of Covid-19 reversed recent gains GDP) under the FY2019/20 budget. Ad- tourism, with 179,780 arrivals in 2021 in poverty reduction and female labor ditionally, the blurring in the separation marking a 41.8 percent decrease compared force participation. of monetary and fiscal functions stem- to 308,980 in 2020. Even after full reopen- ming from the direct involvement of the ing of borders since October 1, monthly BoM in the Covid-19 response, as well arrivals hovered below 50 percent of pre- as through the newly created Mauritius pandemic figures. Total exports increased FIGURE 1 Mauritius / General government balance and FIGURE 2 Mauritius / Actual and projected poverty rates debt and real GDP per capita Percent of GDP Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 2 110 25 350000 0 100 -2 90 300000 20 -4 80 250000 -6 70 -8 15 200000 60 -10 50 -12 150000 40 10 -14 -16 30 100000 -18 20 5 10 50000 -20 -22 0 0 0 2012/13 2015/16 2018/19 2021/22e 2024/25f General government balance (lhs) 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Primary balance (lhs) Real GDP pc Lower middle-income pov. rate General government debt (rhs) Upper middle-income pov. rate Sources: Statistics Mauritius, World Bank staff estimates. Source: World Bank. Notes: see Table 2. MPO 60 Apr 22 16.9 percent in 2021 compared to 2020, dri- expects to fully control Air Mauritius by recovery of tourism, before gradually ven by manufactures. As total imports in- end-March 2022. The rising of the Maurit- narrowing down over the medium term, creased by 29.8 percent, the trade deficit ian flag in the Chagos archipelago on Feb- assuming continued recovery of tourism was 39.4 percent higher. However, the cur- ruary 14 during a scientific expedition to and efforts to strengthen export com- rent account deficit still narrowed from the Blenheim reef signaled Mauritius’ in- petitiveness. The fiscal deficit is expect- 12.5 to 11.1 percent of GDP, aided by net tent to recover the islands in dispute with ed to moderate to 9.8 percent in FY21/ income inflows. the UK. 22 as the economic recovery accelerates Fiscal deficit escalated to 19.9 percent in Poverty (Upper-MIC threshold of $5.5 a and Covid-19 support measures are lift- FY20/21, and despite being partially fi- day 2011 PPP) fell from 18 to 10 percent ed, aiding a progressive fiscal consoli- nanced through a 12.6 percent of GDP non- between 2012 and 2019. However, given dation. Public debt would peak at 103.7 refundable Central Bank transfer, still the dramatic contraction of GDP in 2020, percent of GDP in FY21/22 and gradual- caused public debt to spike to 100.6 per- poverty is estimated to have increased by ly decrease over the medium term. Pro- cent of GDP. Headline inflation rose to 4 over 5 percentage points in 2020, subse- jections indicate that poverty will fall to percent in 2021 from 2.5 percent in 2020, quently dropping by over 1 point in 2021. 10 percent, the pre-COVID-19 level, well driven by external supply shocks leading into 2024. to higher freight, energy, and food prices. Significant downside risks cloud the hori- As oil prices rose to historical heights in zon. New Covid-19 variants may continue the wake of the Russian invasion of Outlook to inhibit the rebound of tourism, while es- Ukraine and ensuing sanctions on Russia, calation of war in Europe and harsher eco- the BoM raised the Key Repo Rate 15 bps GDP is expected to grow by 5.9 percent in nomic sanctions could push fuel and food to 2 percent on March 9, representing its 2022 and 6.0 in 2023, before decelerating to prices higher and further disrupt global first hike since June 2011. The removal of 3.9 percent in 2024, in a global context of supply chains, fueling inflation. Pensions’ Mauritius from the FATF, UK and EU low growth, high inflation, and heightened reform and the phased unwinding of watchlists between October 2021 and Janu- geopolitical tensions. Covid-19 support will be key to maintain ary 2022 bolstered the financial sector, and The current account deficit would rise to debt sustainability and create fiscal space following closing of the Mandatory Offer 14.2 percent of GDP in 2022 hit by high- to address structural challenges and boost made by Airport Holdings Limited on Oc- er oil and food import costs and with preparedness facing future shocks, includ- tober 15, 2021, the state-controlled entity rising airfare costs hindering a stronger ing from climate change. TABLE 2 Mauritius / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f a Real GDP growth, at constant market prices 3.0 -14.9 3.9 5.9 6.0 3.9 Private Consumption 3.2 -18.6 6.3 2.0 2.0 2.2 Government Consumption 2.0 -1.2 2.9 1.4 2.9 2.9 Gross Fixed Capital Investment 6.1 -26.1 19.0 3.8 5.7 4.7 Exports, Goods and Services -4.2 -38.1 -1.4 32.0 12.7 7.0 Imports, Goods and Services 2.1 -28.9 5.9 12.3 2.5 2.6 Real GDP growth, at constant factor prices 3.2 -14.7 3.9 5.9 6.0 3.9 Agriculture 4.1 -2.5 6.6 1.5 3.8 1.8 Industry 2.4 -19.1 13.2 1.7 3.3 1.3 Services 3.3 -14.3 1.4 7.3 6.9 4.7 Inflation (Consumer Price Index) 0.5 2.5 4.0 8.4 5.7 5.0 Current Account Balance (% of GDP) -5.4 -12.5 -11.1 -14.2 -10.4 -9.3 Net Foreign Direct Investment (% of GDP) 14.3 26.0 31.9 32.5 32.3 33.1 b Fiscal Balance (% of GDP) -10.8 -19.9 -9.8 -6.3 -7.1 -6.2 b Debt (% of GDP) 77.7 100.6 103.7 103.2 99.0 97.5 b Primary Balance (% of GDP) -8.1 -17.0 -7.4 -3.9 -4.7 -4.0 c,d Lower middle-income poverty rate ($3.2 in 2011 PPP) 1.8 2.7 2.4 2.2 2.0 1.8 c,d Upper middle-income poverty rate ($5.5 in 2011 PPP) 10.5 15.8 14.5 12.9 11.1 10.0 GHG emissions growth (mtCO2e) 0.4 -12.9 7.5 5.7 4.5 6.5 Energy related GHG emissions (% of total) 61.5 62.1 61.2 61.5 61.4 61.9 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Historical demand-side data is being revised due to a consistency problem. b/ Fiscal balances are reported in fiscal years (July 1st - June30th). c/ Calculations based on 2017-HBS.Actual data: 2017. Nowcast: 2018-2021. Forecasts are from 2022 to 2024. d/ Projection using neutral distribution (2017) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 61 Apr 22 promote inclusive growth. Achieving this requires, among others, investments MOZAMBIQUE Key conditions and in infrastructure and social sectors, but the country faces substantial fiscal con- challenges straints. The public sector wage bill and debt service absorb about 90 percent Table 1 2021 The economy was already weak when it of total tax revenues. In addition, sig- Population, million 32.2 entered the pandemic. Growth plunged nificant fiscal revenues from the LNG GDP, current US$ billion 16.1 from 8 percent in 1993–2015, to 3 percent sector may materialize only in about a GDP per capita, current US$ 500.0 in 2016–2019, due to the hidden debt cri- decade. Mobilizing additional financing a 63.7 International poverty rate ($1.9) sis in 2016, the insurgency escalation in needs involve: (i) resuming fiscal con- a 82.4 Northern Mozambique, and the cyclones solidation, notably through wage bill re- Lower middle-income poverty rate ($3.2) a 54.0 in 2019. In 2020, COVID-19 led to a GDP forms; (ii) increasing public spending ef- Gini index School enrollment, primary (% gross) b 118.4 contraction of 1.2 percent, as demand fell ficiency; (iii) improving debt manage- Life expectancy at birth, years b 60.9 and liquified natural gas (LNG) invest- ment and bringing public debt back to Total GHG Emissions (mtCO2e) 112.2 ments were delayed. The pandemic exac- more sustainable levels; and (iv) greater erbated pre-existing vulnerabilities stem- private sector development. Source: WDI, Macro Poverty Outlook, and official data. a/ Most recent value (2014), 2011 PPPs. ming from overreliance on large invest- b/ WDI for School enrollment (2020); Life expectancy ments in the extractive industry and ex- (2019). ports of commodities, with weak domes- tic linkages. The private sector’s potential Recent developments remains untapped due to weak gover- Mozambique’s economy recovered moder- nance, a difficult business environment, Growth reached 2.2 percent in 2021, dri- ately in 2021. Growth reached 2.2 per- and infrastructure and human capital ven by increased agricultural and ser- deficits. Structural transformation has vices output. The resumption of mobility cent, driven by agriculture and a gradual been limited with most jobs remaining in supported the recovery of private con- rebound in demand. Yet, the poverty rate low productivity activities. Despite con- sumption. The global recovery impacted remains high at 63.5 percent as per capita siderable downside risks—including food, energy, and fuel prices, contribut- income declined. The medium-term out- COVID-19, natural disasters, and insur- ing to a rise in inflation to 5.7 percent in look is positive with growth projected to gency— economic prospects remain pos- 2021, double the rate registered in 2020. itive. Growth is projected to average 5 The loss of income and employment due reach 6 percent in 2023, largely reflecting percent in 2022-2024, driven by develop- to the pandemic meant that the pover- the start of LNG production. However, ments in the LNG sector. The poverty ty rate remained unchanged at 63.5 per- considerable uncertainties remain, in- rate is expected to fall marginally from cent in 2021, but the number of poor in- cluding from the pandemic, insurgency in 63.2 to 61.1 percent between 2022 and creased by 650,000, totaling 20.4 million 2024, but the number of poor will in- as of end-2021. the north, and natural disasters. crease by some 600,000 people due to Although revenues held up well in 2021, rapid population growth. fiscal pressures persisted. The overall fiscal Mozambique needs to capitalize on the deficit declined to an estimated 4.8 percent gains from the economic recovery to of GDP in 2021, down from 5.7 percent in 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) 8% 100 25000 90 6% 80 20000 4% 70 60 15000 2% 50 0% 40 10000 30 -2% 20 5000 -4% 10 0 0 2008 2010 2012 2014 2016 2018 2020 2022 2024 Agriculture Extractives Manufacturing International poverty rate Lower middle-income pov. rate Services Tax GDP Real GDP pc Source: World Bank. Source: World Bank. Notes: see Table 2. MPO 62 Apr 22 2020. Despite the pressures from COVID- at US$3.2 billion (equivalent to 6-7 but expected to decline to 3.6 percent of related as well as humanitarian and secu- months of imports, excluding megapro- GDP over 2023–2024, partly driven by a rity spending, total public expenditure fell jects) in November of 2021—representing lower wage bill. Structural reforms, includ- to 31.6 percent of GDP in 2021 (from 33.6 a drop of 14 percent (y-o-y). ing streamlined salary and career struc- percent in 2020). This was driven by lower tures, and fiscal consolidation measures debt service, reflecting currency appreci- are expected to reduce wage bill pressures. ation and debt service deferral under the Revenue is projected to perform well as the DSSI. Total public debt dropped from 125 Outlook economy recovers. Despite this, financing to 117 percent of GDP in 2021, largely due needs will remain substantial in 2022-2024, to the currency appreciation. Mozambique Growth is projected at 3.6 percent in 2022, due to high debt service and short-term is in debt distress with debt assessed to be before peaking at 6 percent in 2023. The cost of wage bill reforms. sustainable in a forward-looking sense. start of LNG production at the Coral South The CAD is expected to reach 32.5 per- Recovering trade and delayed implemen- offshore is expected to boost exports. Agri- cent of GDP in 2022, and stay close to 40 tation of LNG projects have led to a sta- cultural output growth is expected to re- percent in 2023-2024 owing to increased ble current account deficit (CAD). The main considerable, given favorable weath- imports of services and machinery for CAD declined from 25.7 to 22 percent of er conditions, and services activities will LNG development. Further, the push in GDP between 2020 and 2021. The drop continue to steadily recover. Inflationary fuel, and wheat will add extra US$ 300 was mainly driven by lower imports of pressures will remain substantial as fuel million to total imports. However, exports services, due to the delays in LNG pro- and food prices continue to increase. are set to grow significantly as LNG pro- jects. Total exports—mainly coal and alu- Nonetheless, inflation is projected to re- duction begins and commodity prices re- minum—grew by 55 percent, following a main within single digit in the medium- cover. The external financing gap will decline of 23 percent in 2020. The CAD term, supported by a conservative mon- be covered by FDI inflows and external was mostly financed by FDI and, to some etary policy and a stable exchange rate. loans, mainly for LNG investments. These extent, private borrowing. FDI was con- Poverty is expected to remain over 63 per- FDI inflows, combined with the anticipat- siderably high at US$ 5.1billion (against cent in 2022, despite the growth recovery ed World Bank DPF and the IMF pro- US$ 3 billion in 2020), surpassing pre- and increased social transfers. gram, will allow external reserves to re- pandemic levels. As a result of these de- Fiscal pressures are likely to persist. The main at comfortable levels. velopments, net external reserves closed deficit is projected at 6.3 percent in 2022 TABLE 2 Mozambique / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 2.3 -1.2 2.2 3.6 6.0 5.8 Private Consumption 3.1 -2.1 18.1 0.3 7.6 3.7 Government Consumption 3.6 -19.3 -5.8 10.5 -18.7 -7.5 Gross Fixed Capital Investment -0.6 60.1 36.1 -0.9 3.8 6.8 Exports, Goods and Services -9.5 -15.0 24.1 9.6 15.1 6.4 Imports, Goods and Services -1.5 -0.4 40.7 2.1 3.5 2.5 Real GDP growth, at constant factor prices 1.8 -1.9 2.2 3.6 6.0 5.8 Agriculture 1.3 3.1 3.4 3.5 1.2 5.8 Industry -0.4 -5.8 1.3 3.6 14.9 5.8 Services 2.9 -2.7 2.0 3.7 5.1 5.7 Inflation (Consumer Price Index) 2.8 3.1 5.7 6.4 5.5 5.5 Current Account Balance (% of GDP) -19.6 -25.7 -22.1 -32.5 -39.0 -42.0 Net Foreign Direct Investment (% of GDP) 14.4 16.7 31.8 22.2 20.6 19.1 a Fiscal Balance (% of GDP) -0.5 -5.7 -4.8 -6.3 -3.7 -3.5 Debt (% of GDP) 107.5 125.3 117.4 120.0 113.5 104.1 a Primary Balance (% of GDP) 2.7 -2.3 -1.1 -2.4 0.1 0.8 b,c International poverty rate ($1.9 in 2011 PPP) 61.9 63.3 63.5 63.2 62.2 61.1 b,c Lower middle-income poverty rate ($3.2 in 2011 PPP) 81.1 82.2 82.3 82.1 81.4 80.6 GHG emissions growth (mtCO2e) 0.9 0.7 0.3 1.1 1.7 1.5 Energy related GHG emissions (% of total) 8.0 8.3 8.0 8.2 8.7 9.1 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Figure includes once-off capital gains revenues in 2017, estimated at 2.7 percent of GDP. b/ Calculations based on 2014-IOF. Actual data: 2014. Nowcast: 2015-2021. Forecasts are from 2022 to 2024. c/ Projection using neutral distribution (2014) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 63 Apr 22 and foster job-rich growth, is critical to re- verse the trend of declining potential out- NAMIBIA Key conditions and put. In the long term, progress in the planned development of a green hydrogen challenges sector carries significant upside potential for the economy. Short-term risks to Table 1 2021 Namibia’s growth challenge predated the Namibia’s recovery are dominated by pan- Population, million 2.6 COVID-19 crisis. In the decade leading up demic uncertainties, amid relatively low GDP, current US$ billion 12.4 to 2015, economic growth averaged nearly vaccine coverage, and evolving effects of GDP per capita, current US$ 4794.1 5 percent annually boosted by investments the war in Ukraine. a 13.8 International poverty rate ($1.9) in mineral extraction, a boom in exports a 30.3 and government spending. The period Lower middle-income poverty rate ($3.2) a 51.0 from 2016 onwards has mostly been Upper middle-income poverty rate ($5.5) Gini index a 59.1 marked by recession. Pre-pandemic, fiscal Recent developments School enrollment, primary (% gross) b 124.2 retrenchment, weak export prices, comple- b 63.7 tion of major investment projects and poor Mainly driven by a rebound in private Life expectancy at birth, years growth in key trade partners brought consumption, the economy is estimated to Total GHG Emissions (mtCO2e) 22.2 growth to a halt. In real terms, GDP per have expanded by 0.8 percent in 2021 fol- Source: WDI, Macro Poverty Outlook, and official data. capita has contracted since 2016, with cor- lowing the historic contraction of -8.5 in a/ Most recent value (2015), 2011 PPPs. b/ WDI for School enrollment (2018); Life expectancy responding projected poverty increases. 2020. The economic rebound was weak- (2019). Weak demand and skills mismatches have er than projected in October 2021 due to constrained job creation with the unem- a marked deterioration in the net export ployment rate averaging above 20 percent balance. Exports contracted further and Namibia’s growth rebound in 2021 is es- since 2016. With persisting labor market imports rebounded. The supply side as- timated to have been weaker than expect- challenges, Namibia remains one of the sessment suggests that the tertiary sec- most unequal countries in the world. tor underpinned growth in 2021, coming ed. The outlook for 2022 is favorable Global and regional developments are an from depressed levels in the prior year, boosted by an improved pandemic situa- important driver of Namibia’s fiscal and while industry output contracted, led by tion and strong prospects for the mining external positions as the country is highly declines in construction activity and elec- sector. The protracted effects of the pan- reliant on commodity exports and SACU tricity generation. Tight COVID-19 re- transfers. Volatility in prices of Namibia’s strictions were in place during parts of demic have left significant scarring in the exports, particularly diamonds and ura- the year to manage surges in infections. economy, worsening socio-economic indi- nium, present risks. While Namibia en- The protracted effects of the pandemic cators. The projected upper middle-in- joyed good rains in 2021, the country is have left significant scarring in the econ- come poverty rate remains high at 65 per- amongst the driest in the world and se- omy, worsening socio-economic indica- cent for 2021 while employment is esti- vere drought is a persistent threat for eco- tors. Given the sluggish economic expan- nomic performance and for the welfare of sion, the projected upper middle-income mated to be below pre-pandemic levels. poverty rate remained high at 65 percent poor subsistence farmers. Raising productivity, including through re- while employment is estimated to be well forms to improve the business environment below pre-pandemic levels. FIGURE 1 Namibia / Budget balance and SACU revenues FIGURE 2 Namibia / Actual and projected poverty rates and real GDP per capita Percent of GDP Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 0 6 80 70000 -1 7 70 60000 -2 8 60 -3 50000 9 50 -4 40000 -5 10 40 30000 -6 11 30 -7 20000 20 12 -8 10000 10 -9 13 0 0 -10 14 2009 2011 2013 2015 2017 2019 2021 2023 2016 2017 2018 2019 2020 2021e International poverty rate Lower middle-income pov. rate Budget deficit Taxes on international trade, SACU (rhs) Upper middle-income pov. rate Real GDP pc Sources: Ministry of Finance, Central Bank and World Bank staff estimates. Source: World Bank. Notes: See table 2. MPO 64 Apr 22 Namibia experienced a deterioration of matured in November 2021, limiting the So long as the effects of the conflict in its current account balance to an estimat- rise in debt levels. Ukraine last, higher mineral prices will ed deficit of 8 percent of GDP in 2021 Monetary policy remained accommoda- benefit Namibia’s terms of trade but the re- from an atypical surplus of 3.3 percent of tive and aligned with the SARB. The policy lated oil price shock will raise the import GDP in 2020, while being able to main- rate was unchanged at 3.75 percent bill and inflationary pressures. tain an adequate level of international re- through 2021, before the Bank of Namibia Government consumption is expected to serves. The weaker external balance was hiked by 25 basis points in February 2022. be a drag on growth over the medium due to lower mineral exports, a decrease Inflation remained contained in 2021, aver- term given fiscal consolidation. Authori- in SACU receipts, investment income out- aging 3.6 percent. ties remain committed to restoring fiscal flows, and an increase in imports that sustainability over the MTEF period, al- has been fueled by rebounding domes- though the speed of consolidation will tic demand. Thanks to significant finan- depend on recovery in revenues. Mone- cial inflows from International Financial Outlook tary policy normalization is expected to Institutions, gross reserves increased from continue at a prudent pace, driven by the US$2.2 billion at end-2020 to US$2.8 bil- Namibia’s economic performance is ex- exchange rate peg with the rand. As min- lion at end-2021 (representing about 5.5 pected to improve in 2022-23, premised on ing exports rebound and SACU receipts months of imports). waning effects of the pandemic and strong increase from next year, the current ac- Amid the limited growth rebound, the prospects for the mining sector. GDP count deficit is expected to narrow grad- fiscal position deteriorated with the bud- growth is projected to accelerate to 2.9 per- ually over the medium term and pro- get deficit increasing to 8.8 percent of cent in 2022. Diamond output, in particu- jected at 6.3 percent of GDP in 2022. GDP in 2021 (from 8.2 percent in 2020), lar, is expected to increase as the new Deb- The trajectory of the pandemic globally is and public debt (including guarantees) marine vessel begins operating and the life an intractable risk to the outlook while further rising to 75.3 percent of GDP from of mines that were previously slated to the projected growth path is insufficient 69.2 percent in 2020. The wider deficit close is extended. The new diamond re- to address socio-economic challenges. was on the back of lower SACU revenues, covery vessel is expected to boost produc- Poverty is projected to remain high at 64 which fell from 12.5 percent of GDP in tion by at least a third. Activity in the min- percent (US$5.50 line, 2011 PPP) in 2022 FY2020 to 7.9 percent of GDP in FY2021. ing sector is broadly expected to find sup- due to weak per capita GDP growth and Namibia redeemed its Eurobond which port from firm global commodity prices. slow job creation. TABLE 2 Namibia / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices -0.9 -8.5 0.8 2.9 2.1 2.0 Private Consumption 0.4 -10.3 11.9 3.3 3.0 3.0 Government Consumption 1.5 -1.5 0.5 -0.6 -0.1 -0.2 Gross Fixed Capital Investment -8.9 -11.2 -8.8 5.0 4.3 4.7 Exports, Goods and Services -9.0 -17.7 -9.8 13.1 6.0 3.5 Imports, Goods and Services -3.4 -14.7 8.0 6.9 5.1 4.0 Real GDP growth, at constant factor prices -0.2 -7.1 0.5 2.9 2.1 2.0 Agriculture -3.2 6.1 -0.1 2.0 2.0 2.0 Industry -2.3 -13.7 -2.9 7.2 2.1 2.5 Services 1.1 -5.7 1.9 1.4 2.1 1.7 Inflation (Consumer Price Index) 3.7 2.2 3.6 5.2 4.5 4.5 Current Account Balance (% of GDP) -1.8 3.3 -8.0 -6.3 -4.5 -3.8 Net Foreign Direct Investment (% of GDP) -1.5 -2.0 2.3 1.6 1.6 1.9 Fiscal Balance (% of GDP) -5.3 -8.2 -8.8 -7.4 -6.2 -5.4 a Debt (% of GDP) 62.8 69.2 75.3 79.5 81.5 83.6 Primary Balance (% of GDP) -1.4 -3.8 -4.3 -2.6 -1.1 -0.4 b,c International poverty rate ($1.9 in 2011 PPP) 16.7 20.8 21.3 20.8 20.6 20.5 b,c Lower middle-income poverty rate ($3.2 in 2011 PPP) 35.8 43.5 44.4 43.4 43.1 42.9 b,c Upper middle-income poverty rate ($5.5 in 2011 PPP) 56.8 64.5 65.3 64.4 64.1 63.9 GHG emissions growth (mtCO2e) -1.1 0.0 -0.1 1.5 1.5 0.3 Energy related GHG emissions (% of total) 19.9 19.3 19.2 19.5 19.9 19.7 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Refers to Public and Publicly Guaranteed debt b/ Calculations based on 2009-NHIES and 2015-NHIES. Actual data: 2015. Nowcast: 2016-2021. Forecasts are from 2022 to 2024. c/ Projection using annualized elasticity (2009-2015) with pass-through = 1 based on GDP per capita in constant LCU. MPO 65 Apr 22 a stronger disasters management frame- work, and robust social safety nets, are NIGER Key conditions and also key to increase resilience to natural shocks. Supporting demographic transi- challenges tion by reducing large gender gaps also needs to be a central piece of Niger’s Table 1 2021 Despite robust GDP growth (averaging 6.2 development strategy, while the pace of Population, million 25.1 percent annually over 2010-2019), the level vaccination for COVID-19 needs to accel- GDP, current US$ billion 14.3 of per capita GDP (US$ 554 in current erate to reach the target of 42 percent of GDP per capita, current US$ 569.8 prices) in 2019 remains well below regional the population. a 41.4 International poverty rate ($1.9) peers. High demographic growth is the a 75.2 main drag to a more sustained increase in Lower middle-income poverty rate ($3.2) a 91.8 per capita incomes. Upper middle-income poverty rate ($5.5) Gini index a 37.3 Niger needs to address at least two key fac- Recent developments School enrollment, primary (% gross) b 66.4 tors to reduce its structural fragility and sus- b 62.4 tain a higher pace of economic growth. First, The pace of economic growth came to a Life expectancy at birth, years Niger needs to better adapt to climatic sudden halt in 2021, falling to 1.4 percent Total GHG Emissions (mtCO2e) 52.3 changes as 75 percent of the workforce is from 3.6 percent in 2020 due to the collapse Source: WDI, Macro Poverty Outlook, and official data. still in subsistence agriculture and volatile of cereal production (-38 percent), caused a/ Most recent value (2018), 2011 PPPs. b/ Most recent WDI value (2019). climatic conditions have led to large agricul- by drought in September, crop infestation, tural production fluctuations (as highlight- and insecurity. This agricultural produc- ed by the collapse of production in 2021) tion shock left more than 2.5 million peo- Niger avoided recession in 2020, but the and food insecurity. Second, Niger needs to ple food insecure. address domestic insecurity and regional The fiscal deficit remained high, at 6.6 recovery was interrupted in 2021 with instability, which impact Niger’s overall percent of GDP, in 2021 due to the in- growth falling to 1.4 percent (-2.3 percent economic performance, public finances, crease in spending to support the recov- per capita), due to heightened insecurity service delivery and access to markets. ery and to address security and food in- and climatic shocks (drought, erratic With relative political stability in a tur- security issues, for example by strength- bulent region, Niger is relatively well po- ening food for work, school feeding, or rains and flash floods) that significantly sitioned to adopt structural reforms that cereal distribution programs. As a result reduced agricultural output. Consequent- lay the foundations for more inclusive of lower growth and the higher deficit, ly, extreme poverty increased to 41.8 per- and resilient economic growth. Reforms public debt is projected to have reached cent in 2021. While the outlook remains need to increase overall productivity (es- 52.3 percent of GDP in 2021, and the positive, with oil revenues coming on- pecially in agriculture) by strengthening risk of debt distress is assessed as mod- economic governance, promoting finan- erate. The current account deficit (CAD) stream in 2024, significant downside cial inclusion, adopting digital technolo- is estimated to have widened to 14.9 risks require a strong reform effort. gies, and broadening access to education percent of GDP in 2021, driven by a and training to support waged jobs cre- deterioration of the trade balance amid ation. Accelerating crisis preparedness high oil and gas projects-related imports through climate adaptation investments, and higher food import prices. FIGURE 1 Niger / Real GDP growth and sectoral FIGURE 2 Niger / Actual and projected poverty rates and contributions to real GDP growth real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant LCU) 12 120 400000 10 350000 100 8 300000 6 80 250000 4 60 200000 2 150000 0 40 100000 -2 20 50000 -4 2019 2020 2021 2022 2023 2024 0 0 Agriculture Industry 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 Services Net Taxes International poverty rate Lower middle-income pov. rate Actual GDP growth Upper middle-income pov. rate Real GDP pc Sources: INSN and World Bank staff estimates. Source: World Bank. Note: See table 2. MPO 66 Apr 22 Inflationary pressures persisted, fueled by Nigerien households are net food buyers in agriculture improves. However, in order rising food prices (7.8 percent), particu- and food represent 58 percent of their con- to achieve a reduction in the absolute num- larly cereals (16.8 percent). Average annu- sumption basket. ber of poor, annual GDP growth must be al inflation reached 3.8 percent for 2021. significantly above Niger’s projected high Niger’s monetary and exchange rate poli- population growth rate of 3.8 percent dur- cies are managed by the BCEAO, which ing the period 2022-2024, and the rents maintains a fixed peg between the CFA Outlook from the petroleum sector must be broadly Franc and the Euro. Its reserves reached shared through proactive government 5.8 months of imports of goods and ser- Amidst high uncertainty, economic policies for inclusive growth. vices in 2021, as a result of the recovery growth in 2022 is projected at 5.2 percent. The GDP growth outlook is subject to a in export repatriation proceeds, the Au- This forecast hinges upon several positive high degree of uncertainty and multiple gust 2021 SDR allocation, and portfolio developments, particularly the absence of downside risks, including intensified secu- inflows linked to Eurobond issuances in new climatic shocks, and on an improve- rity risks, further climatic-shocks, continu- the region. ment in the security situation. Over the ing food security challenges, local COVID The 2.3 percent decline in per capita GDP medium term, growth is expected to sur- outbreaks, and widespread social discon- in 2021 resulted in an increase of 1.4 per- pass 10 percent in 2024 due to the start of tent from food inflation and insecurity. It is centage point in the international extreme oil production. Inflation is set to overshoot likely that at least one/some of these risks poverty rate (US$1.90/day per capita, 2011 the standard 3 percent target again in 2022, will materialize and concurrent shocks are PPP) to 41.8 percent in 2021. As a result, driven by higher food and energy prices. possible. The economic consequences of the number of extreme poor rose from 9.8 An ambitious fiscal adjustment supported the Russia-Ukraine war are a further million to 10.5 million. Data from high fre- by the IMF program, aimed at reducing the source of risk, primarily through higher quency phone surveys indicated that 40 deficit from 5.5 percent of GDP in 2022, to global food (grains/fertilizer) and energy percent of households experienced an in- around 3 percent in 2024, would put the prices. The projections already reflect re- come loss during the pandemic. Further- debt-to-GDP ratio onto a declining path. cent sharp increases in oil and gas, agri- more, higher food inflation would have Extreme poverty is expected to decline to culture and metal and mineral prices since impacted poor households as 40 percent of 41.0 percent in 2022 as growth, particularly January 2022. TABLE 2 Niger / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 5.9 3.6 1.4 5.2 7.1 10.4 Private Consumption 3.7 4.4 -1.5 5.1 5.9 6.7 Government Consumption 8.1 3.7 2.0 7.6 13.0 12.1 Gross Fixed Capital Investment 13.6 4.9 9.1 5.4 6.0 6.5 Exports, Goods and Services 1.1 -6.3 3.6 5.5 20.8 41.7 Imports, Goods and Services 6.2 2.7 3.5 6.8 11.1 11.0 Real GDP growth, at constant factor prices 6.1 4.2 1.1 5.1 7.1 10.4 Agriculture 3.4 7.7 -7.9 5.0 6.1 6.2 Industry 9.0 1.7 5.4 6.4 7.9 20.0 Services 7.0 2.3 7.7 4.4 7.6 8.5 Inflation (Consumer Price Index) -2.5 2.8 3.8 3.5 3.0 3.0 Current Account Balance (% of GDP) -12.2 -13.2 -14.9 -16.9 -15.5 -12.2 Net Foreign Direct Investment (% of GDP) 5.3 2.5 4.6 5.2 3.5 2.8 Fiscal Balance (% of GDP) -3.6 -5.4 -6.6 -5.5 -4.5 -3.2 Debt (% of GDP) 39.8 45.0 52.5 53.0 52.2 48.7 Primary Balance (% of GDP) -2.6 -4.4 -5.5 -4.1 -3.1 -2.1 a,b International poverty rate ($1.9 in 2011 PPP) 40.3 40.4 41.8 41.0 38.7 34.8 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 74.3 74.5 75.5 74.8 73.5 70.4 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 91.5 91.5 91.9 91.6 91.1 89.9 GHG emissions growth (mtCO2e) 4.8 3.8 3.9 4.3 4.8 5.3 Energy related GHG emissions (% of total) 14.8 14.6 14.6 14.9 15.5 16.5 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2018) with pass-through = 0.7 based on GDP per capita in constant LCU. MPO 67 Apr 22 which remains scant, should be expanded to offset income losses and prevent house- NIGERIA Key conditions and holds from falling into—or further in- to—poverty. challenges In the medium term, the government must adopt reforms to sustain Nigeria’s eco- Table 1 2021 After two decades of uneven growth, nomic recovery. These include merging its Population, million 211.4 poverty in Nigeria remains widespread, multiple exchange rates, reducing trade re- GDP, current US$ billion 488.6 affecting around 4 in 10 Nigerians. Nigeria strictions, improving the business climate, GDP per capita, current US$ 2311.1 grew rapidly between 2000 and 2014 (av- and reducing the monetization of the fiscal a 39.1 International poverty rate ($1.9) erage of 7 percent per year), but the deficit. In addition, diversifying the econ- a 71.0 2014-2015 collapse in global oil prices, a re- omy, especially reducing the dependence Lower middle-income poverty rate ($3.2) a 92.0 versal in macroeconomic reforms, and the of revenues on oil, is essential to build re- Upper middle-income poverty rate ($5.5) Gini index a 35.1 fall in domestic non-oil production led to silience against future shocks, create pro- School enrollment, primary (% gross) b 87.5 a cycle of sluggish growth. Subsequently, ductive jobs, and reduce poverty. b 54.7 economic growth has been muted at 1.1 Life expectancy at birth, years percent, on average, in 2015–21, below the Total GHG Emissions (mtCO2e) 387.0 rate of population growth of 2.6 percent. Source: WDI, Macro Poverty Outlook, and official data. a/ Most recent value (2018), 2011 PPPs. Nigeria’s fiscal position has been deterio- Recent developments b/ WDI for School enrollment (2018); Life expectancy rating since 2015, mainly due to low and (2019). declining oil revenues (50 percent of con- GDP grew by 3.6 percent in 2021, exceed- solidated revenues come from oil) and ris- ing population growth for the first time ing expenditures, resulting in fiscal deficits since 2015, led by base effects in most sec- Nigeria’s real GDP is expected to grow averaging 5.4 percent of GDP in 2020-21. tors and organic growth in agriculture, by 3.8 percent in 2022. Nevertheless, giv- After the 2015-16 recession, Nigeria’s al- telecommunications, and financial ser- ready low level of general government rev- vices. Oil production, however, continued en high population growth and stagnant enue fell and averaged 7.0 percent of GDP to decline and reached a two-decade low poverty reduction, the number of Nigeri- between 2016 and 2020, the second lowest due to inefficiencies and insecurity. ans living below the international poverty globally. As a result, general government Inflation remains high in Nigeria, reach- line is projected to rise by 2.5 million be- expenditure remains low. ing 15.6 percent, year-on-year, in January In the short term, recouping the welfare 2022—above the average of the last 4 tween 2021 and 2024. Nigeria’s growth and human capital losses incurred during years and one of the highest in Sub-Sa- outlook remains uncertain due to the war the COVID-19 pandemic remains vital. To haran Africa. Inflation has been driven in Ukraine and its impact on the global this end, the authorities should consider by higher prices of staples, which are es- economy. Macroeconomic and business three policy priorities. First, a fast and eq- pecially reducing the purchasing power climate reforms will be necessary to en- uitable vaccine rollout is still needed to of poor and vulnerable Nigerians, con- tackle the virus’ direct health effects. Sec- straining any potential poverty reduction. sure a sustained recovery beyond the base Nigerian authorities have not taken any ond, reversing learning losses from school effects seen in 2021. closures can mitigate long-term effects on recent concerted actions to tackle infla- human capital. Finally, social protection, tionary pressures. FIGURE 1 Nigeria / Oil price shock transmission channels FIGURE 2 Nigeria / Actual and projected poverty rates and real GDP per capita Percent GDP, percent growth US$/bbl Poverty rate (%) Real GDP per capita (constant LCU) 20 110 100 400000 90 390000 Oil price (US$/bbl) 90 15 80 380000 70 70 60 370000 10 50 50 360000 40 350000 30 5 30 Revenues (% GDP) 340000 GDP growth (%) 10 20 10 330000 0 -10 0 320000 2010 2012 2014 2016 2018 2020 2022 2024 -5 -30 International poverty rate Lower middle-income pov. rate 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Upper middle-income pov. rate Real GDP pc Sources: WDI, NBS, and World Bank. Source: World Bank. Notes: see Table 2. MPO 68 Apr 22 The government’s fiscal position typically can be threatened by: (i) the impact of improves when oil prices rise, but this the Russia-Ukraine conflict on the global was not the case in 2021 when the con- Outlook economy through lower capital flows, solidated fiscal deficit remained above 5.0 heightened uncertainty, higher prices of percent of GDP. Nigeria has not been Nigeria’s GDP growth is projected at 3.8 imported food and inputs for fertilizers, able to fully benefit from the current price percent in 2022, driven by growth in the lower global growth, and volatile oil boom because: (i) oil production declined services, trade, agriculture, and construc- prices; (ii) lower-than-expected oil pro- in 2021; and (ii) the domestic price of tion sectors as well as a recovery in oil pro- duction due to technical inefficiencies; petrol remained fixed while global petrol duction. Yet, GDP per capita at end-2022 (iii) heightened insecurity; (iv) higher un- prices rose, increasing the cost of the Pre- is expected to be below the level recorded certainty on policy direction arising from mium Motor Spirit (PMS) subsidy. The in 2014, and it is not expected to return to the upcoming February 2023 general PMS subsidy disproportionately benefits pre-COVID-19 levels before 2027. elections; and (v) worsening fiscal risks richer Nigerians and imposes a massive The impact of the pandemic on poverty related to the PMS subsidy deductions. and unsustainable fiscal burden. Its cost could linger. Combining the effects of Even in the most favorable global con- rose from 4 to 35 percent of oil and gas the COVID-19 crisis and high popula- text, the policy response of Nigeria’s au- revenues in 2021 (US$4.5 billion, roughly tion growth, the number of Nigerians thorities will be crucial to lay the foun- 1 percent of GDP). living in extreme poverty (measured us- dation for a robust recovery. The au- Buoyed by rising oil prices and improved ing the international poverty line of thorities can boost growth by strength- remittance inflows, Nigeria’s external po- US$1.90 per day, 2011 PPP) could rise ening macroeconomic reform efforts, in- sition improved in 2021. The current ac- by 10 million between 2019 and 2024, cluding measures aimed at: (a) adopting count balance improved from -2.4 percent with the absolute number of poor peo- a more flexible and transparent foreign of GDP in 2020 to 2.0 percent of GDP in ple reaching 89 million by 2024. While exchange management regime; (b) ac- 2021. Despite the central bank taking steps these forecasts are slightly rosier than celerating revenue-based fiscal consolida- to merge its multiple exchange rates by the World Bank fall forecasts, they still tion; (c) strengthening expenditure and adopting the Importer and Exporter FX paint a sobering picture of Nigeria’s debt management; and (d) improving the window rate as its official rate in May 2021, prospects for poverty reduction. business climate. the parallel rate premium increased to 37 The country’s economic outlook remains percent of the official rate in 2021. highly uncertain. The projected recovery TABLE 2 Nigeria / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 2.2 -1.8 3.6 3.8 4.0 4.0 Private Consumption -2.4 1.3 0.2 2.4 2.6 2.9 Government Consumption 15.0 13.6 -1.1 4.8 0.4 7.5 Gross Fixed Capital Investment 11.8 19.0 8.5 3.2 5.2 7.9 Exports, Goods and Services 15.0 -32.2 10.4 8.5 7.5 5.0 Imports, Goods and Services 27.3 -23.5 3.5 5.5 4.3 9.0 Real GDP growth, at constant factor prices 2.3 -1.9 3.7 3.8 4.0 4.1 Agriculture 2.4 2.2 2.1 2.7 2.7 3.0 Industry 2.3 -5.9 -0.2 4.5 5.1 3.5 Services 2.2 -2.2 6.0 4.1 4.1 4.8 Inflation (Consumer Price Index) 11.4 13.2 17.0 14.8 13.0 11.0 Current Account Balance (% of GDP) -3.8 -2.4 2.0 5.8 4.9 3.2 Net Foreign Direct Investment (% of GDP) 0.4 0.2 0.6 0.5 0.4 0.4 Fiscal Balance (% of GDP) -4.6 -5.8 -5.8 -5.1 -4.9 -5.3 Debt (% of GDP) 21.7 25.2 29.6 29.6 30.4 31.7 Primary Balance (% of GDP) -2.6 -4.1 -3.6 -2.6 -2.4 -2.4 a,b International poverty rate ($1.9 in 2011 PPP) 39.3 41.1 40.7 40.2 39.6 38.9 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 71.1 72.6 72.3 71.9 71.4 70.8 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 92.1 92.8 92.6 92.4 92.1 91.9 GHG emissions growth (mtCO2e) 3.1 1.1 3.9 4.0 4.4 4.6 Energy related GHG emissions (% of total) 39.3 38.1 38.0 37.8 37.9 38.0 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2018-LSS.Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2018) with pass-through = 0.7 based on GDP per capita in constant LCU. MPO 69 Apr 22 by high costs of finance, energy, and trans- port, coupled with dominance of SOEs. RWANDA Key conditions and Key reforms should aim to enable compet- itive domestic enterprises, foster innova- challenges tion, develop long-term finance, and foster regional integration. Table 1 2021 Despite exceptional economic perfor- Population, million 13.3 mance in recent decades, including rapid GDP, current US$ billion 11.0 growth in per capita income over GDP per capita, current US$ 828.7 2005–2019, Rwanda faces major develop- Recent developments a 56.5 International poverty rate ($1.9) ment challenges. Poverty rates (measured a 80.3 as US$1.90 a day) fell from 69.1 percent Effective vaccination measures helped Lower middle-income poverty rate ($3.2) a 91.9 in 2005 to 56.5 percent in 2017 and was Rwanda navigate the pandemic. After Upper middle-income poverty rate ($5.5) Gini index a 43.7 projected to fall even further to 52.9 per- grappling with the third—and more se- School enrollment, primary (% gross) b 131.3 cent in 2019 behind strong growth in GDP vere—wave in June–August 2021, Rwan- b 69.0 and private consumption. With the emer- da successfully contained the spread of Life expectancy at birth, years gence of COVID-19, poverty is expected infections while continuing its vaccination Total GHG Emissions (mtCO2e) 8.4 to have increased to 56.0 percent for 2020. campaign. By end-February, about 68 per- Source: WDI, Macro Poverty Outlook, and official data. Rwanda has relatively higher poverty rates cent of the total population had received a/ Most recent value (2016), 2011 PPPs. b/ Most recent WDI value (2019). than African peers with similar income per at least one dose of COVID vaccine, while capita, and poverty reduction has become 60 percent had received two doses. These less responsive to growth in recent years. vaccination rates place Rwanda among Rwanda’s economy grew at around 11 Rwanda now faces challenges in fully the top ten countries in Africa. Rwanda translating its strong growth into commen- started administrating a booster shot dose percent in 2021, as targeted measures surate gains in poverty reduction and in December 2021. helped economic activities to effectively shared prosperity, with the aim of elimi- The economy surged in 2021, growing by navigate the pandemic. The twin deficits nating poverty by 2050. about 11 percent. Gradually easing mobil- remained—requiring more external fi- A shift from public investment-led growth ity restrictions have supported a broad- to the private sector is key to Rwanda’s as- based rebound, stimulating private con- nancing—and are expected to ease below piration of becoming an upper-middle in- sumption, by increasing incomes amid the their pre-crisis levels in 2022–2024. De- come country by 2035 and a high-income reopening of economic activities, and spite an unprecedented assistance pro- country by 2050. Capital accumulation, falling inflation. Household consumption gram, poverty likely increased due to the mostly large-scale public investment in in- made significant contribution to growth, adverse effects of the pandemic on output frastructure, has been the main driver of thanks to government transfers rolled out growth. Limitations of the state-led devel- to households affected by the pandemic. and employment, but is expected to re- opment model have become apparent. La- Government investment spending con- turn to pre-crisis levels in 2022. bor productivity and total factor produc- tributed significantly, accounting for one- tivity are low for its income level. More- third of GDP growth. However, unem- over, the private sector still maintains a rel- ployment continued to be higher relative atively limited presence, restricted in part to the pre-crisis levels as firms were not yet FIGURE 1 Rwanda / Primary deficit, interest payments, and FIGURE 2 Rwanda / Actual and projected poverty rates and public debt real private consumption per capita Percent of GDP Poverty rate (%) Real private consumption per capita (constant LCU) 16 100 700000 90 600000 12 80 70 500000 8 60 400000 50 40 300000 4 30 200000 20 0 100000 10 0 0 -4 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2016 2017 2018 2019 2020 2021 2022 2023 2024 International poverty rate Lower middle-income pov. rate Primary deficit Interest Change in debt Upper middle-income pov. rate Real priv. cons. pc Source: World Bank. Source: World Bank. Notes: see Table 2. MPO 70 Apr 22 confident about the recovery sustainability (to 5 percent) in mid-February 2022, while improve, raising GDP growth to around and did not hire permanent employees. In continuing to support the recovery. 7 percent over 2022–2024, a lower growth August 2021, the unemployment rate was trajectory than before the pandemic. more than 3 percentage points higher than Rwanda is likely to reach its pre-pandemic in August 2019. trend on its real per capita US$ GDP by The authorities have maintained a fiscal Outlook 2023. The pace of national vaccination expansion to support the recovery amid should be kept up to ensure that 70 percent rising revenues. Total government rev- Short- to medium-term growth prospects of the population 12 years and above is ful- enues (including grants) peaked in 2021, of Rwanda’s economy are positive but con- ly vaccinated by mid-2022. estimated at 25.5 percent of GDP, up from ditional on continued national vaccination, The fiscal deficit is expected to remain ele- 23.6 percent in 2020. Government outlays recovery of the domestic economy, as well vated at around 7.4 percent of GDP in 2022 also increased, reaching 33.3 percent of as the economic consequences of the Russ- before gradually declining as revenues re- GDP in 2021, compared to 32.9 percent in ian invasion in Ukraine. Energy and com- cover and emergency spending subsides. 2020, driven mainly by continued fiscal modity prices (especially wheat) have The deficit is projected to narrow to about support for firms and households affected surged, adding to inflationary pressures 4 percent of GDP in 2024 in line with gov- by the pandemic. The government fast- from supply chain disruptions and hob- ernment commitments. Public debt is fore- tracked a US$250 million package to sup- bling the rebound from the COVID-19 cast to peak in 2023 (Table 2), but Rwanda port private investments in manufacturing pandemic. While the economic conse- remains susceptible to external shocks to and construction. The overall fiscal deficit quences of the Russian invasion, war, and growth and/or exports, and worse-than- eased to 8.2 percent of GDP in 2021, com- associated sanctions are still unfolding, expected external financing conditions, pared to 10.3 percent of GDP in 2020, as Rwanda’s GDP growth is likely to be lower which can be aggravated by a prolonged Rwanda continued to benefit from large than expected in 2022. Commodity prices pandemic and uneven recovery. Rwanda external COVID-related support. and fiscal subsidies are expected to be the needs to identify credible revenue and Driven mainly by rising prices of fresh main channels of the crisis. Even though spending measures for a growth-friendly food and energy products, annual urban poverty is expected to return to pre-crisis fiscal consolidation with a view to reach- inflation rose to 5.8 percent in February levels in 2022 behind expected increases ing their debt anchor within a reasonable and is expected to remain high in 2022. in household consumption, large increases timeframe and further strengthening their In expectation of higher inflationary pres- in food prices have the potential to delay debt management capacity. However, sures from higher international commodi- or even revert these poverty gains. With higher interest payments could put pres- ties, the National Bank of Rwanda raised eased COVID-19 restrictions, domestic de- sure on fiscal space in the medium-term, the policy interest rate by 50 basis points mand and trade are expected to gradually absent revenue reforms. TABLE 2 Rwanda / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 9.5 -3.4 10.9 6.8 7.2 7.4 Private Consumption 5.5 -5.0 8.8 6.2 6.1 5.8 Government Consumption 17.5 1.9 4.3 7.7 7.5 8.3 Gross Fixed Capital Investment 32.1 -4.5 17.0 15.2 7.6 6.6 Exports, Goods and Services 19.9 -9.2 2.8 14.9 16.2 15.7 Imports, Goods and Services 18.0 -3.4 3.6 17.7 11.0 9.3 Real GDP growth, at constant factor prices 8.9 -3.5 10.9 6.8 7.2 7.4 Agriculture 5.0 0.9 5.8 5.5 5.5 5.0 Industry 16.6 -4.2 14.7 10.7 9.2 8.5 Services 8.3 -5.5 12.2 6.0 7.2 8.2 Inflation (Consumer Price Index) 2.4 7.7 0.8 7.2 6.8 5.0 Current Account Balance (% of GDP) -11.9 -12.2 -10.9 -11.8 -11.4 -10.2 Net Foreign Direct Investment (% of GDP) 2.5 1.0 1.9 3.2 3.6 3.7 Fiscal Balance (% of GDP) -9.2 -10.4 -8.4 -7.4 -5.7 -4.2 Debt (% of GDP) 56.8 72.4 74.9 77.9 78.8 76.0 Primary Balance (% of GDP) -7.7 -8.8 -6.3 -5.0 -3.2 -1.8 a,b International poverty rate ($1.9 in 2011 PPP) 52.9 56.0 53.6 51.8 50.4 49.1 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 78.1 80.0 78.6 77.5 76.6 75.8 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 91.1 91.8 91.3 90.8 90.5 90.2 GHG emissions growth (mtCO2e) 2.8 2.1 2.9 3.2 3.3 3.2 Energy related GHG emissions (% of total) 26.1 25.9 25.3 24.6 24.0 23.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2010-EICV-III and 2016-EICV-V.Actual data: 2016. Nowcast: 2017-2021. Forecasts are from 2022 to 2024. b/ Projection using average elasticity (2010-2016) with pass-through = 0.7 based on private consumption per capita in constant LCU. MPO 71 Apr 22 a state of emergency. The December 2021 floods led to agricultural and livestock SÃO TOMÉ AND Key conditions and losses and, if uncompensated, will lead to an increase in poverty. Most Santomean challenges PRÍNCIPE households lack insurance or strategies for coping with shocks, with 65 percent STP is a small island country heavily ex- reporting either having to reduce spend- posed to shocks and constrained by its re- ing or having no strategy in the event of Table 1 2021 mote location, weak private sector, limited a shock. Population, million 0.2 institutional capacity, and low human cap- GDP, current US$ billion 0.5 ital. Underdeveloped infrastructure, espe- GDP per capita, current US$ 2559.2 cially unreliable and costly electricity, is a International poverty rate ($1.9) a 25.6 key challenge to growth and fiscal sustain- Recent developments a 57.0 ability. STP is highly dependent on exter- Lower middle-income poverty rate ($3.2) a nal concessional financing and has effec- Real GDP growth is estimated to have Upper middle-income poverty rate ($5.5) 82.9 a tively pursued a “public expenditures-led” slowed down from 3.1 percent in 2020 Gini index 40.7 growth model. With the structural decline to 1.8 percent in 2021 as international fi- b 106.8 School enrollment, primary (% gross) in external financing compounded by low nancing from development partners for b 70.4 Life expectancy at birth, years domestic revenue mobilization, the pace of COVID-19 response declined, continued Total GHG Emissions (mtCO2e) 0.4 growth has slowed in recent years. global travel restrictions dampening the Source: WDI, Macro Poverty Outlook, and official data. STP’s fast-growing population is young recovery of tourism, and prolonged en- a/ Most recent value (2017), 2011 PPPs. and lacking employment opportunities, ergy shortages in mid-2021 disrupting b/ WDI for School enrollment (2017); Life expectancy (2019). heavily relying on informal and subsis- economic activity. tence activities. Poverty remains wide- The current account deficit (CAD), ex- spread, with about 25.9 percent of the pop- cluding grants, is expected to have ulation living on less than $1.90 per day (in widened given the increase in imports, The challenges presented by the 2011 PPP terms) in 2017. which was driven primarily by higher COVID-19 pandemic and the energy cri- The COVID-19 pandemic in STP brought oil prices, while low tourism activity un- sis on São Tomé and Príncipe have been the highest death rate in Africa, at about dermined receipts. To address the unex- further aggravated by flooding and land- 33 deaths per 100,000 inhabitants, com- pected fiscal expenditures resulting from slides from severe rain in end-2021. Nev- pared to 19 in the rest of the continent. rainfall and floods, the government Vaccination has been advancing well, drew on the recently allocated SDRs. ertheless, the economy continues to grow however, and as of end-February, nearly Thus, net international reserves in early and the outlook for 2022 is encouraging 112 thousand Santomean (corresponding 2022 were reduced to around US$ 30 as tourism is projected to recover. Imple- to 97 percent of the adult population or million (28 percent YoY) and covered menting reforms in the tax system and 49 percent of the total population) had re- two months of imports. ceived at least one vaccine dose. In De- Lower levels of external grants and do- energy sector is paramount to ensure fis- cember 2021, heavy rainfall and the con- mestic revenues due the economic decel- cal sustainability, robust growth, and sequent flooding caused significant dam- eration reduced overall fiscal revenues. long-term poverty reduction. age, which led the authorities to declare However, expenditures increased given FIGURE 1 São Tomé and Príncipe / Domestic revenue and FIGURE 2 São Tomé and Príncipe / Actual and projected grants poverty rates and real GDP per capita Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 25 100 25000 90 20 80 20000 70 15 60 15000 50 40 10000 10 30 20 5000 5 10 0 0 0 2010 2012 2014 2016 2018 2020 2022 2024 2010 2012 2014 2016 2018 2020 2022P International poverty rate Lower middle-income pov. rate Domestic Revenue Grants Upper middle-income pov. rate Real GDP pc Sources: Ministry of Finance, IMF, World Bank MTI. Source: World Bank. Notes: see Table 2. MPO 72 Apr 22 the continued pandemic-related needs. the current account, although this may be The domestic primary deficit is estimated offset by the higher costs of food and fuel to have deteriorated to around 3.8 percent Outlook imports. Private and official external capi- of GDP and debt-to-GDP ratio increased tal could finance a wider deficit. Address- to 95.6 percent in 2021, with new debt Real GDP growth is expected to increase ing prolonged unsettled external arrears in mostly from multilateral lenders. modestly to 2.8 percent in 2022, driven by the energy sector is the main challenge for Inflation stood at 9.5 percent in 2021 dri- higher agricultural production and exports debt sustainability. ven by higher food prices, mainly ex- (cocoa and palm oil), a more robust recov- Infrastructure destruction and economic plained by the hike in global commodity ery of tourism, and improved industrial disruption due to the December 2021 prices. The central bank continues to activity due to better conditions in the en- floods highlight the risks faced by São tighten liquidity that was earlier injected ergy sector and the implementation of ex- Tomé from climate events as well as the to support the economic response to the ternally financed projects. Additional fiscal need to focus on adaptation to climate pandemic: the growth rate of the mon- needs resulting from the floods, remaining change as a key priority in the country’s etary aggregate (M2) went from an in- pandemic-related expenditures, and the development strategy. Uninsured house- crease of 14 percent in 2020 to a contrac- slow recovery of domestic revenues are ex- hold losses due to the recent flooding and tion of 4.1 percent in 2021. pected to cause a deterioration of internal the potential increase in inflation of some To help poor families better absorb and external balances in 2022. While in- basic items, partially due to the current shocks and alleviate poverty, the author- flation dynamics should be generally increase in the price of grains, could in- ities have expanded youth skills training favourable, the introduction of the VAT crease poverty. These effects are mitigat- programs and the vulnerable families’ may lead to temporary increase in infla- ed by the continued economic recovery cash transfer program. They also extend- tion. Food inflation and insecurity may be that is expected to improve household ed the emergency COVID-19 shock re- further exacerbated by the increase in food earnings and the extension to the tempo- sponse program providing cash transfers prices triggered by the economic conse- rary cash program that will maintain el- to an additional 16,000 households in quences of the Russian invasion, war and evated levels of social protection cover- 2021 and 2022, which will help mitigate associated sanctions. age through end-2022. As a result, pover- the impacts of the flood and prevent an As global economic conditions improve, ty projections suggest little movement in increase in poverty. exports and tourism earnings will bolster overall poverty rates. TABLE 2 São Tomé and Príncipe / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 2.2 3.1 1.8 2.8 3.0 3.3 Real GDP growth, at constant factor prices 2.5 2.3 1.8 2.8 3.0 3.3 Agriculture 1.0 -1.1 1.1 2.4 3.2 3.5 Industry 0.7 4.4 -0.8 3.8 4.0 4.2 Services 3.2 2.2 2.5 2.6 2.7 3.1 Inflation (Consumer Price Index) 7.7 9.4 9.5 12.5 11.0 9.5 Current Account Balance (% of GDP) -19.9 -11.4 -10.8 -12.0 -9.6 -8.6 Fiscal Balance (% of GDP) -2.6 -4.9 -4.5 -3.7 -5.3 -4.7 Debt (% of GDP) 99.9 87.1 95.6 93.3 89.9 85.3 Primary Balance (% of GDP) -2.0 -4.5 -3.8 -3.3 -4.9 -4.3 a,b International poverty rate ($1.9 in 2011 PPP) 25.4 25.2 25.2 25.1 24.9 24.8 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 56.8 56.6 56.6 56.5 56.3 56.2 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 82.6 82.4 82.3 82.2 81.9 81.7 GHG emissions growth (mtCO2e) 1.2 0.8 0.9 0.8 1.0 1.1 Energy related GHG emissions (% of total) 39.3 39.6 39.9 40.1 40.3 40.6 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Projection using point to point elasticity at regional level with pass-through = 0.7 based on GDP per capita in constant LCU. Actual data: 2017. Nowcast: 2018-2021. Forecasts are from 2022 to 2024. b/ Actual data: 2017. Nowcast: 2018-2021. Forecast are from 2022 to 2024. Actual data: 2017. Nowcast: 2018-2021. Forecasts are from 2022 to 2024. MPO 73 Apr 22 Risks are mainly on the downside. A more prolonged conflict in Ukraine could in- SENEGAL Key conditions and crease pressure on food and energy prices, further reducing global demand and in- challenges creasing the risk of food insecurity in the rural regions. The COVID-19 crisis aggra- Table 1 2021 Over the last decade, Senegal benefited from vated emerging fiscal vulnerabilities, un- Population, million 17.2 enhanced international competitiveness, derlining the importance of transparent, GDP, current US$ billion 26.6 lower fertility rates, and structural transfor- effective fiscal and debt management in GDP per capita, current US$ 1549.2 mation. Pre-COVID, real GDP growth aver- the mid-term. In addition, insecurity a 7.6 International poverty rate ($1.9) aged around 6 percent between 2014-19, spreading from the Sahel and political tur- a 34.0 boosted by investment, private consump- moil in neighboring countries could nega- Lower middle-income poverty rate ($3.2) a 66.8 tion, and a favorable external environment. tively affect economic activity and invest- Upper middle-income poverty rate ($5.5) Gini index a 38.1 However, growth was less inclusive, charac- ments in the eastern provinces and reduce School enrollment, primary (% gross) b 83.0 terized by slow poverty reduction and stag- exports. Finally, Senegal is exposed to cli- b 67.9 nating inequality. The poverty incidence mate shocks (floods, droughts, and associ- Life expectancy at birth, years (using the national poverty line at FCFA ated health hazards), which could reduce Total GHG Emissions (mtCO2e) 39.1 332,539 a year) declined from 43 percent in agricultural productivity and adversely Source: WDI, Macro Poverty Outlook, and official data. 2011 to 37.8 percent in 2018/19 – falling short impact the recovering tourist industry. a/ Most recent value (2018), 2011 PPPs. b/ WDI for School enrollment (2020); Life expectancy of top performing sub-Saharan African (2019). countries, while socio-economic disparities persist. COVID-19 worsened the situation, especially in urban areas, where service ac- Recent developments Growth accelerated to 6.1 percent in tivities are concentrated. However, the 2021, from 1.3 percent in 2020, driven by poverty gap deteriorated more in rural ar- Growthacceleratedin2021to6.1percent(3.3 eas, suggesting that the rural poor suffered percent in per capita terms), from 1.3 percent industrial production and a recovery in most. In addition, the pandemic worsened in 2020 (-1.4 percent in per capita terms), dri- services as COVID-19 restrictions eased. non-monetary poverty with potential long- ven by private consumption and invest- The fiscal deficit remained at 6.2 percent term negative effects on human capital, no- ment. Industrial production and services of GDP, further increasing the debt-to- tably through lower school attendance. were strong while agriculture grew moder- Structural vulnerabilities hamper Sene- ately after arecord contribution in 2020. GDP ratio. Risks to the outlook include gal’s potential growth. Total factor pro- Inflation decelerated from 2.5 in 2020, to inflationary pressures, potentially exacer- ductivity declined from 2000 to 2014 and 2.2 in 2021 percent, due to a slower in- bated by a prolonged conflict in Ukraine, grew tepidly from 2015, highlighting both crease for food prices and lower telecom- regional insecurity, new COVID-19 vari- the low level of human capital and struc- munication prices. Food prices contributed ants, and extreme climate events. tural labor-supply constraints. In addition, 1.4 ppts in 2021, compared to 1.6 ppts in insufficient competition, and inadequate 2020 driven by robust domestic supply in financing have constrained the develop- H1-2021, from record production in 2020, ment of the private sector, limiting job cre- and fiscal measures implemented to limit ation in productive sectors. basic food price increases. However, food FIGURE 1 Senegal / Evolution of main macroeconomic FIGURE 2 Senegal / Actual and projected poverty rates and indicators real private consumption per capita Percent and percentage points Percentage points Poverty rate (%) Real private consumption per capita (constant LCU) 12 0 100 700000 10 90 -2 600000 8 80 6 -4 70 500000 4 60 400000 -6 50 2 40 300000 0 -8 30 200000 -2 -10 20 -4 100000 10 -6 -12 2015 2017 2019e 2021p 2023p 0 0 GDP growth (%) 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 Primary fiscal balance (% of GDP) International poverty rate Lower middle-income pov. rate Current account balance (% of GDP, rhs) Upper middle-income pov. rate Real priv. cons. pc Sources: Senegalese authorities and World Bank staff calculations. Sources: Senegalese authorities and World Bank staff calculations. Notes: see Table 2. MPO 74 Apr 22 prices started picking up in June 2021, growth drivers were concentrated in percent of GDP in 2022 up from a projected reaching 3.8 percent y/y in December 2021. urban areas, while rural areas remain 4.8 percent before the war, as fuel subsi- The current account deficit (CAD) widened more vulnerable to shocks as social dies rise and import duties and VAT tax slightly from 9.9 percent of GDP in 2020, to safety nets remain nascent. holidays are implemented to limit the in- 10.2 percent in 2021, driven by oil and gas in- crease in domestic food prices. The deficit vestment-related services imports, while should gradually narrow to reach the key export markets such as tourism re- WAEMU target of 3 percent by 2024, dri- mained subdued. The deficit was financed Outlook ven by a revenue based fiscal consolida- by strong hydrocarbon related foreign di- tion. The debt-to-GDP ratio should peak rect investment and commercial borrowing. The recovery momentum is jeopardized by at 73.1 percent in 2022, before gradually The fiscal deficit remained high for a sec- the conflict in Ukraine. Real growth is ex- decreasing driven by higher nominal GDP ond consecutive year, at 6.2 percent of pected to decelerate to 4.4 percent in 2022, and lower fiscal deficits. GDP in 2021 (6.3 percent of GDP in 2020) as private consumption and investment de- WAEMU reserves are expected to fall to as COVID response measures extended in- cline with higher food and energy prices around 5.5 months of imports in 2022 and to 2021. An increase in tax revenues partly and greater uncertainty. In 2023-2024, 5.3 months in 2023 and 2024, reflecting offset a drop in grants, with total expen- growth could average 9.5 percent, driven by faster growth in imports and a reduction in ditures at 25 percent of GDP. The debt- the expected start of hydrocarbon produc- net capital inflows (as a percent of GDP), to-GDP ratio reached 72.5 percent of GDP tion. Inflation is expected to peak at 3.8 per- as the environment for Eurobond is- end 2021, a +9.4 ppt increase since 2019. cent in 2022, due to trade disruptions exac- suances remains uncertain. Growth- Senegal’s monetary and exchange rate erbated by the conflict in Ukraine, with en- friendly fiscal consolidation and the imple- policies are managed by the Central Bank ergy and food prices rising the most. mentation of structural reforms are key to of West African States (BCEAO), which The CAD is expected to widen to 10.8 per- maintaining reserves at an optimal level. maintains a fixed peg between the CFA cent of GDP as import prices, notably for The poverty rate is expected to remain sta- Franc and the Euro. Its reserves reached energy, sharply increase. Hydrocarbon re- ble at around 34 percent in 2022 as growth 5.8 months of imports of goods and ser- ceipts should significantly improve CAD remains concentrated in urban areas. Re- vices in 2021, as a result of increased ex- balances in 2023-2024. The deficit will be fi- cent fiscal measures, including the removal ports, the August 2021 IMF SDR alloca- nanced by oil-sector related foreign invest- of regressive tax exemptions, should con- tion, and portfolio inflows linked to Eu- ment and a mix of concessional and com- tribute to alleviate poverty. Over the medi- robond issuances in the region (by Benin, mercial borrowing. um-term, poverty rates are expected to Côte d’Ivoire, Senegal and BOAD). Fiscal policy is expected to remain expan- gradually revert to pre-crisis levels with Poverty incidence (USD 3.2 a day, sionary for a third consecutive year as the more progressive fiscal measures, com- 2011 PPP) is estimated to have re- government tries to shield the population bined with the extension of social safety mained at around 34 percent in 2021. from the impacts of the Ukraine crisis. The nets, preventing vulnerable households Spatial inequalities increased as fiscal deficit is projected to increase to 6.8 from falling into poverty. TABLE 2 Senegal / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 4.6 1.3 6.1 4.4 8.5 10.6 Private Consumption 3.8 2.2 6.0 4.0 6.1 8.9 Government Consumption 7.5 2.6 5.4 11.5 10.4 7.8 Gross Fixed Capital Investment 10.3 4.3 5.0 3.3 4.3 5.3 Exports, Goods and Services 14.7 -13.2 14.7 9.1 16.9 16.0 Imports, Goods and Services 6.8 7.0 8.0 7.5 7.0 6.8 Real GDP growth, at constant factor prices 4.5 1.9 5.8 4.4 8.5 10.6 Agriculture 4.3 12.8 -1.0 5.1 5.4 6.5 Industry 5.0 -0.4 10.9 5.3 10.0 12.8 Services 4.3 -0.1 5.7 3.8 8.7 10.8 Inflation (Consumer Price Index) 1.0 2.5 2.2 3.8 2.9 2.6 Current Account Balance (% of GDP) -8.0 -9.9 -10.2 -10.8 -8.5 -5.8 Fiscal Balance (% of GDP) -3.9 -6.3 -6.2 -6.8 -3.9 -3.0 Debt (% of GDP) 63.1 67.8 72.5 73.1 69.7 64.5 Primary Balance (% of GDP) -2.0 -4.2 -4.2 -4.7 -1.7 -1.0 a,b International poverty rate ($1.9 in 2011 PPP) 7.6 7.6 7.5 7.4 7.3 7.0 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 33.9 34.0 33.8 33.7 33.3 32.8 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 66.7 66.7 66.4 66.1 65.4 64.5 GHG emissions growth (mtCO2e) 6.2 2.9 4.1 3.7 6.4 6.3 Energy related GHG emissions (% of total) 36.1 36.4 37.4 38.2 39.9 41.9 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2011-ESPS-II and 2018-EHCVM.Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. b/ Projection using point to point elasticity at regional level with pass-through = 0,7 based on private consumption per capita in constant LCU. MPO 75 Apr 22 temporary roadside stalls to sell fruits and seafood products to cope with the SEYCHELLES Key conditions and shock. As tourism started to return, social protection programs were end- challenges ed as they became a burden to the na- tional budget. While the end of social Table 1 2021 Tourism and fisheries are the key sectors protection programs reduced govern- Population, million 0.1 of the Seychelles’ economy. The fishing ment fiscal pressures, there are reasons GDP, current US$ billion 1.4 industry, which is host to one of the to believe that poverty may have been GDP per capita, current US$ 13991.5 largest tuna canneries in the world, con- negatively affected. a 0.5 International poverty rate ($1.9) tributes to between 8 and 20 percent The recovery process may be hindered a 1.1 to GDP annually and the tourism sector by the emergence of new COVID-19 vari- Lower middle-income poverty rate ($3.2) a 5.2 contributes 30 percent to GDP. The coun- ants. In addition, Russia’s attack on Upper middle-income poverty rate ($5.5) Gini index a 32.1 try is also dependent on imports. This Ukraine is expected to increase the con- School enrollment, primary (% gross) b 100.8 lack of economic diversification exposes cerns around inflation since Russia is b 73.9 Seychelles to external shocks. These among the world's biggest oil exporters Life expectancy at birth, years shocks are transmitted through disrup- and a major grain exporter along with Total GHG Emissions (mtCO2e) 0.8 tions in international travel and tourism Ukraine, whose Black Sea ports have Source: WDI, Macro Poverty Outlook, and official data. demand, as well as through fluctuations been closed to shipping. a/ Most recent value (2018), 2011 PPPs. b/ WDI for School enrollment (2020); Life expectancy in fishing stocks and instabilities in the (2019). price of essential commodities such as food and fuel prices. Before the pandemic, Seychelles was Recent developments Real GDP increased by 7.9 percent in on a steady path to decrease poverty, 2021 and is projected moderate to 4.6 reaching around 5.0 percent in 2019 Economic growth is estimated at 7.9 (when measured against the poverty percent for 2021 due primarily to percent in 2022 as tourist arrivals de- line for upper middle-income countries a recovery in the tourism sector. cline because of the impact of the Russ- of USD 5.5 a day per capita in PPP Tourist arrivals rebounded in 2021 ian invasion of Ukraine. In the medium- terms). While the decline in the pover- following the reopening of borders term the fiscal balance is expected to re- ty rate has been driven by a rise in in late March 2021, and the emer- incomes from paid employment and gence of new tourist markets (Russia, turn to a sustainable path as the gov- self-employment and substantial bene- UAE and Israel). With the fishery ernment undertakes fiscal consolidation fits from various social protection pro- sector selling about 50 percent of and the economy continues to recover. grams, salary cuts and job losses in the the domestic artisanal catches to re- Poverty declined in 2021 due to im- tourism industry due to COVID-19 in- sorts and restaurants, the fishery sec- provement in economic growth. creased poverty rates to 6.6 percent in tor grew by 2.5 percent in 2021 as 2020. To limit the poverty impacts of the tourism sector recovered. Private the crises, the government introduced consumption also contributed to the several social protection programs and recovery in the economy. The aver- some low-income households opened age inflation rate was 10.0 percent in FIGURE 1 Seychelles / Fiscal balance and public sector debt FIGURE 2 Seychelles / Actual and projected poverty rates and real GDP per capita Percent of GDP Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 10 120 16 120000 5 14 100 100000 12 0 80 80000 10 -5 60 8 60000 -10 6 40 40000 -15 4 -20 20 20000 2 -25 0 0 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Primary Balance (LHS) Overall Balance (LHS) International poverty rate Lower middle-income pov. rate Public Sector Debt (RHS) Upper middle-income pov. rate Real GDP pc Sources: WDI and World Bank staff estimates. Source: World Bank. Notes: see table 2. MPO 76 Apr 22 2021 due to increased domestic de- mitigate the poverty impacts of COVID-19, The fiscal deficit is expected to contract mand and rising imported inflation poverty numbers for 2021 and 2022 could over the medium-term, as the govern- due to tight supply conditions. De- be higher than the above projection. ment continues fiscal adjustment. The spite a gradual revival of tourist ac- GOS introduced expenditure-saving tivity, the current account deficit re- measures in 2021 that are expected to mained high at -20.3 percent of GDP continue in the medium term, including: in 2021 (compared to -29.7 percent Outlook limiting new recruitments to key posi- in 2020). Gross international reserves tions in certain ministries and depart- stood at US$ 702 million at end-De- Economic growth is projected to average ments; freezing salaries for public ser- cember 2021 (4.8 months of imports). 5.1 percent over the medium-term. Given vice employees; freezing long term ser- Due to the withdrawal of the COVID-19 the structure of the domestic economy, its vice allowance; and limiting the intro- fiscal support package, the fiscal balance recovery is conditional on external devel- duction of new schemes of government deficit improved from 17.8 percent of GDP opments, specifically the revival of the service. In the medium-term, revenue in 2020 to 9.1 percent of GDP in 2021. The global travel and tourism industry. Tourist collection will increase, driven by a re- decline in transfers (to around 9.0 percent arrivals are projected to moderate to a sumption of economic activities as well of GDP in 2021 from 18.0 percent of GDP growth rate of 14 percent in 2022, relative as measures to improve tax policy such in 2020), reflects the removal of COVID-19 to 59 percent in 2021 (due to projected lost as: (i) the prevention of base erosion of measures such as the guarantee of salaries in tourist arrivals from Russia and Ukraine the corporate tax base through interna- to the private sector and the increase in al- (23 percent of arrivals in 2021)) and the tional profit shifting; (ii) streamlining of location to social protection to finance the economy is projected to grow by 4.6 per- VAT exemptions. unemployment relief scheme program cent. In 2023 and 2024, economic growth Poverty is projected to continue to de- which were all stopped in early 2021. is projected to be 5.6 percent and 5.0 per- cline gradually to 5.1 percent and 5.0 As a result of the increase in visitor ar- cent, respectively, as tourism continues to percent by 2023 and 2024 ($5.5 a day rivals, poverty is expected to decrease rebound. Food and oil prices are expected per capita line), respectively. Neverthe- from 5.3 percent in 2021 to 5.2 percent in to remain elevated in 2022 as the Russian less, this depends on the ability of the 2022. However, due to the end of the finan- invasion of Ukraine continues and cause tourism and services sectors to fully cial assistance for job retention program supply disruptions in commodity (wheat bounce back to their pre-COVID-19 levels that the government had introduced to and maize) and fuel. over the next few years. TABLE 2 Seychelles / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 2.0 -13.3 7.9 4.6 5.7 5.0 Private Consumption 4.8 -10.8 8.8 6.8 7.0 4.7 Government Consumption -0.2 4.3 2.3 0.4 -3.8 4.0 Gross Fixed Capital Investment -2.7 -37.7 22.1 7.1 9.7 3.5 Exports, Goods and Services 2.0 -39.6 12.2 16.8 17.8 17.4 Imports, Goods and Services 0.9 -38.2 14.3 15.3 14.4 14.9 Real GDP growth, at constant factor prices 1.8 -13.4 7.9 4.6 5.6 5.0 Agriculture 1.1 -0.2 3.1 1.0 1.4 1.1 Industry 2.1 0.7 3.6 2.4 2.0 2.0 Services 1.7 -15.4 8.7 5.0 6.2 5.5 Inflation (Consumer Price Index) 2.0 1.2 10.0 5.7 1.6 1.2 Current Account Balance (% of GDP) -18.8 -29.7 -20.3 -27.7 -23.0 -18.4 Net Foreign Direct Investment (% of GDP) 17.7 10.1 13.1 11.0 14.6 13.1 Fiscal Balance (% of GDP) 1.0 -17.8 -9.1 -5.7 -1.6 0.9 Debt (% of GDP) 58.7 102.3 76.5 79.6 76.8 73.5 Primary Balance (% of GDP) 3.6 -14.3 -6.6 -3.2 0.9 3.2 a,b International poverty rate ($1.9 in 2011 PPP) 0.5 0.7 0.6 0.5 0.5 0.4 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 1.1 1.5 1.2 1.2 1.0 1.0 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 5.0 6.6 5.3 5.2 5.1 5.0 GHG emissions growth (mtCO2e) 3.7 -2.8 7.3 5.8 6.3 5.3 Energy related GHG emissions (% of total) 79.8 80.6 81.5 82.1 82.8 83.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2018-HBS. Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2018) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 77 Apr 22 interest payments to domestic revenue was estimated at 19.8 percent in 2020. Inflation SIERRA LEONE Key conditions and has remained elevated, largely in double digits, raising concerns for food security. challenges Economic growth has translated into mod- est per capita income gains because of Table 1 2021 Sierra Leone’s economy is highly depen- rapid population growth (averaging 2.1 Population, million 8.1 dent on mining and agricultural activities, percent per annum). About 80 percent of GDP, current US$ billion 4.1 making it vulnerable to external (e.g., com- the population is under the age of 35 years, GDP per capita, current US$ 504.4 modity prices and global demand) and do- making efforts to accelerate job creation a 43.0 International poverty rate ($1.9) mestic shocks (e.g., weather). Prior to the and increase access to public services (e.g., a 76.0 Ebola epidemic, mining, primarily iron healthcare and education) a critical chal- Lower middle-income poverty rate ($3.2) a 35.7 ore, accounted for 15 percent of GDP and lenge. Poverty (measured using the inter- Gini index School enrollment, primary (% gross) b 141.3 about 80 percent of merchandise exports. national poverty line of US$1.9 per day, Life expectancy at birth, years b 54.7 However, the sector has exhibited signifi- 2011 PPP) fell by 11.7 percentage points Total GHG Emissions (mtCO2e) 11.4 cant volatility in recent years, with iron ore over the last decade to 43 percent in 2018. output declining to almost zero in 2018–20. Since three-quarters of the poor live in rur- Source: WDI, Macro Poverty Outlook, and official data. a/ Most recent value (2018), 2011 PPPs. Thus, while growth averaged 4.2 percent al areas, poverty among subsistence farm- b/ WDI for School enrollment (2020); Life expectancy over the past decade, it has fluctuated ers remains a major challenge. (2019). widely (by 10.3 percent from the mean, two-thirds of the time). In 2015, the econ- omy was hit simultaneously by a collapse After contracting in 2020, Sierra in global commodity prices and the Ebola Recent developments Leone’s economy grew by 3.1 percent in epidemic. In 2020, the COVID-19 pandem- ic also affected domestic and external de- After contracting by 2 percent in 2020, the 2021, driven mainly by agriculture and mand concomitantly. Mobility restrictions economy grew by 3.1 percent in 2021, re- mining. The fiscal deficit remained ele- adversely impacted private sector employ- flecting the easing of mobility restrictions vated, despite improvements in rev- ment and incomes, especially in urban ar- as well as fiscal stimulus and structur- enues, driven by overruns in recurrent eas, leading to a likely increase in poverty. al reform efforts. Agriculture contributed spending. With growth averaging 4.4 The authorities have struggled to restore more than half of overall growth (1.9 per- macroeconomic stability and fiscal bal- centage points) due to increased private percent during the medium-term, pover- ances since the Ebola shock. Since 2014, the sector participation in input market. Both ty is expected to return to its 2019 level budget deficit has exceeded 5.5 percent of industry and services contributed 0.6 per- by 2023, but high inflation is eroding GDP, due to low domestic revenue mobi- centage points each, reflecting a grad- real incomes and may affect the outlook. lization (average of 12.6 percent of GDP) ual recovery of mining and manufactur- and expenditure overruns (average of 22.0 ing as well as trade and tourism. On the The Ukraine-Russia crisis presents risks percent of GDP). Sierra Leone is at high demand side, growth was driven by fi- to the outlook primarily through fluctu- risk of debt distress, with debt dynamics nal consumption and gross investments ations in commodity prices. partly affected by increased reliance on ex- (mainly public investment following the pensive domestic borrowing. The ratio of resumption of capital projects). Headline FIGURE 1 Sierra Leone / Real GDP growth and sectoral FIGURE 2 Sierra Leone / Actual and projected poverty and contributions to real GDP growth real GDP per capita Percent, percentage points Poverty rate (%) Real GDP per capita (constant million LCU) 6 90 1.80 80 1.60 4 70 1.40 60 1.20 2 50 1.00 40 0.80 0 30 0.60 Agriculture 20 0.40 Industry 10 0.20 -2 Services GDP at Factor Cost 0 0.00 2011 2013 2015 2017 2019 2021 2023 -4 International poverty rate Lower middle-income pov. rate 2019 2020 2021e 2022f 2023f 2024f Real GDP pc Sources: StatSL and World Bank. Source: World Bank. Notes: See Table 2. MPO 78 Apr 22 inflation declined to 8.9 percent in March against US dollars, and 9 percent in the the level recorded in 2019 for longer than 2021, before it accelerated to 17.9 percent parallel market). However, gross external expected. The overall fiscal deficit is pro- (year-on-year) by end-December, reflect- reserves increased to US$933 million (6.1 jected to narrow to 3.0 percent of GDP by ing global food price increases as well months of imports), with the new Inter- 2024, driven by gains in domestic revenue as a combination of recovering domestic national Monetary Fund Special Draw- mobilization, expenditure rationalization, consumer demand and enduring supply ing Rights allocation (US$281 million) en- and public financial management reforms. chain disruptions. High food inflation in- hancing the country’s ability to cushion Fiscal policy would focus on protecting so- creased the share of the food insecure external shocks. cial expenditures to support human capital population from 50 percent (3.6 million) development. The current account deficit in 2015 to 57 percent (4.7 million) in is expected to narrow to 12.9 percent of 2020. The share of the population living GDP by 2024 as the recovery in the mining in poverty is estimated to have increased Outlook sector boosts export growth. during the early stages of the pandemic The outlook is subject to significant in 2020 (especially in urban areas among The economy is expected to gradually re- downside risks and uncertainties related the self-employed) by about 2 percentage cover, mainly due to mining and agricul- to the Ukraine-Russia crisis, the 2023 gen- points, before it fell marginally in 2021. ture. Real GDP growth is projected to av- eral elections, and the path of the pan- The overall fiscal deficit increased slightly erage 4.4 percent over the medium term demic. Wide fluctuations in commodity by 0.1 percentage points to 5.9 percent of (2022–24), with contributions from invest- prices due to the war in Ukraine can pose GDP in 2021, mainly due to higher-than- ments (especially in mining and agricul- both gains and losses for the economy, expected expenditure on wages, goods ture) on the demand side, and from agri- while a sharp rise in global food and fu- and services, and subsidies for electricity culture, tourism, construction, and mining el prices poses a risk of higher inflation generation. The expenditure overruns and manufacturing on the supply side. and potentially increased food insecuri- were aggravated by inflation as the price Headline inflation is expected to remain ty. Higher domestic inflation can cause of goods and services rose. However, rev- elevated in the coming years and decline expenditure overruns, while higher fu- enue collection improved remarkably, gradually to single digits as domestic food el prices, if not passed through to con- and tax revenue reached 15.3 percent of production increases by 2024 and offsets sumers, can put pressure on the gov- GDP, up from 13.8 percent of GDP in the the effect of high international prices. A ernment’s subsidy bill. On the upside, a previous year, due in part to one-off min- sustained increase in fertilizer and fuel sharp increase in the price of metals such ing revenues. Public debt increased from prices in 2022 due to the ongoing Ukraine- as iron ore can: (i) significantly affect the 76.3 percent in 2020 to an estimated 76.9 Russia conflict is likely to hamper agricul- mining outlook; (ii) present terms of trade percent of GDP in 2021, mainly because tural production. While strong overall gains; (iii) bolster the demand for Sierra of new multilateral borrowing. The cur- growth may reduce poverty, headwinds Leone’s iron ore as the world searches for rent account deficit widened with the re- from inflation, including the rise of fuel alternative sources; and (iv) increase gov- covery in domestic demand and the de- and fertilizer prices, may dampen ernment revenue from mining. preciation of the Leone (by 11 percent progress, keeping the poverty rate above TABLE 2 Sierra Leone / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 5.3 -2.0 3.1 3.9 4.4 4.8 Private Consumption 4.3 4.3 4.2 6.2 4.9 5.9 Government Consumption 5.1 2.7 0.1 0.0 15.7 0.9 Gross Fixed Capital Investment -34.2 -4.1 7.6 9.8 13.1 12.4 Exports, Goods and Services -1.6 -9.8 40.5 18.0 9.5 10.1 Imports, Goods and Services -7.0 7.5 18.4 12.4 13.1 7.8 Real GDP growth, at constant factor prices 5.3 -2.0 3.1 3.9 4.4 4.8 Agriculture 5.4 1.6 3.7 3.5 3.6 3.6 Industry 10.9 -7.1 3.8 9.4 4.7 4.7 Services 3.8 -5.9 2.0 2.9 5.5 6.7 Inflation (Consumer Price Index) 14.8 13.5 11.9 14.2 12.1 10.9 Current Account Balance (% of GDP) -15.3 -7.0 -13.7 -15.9 -13.9 -12.9 Net Foreign Direct Investment (% of GDP) 7.9 3.4 8.5 8.0 6.8 6.2 Fiscal Balance (% of GDP) -3.1 -5.8 -5.9 -5.0 -4.2 -3.0 Debt (% of GDP) 70.9 76.3 76.9 76.8 76.8 75.3 Primary Balance (% of GDP) -0.4 -2.7 -2.8 -2.0 -1.4 -0.1 a,b International poverty rate ($1.9 in 2011 PPP) 41.1 43.4 42.8 41.7 40.3 38.8 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 74.7 76.3 75.9 75.2 74.2 73.1 GHG emissions growth (mtCO2e) 3.1 1.4 3.0 3.0 2.7 2.8 Energy related GHG emissions (% of total) 15.1 14.6 14.5 14.4 14.3 14.1 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2011-SLIHS and 2018-SLIHS. Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. b/ Projection using point-to-point elasticity (2011-2018) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 79 Apr 22 market. The traditional economic activities such as livestock production and the SOMALIA Key conditions and booming new services sectors such as telecommunications provide insufficient challenges jobs to move people out of poverty. With no monetary policy instruments and al- Table 1 2021 While Somalia is making gradual progress most no fiscal space, Somalia lacks the pol- a 15.2 Population, million towards building its foundational institu- icy options to respond to shocks or to in- GDP, current US$ billion 7.3 tions, key drivers of fragility prevail. De- vest in human and physical capital. Soma- GDP per capita, current US$ 480.0 cisions on power and resource sharing be- lia is addressing high levels of indebted- b 69.1 International poverty rate ($1.9) tween the Federal Government and the re- ness through the Heavily Indebted Poor b 37.0 gions are still to be made, particularly in Countries (HIPC) initiative, which pro- Gini coefficient c 33.0 sectors such as security and natural re- vides an anchor for implementing struc- School enrollment, primary (% gross) Life expectancy at birth, years d 57.4 sources. Decades of conflict destroyed in- tural reforms and accessing financing for frastructure, led to a flight of human capi- investments required to stimulate growth Sources: World Development Indicators (WDI), World Bank, UNFPA, and Macro Poverty Outlook. tal, and eroded the social contract. The cur- and reduce poverty. a/ Estimates based on 2013 population estimates by rent administration’s term ended in Febru- UNFPA and assumes an average annual population growth of 2.8 percent. ary 2021, but disagreements over election b/ Most recent value (2017). modalities have led to delays in the elec- c/ Somali Poverty and Vulnerability Assessment Report (World Bank, 2019). tions and contributed to rising tensions be- Recent developments d/ Life expectancy for 2019 from WDI. tween the regions. Poverty levels are high and widespread. The economy made a modest recovery in The international poverty rate (using the 2021, growing by an estimated 2.2 per- US$1.90/person/day poverty line) was esti- cent following a contraction of 0.3 percent The economy is showing modest signs of mated at 69 percent in 2017. Although re- in 2020. By February 2022, only 5.5 per- recovery with real GDP growth estimated mittance inflows support household con- cent of the population was fully vacci- at 2.2 percent in 2021, following a con- sumption, most Somalis will remain poor nated, raising the prospect of a lingering traction of 0.3 percent in 2020. Increased without growth in per capita income. Ex- COVID-19 pandemic. Economic activities private sector activity in urban areas, ternal shocks such as climatic disasters and in cities are the main drivers of growth the COVID-19 pandemic have led to a loss and higher demand for imported con- higher remittance inflows, and a rebound of livelihoods, increased food insecurity, sumer goods (y-o-y increase of 9 percent of exports are driving the recovery. How- and contributed to forced displacement. in 2021) is supporting consumption and ever, recurrent climatic shocks and politi- Economic growth has been low and investment. Credit to the private sector cal uncertainty are affecting the economy volatile due to persistent insecurity and grew by over 40 percent and remittance climatic shocks, leading to insufficient job inflows increased by 30 percent in 2021 and wellbeing of the population, con- creation. Real GDP growth averaged 2.9 compared to the previous year. Exports in tributing to forced displacement and percent between 2014 to 2021, on par with 2021 have recovered to the pre-COVID-19 widespread poverty. population growth rate. Overall employ- level, although a severe drought muted ment remains low, with just over half of performance in the fourth quarter. Infla- the population participating in the labor tion has remained below 5 percent due FIGURE 1 Somalia / Overall budget balance FIGURE 2 Somalia / Actual and projected poverty rates and real GDP per capita US$, Millions Poverty rate (%) Real GDP per capita (constant 2015 USD) 60 110 430 50 100 425 40 30 90 420 20 80 415 10 0 70 410 -10 60 405 -20 50 400 -30 2017 2019 2021 2023 -40 International poverty rate Lower middle-income pov. rate 2019Q1 2019Q3 2020Q1 2020Q3 2021Q1 2021Q3 Upper middle-income pov. rate Real GDP pc Sources: Somalia authorities and World Bank staff calculations. Source: World Bank. Notes: see table 2. MPO 80 Apr 22 to de facto dollarization. However, the poverty line in 2021 with the majority of FDI and encourage broad-based private worsening drought and the Ukraine/Rus- the population having experienced a re- sector activity, which will gradually sia crisis are pushing up prices and wors- duction in income compared to pre-pan- boost Somalia’s low domestic produc- ening the external position. A 35 percent demic levels. tive capacity. Climate shocks, political increase in both wheat and oil prices will risks, and insecurity pose significant widen the import bill by 2.2 percent of challenges to growth prospects. A pro- GDP in 2022. longing of the Russian invasion in The delayed election is contributing to fis- Outlook Ukraine could further exacerbate infla- cal challenges. While domestic revenue tionary pressures for food and fuel, mobilization improved in 2021 (rising by The COVID-19 vaccination rate is ex- which are likely to hurt the poor, and 9 percent compared to 2020), multilateral pected to pick up with increasing sup- increase the overall import bill. partners have withheld budget support port from development partners in the While the economic rebound has pushed until the elections are completed. Total ex- health sector. The economy is projected nominal GDP per capita to US$480 in penditures outstrip revenue collection (see to grow over the medium-term, but 2021 from US$471 in 2020, real per capita Figure 1) leading to liquidity pressures risks remain significant. Real GDP GDP declined by -0.5 percent per year on which were addressed through the 2021 growth is estimated at 3.0 percent in average between 2017 and 2021, depress- SDR allocation. To mitigate the impact of 2022 and is projected to reach 3.5 per- ing living standards for most Somalis. recent climatic shocks, the government’s cent in 2023. The outlook assumes sus- The international poverty rate is projected social safety net program, Baxnaano, has tained growth in remittances which will to remain at around 70 percent between been supported by development partners. boost investment and consumption; con- 2022 and 2024. Accelerating the pace of The need for humanitarian assistance re- tinued social protection measures to poverty reduction will require policy in- mains critical as over 4.1 million people are cushion household incomes, especially terventions and public investments that estimated to be food insecure. among the vulnerable; as well as elec- raise productivity, create jobs, and ex- Poverty in Somalia is deep and wide- tions dividends which will support im- pand pro-poor programs which focus on spread, increasing susceptibility to nega- proved business confidence and unlock women and youth. tive shocks. 70 percent of the population donor flows. Economic reforms and in- are projected to have lived below the creased public investment should attract TABLE 2 Somalia / Macro poverty outlook indicators (percent of GDP unless indicated otherwise) a 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 3.3 -0.3 2.2 3.0 3.5 3.9 CPI Inflation, annual percentage change 4.8 4.2 4.6 5.0 4.0 3.8 Current Account Balance -10.9 -11.7 -13.2 -12.9 -14.4 -15.3 Trade balance -66.3 -66.6 -69.4 -73.8 -76.2 -75.7 Private remittances 24.4 23.2 28.7 32.3 32.1 31.5 Official grants 29.4 29.9 28.2 29.8 30.8 30.1 b Fiscal Balance 0.3 0.1 -1.3 0.0 0.1 -1.1 Domestic revenue 3.5 3.0 3.1 3.2 3.7 4.0 External grants 1.7 4.2 2.0 3.3 3.5 2.3 Total expenditure 4.9 7.1 6.5 6.5 7.0 7.3 Compensation of employees 2.5 3.3 3.4 3.2 3.0 3.1 External debt 82.0 65.0 61.8 58.0 54.4 49.9 c,d International poverty rate ($1.9 in 2011 PPP) 67.7 69.5 69.8 69.7 69.4 68.7 c,d Lower middle-income poverty rate ($3.2 in 2011 PPP) 88.5 89.4 89.5 89.5 89.3 89.0 c,d Upper middle-income poverty rate ($5.5 in 2011 PPP) 97.8 98.0 98.0 98.0 97.9 97.9 Sources: Federal Government of Somalia, IMF, and World Bank staff estimates. Notes: e = estimate; f = forecast. a/ GDP baseline estimates 2019-20 are by Somalia National Bureau of Statistics (SNBS, June 2021). b/ Federal Government of Somalia (FGS). c/ Calculations based on 2017 SHFS-wave 2. Actual data: 2017. Nowcast: 2018-20. Forecasts are from 2022-24. d/ Projection using neutral distribution (2017) with pass-through = 1 based on private consumption per capita in constant US dollars. MPO 81 Apr 22 South Africa’s economy remains fragile and is only expected to get back to SOUTH AFRICA Key conditions and its 2019 real GDP level this year. After more than a decade of slow growth, challenges real GDP per capita is close to its 2015 level. As domestic growth drivers re- Table 1 2021 The global environment – especially favor- main weak, South Africa is vulnerable Population, million 60.0 able commodity prices – has driven South to changes in the global environment, GDP, current US$ billion 418.1 Africa’s economic recovery so far, support- including external demand and prices, GDP per capita, current US$ 6963.9 ing GDP growth, the current account, and inflationary pressures, and financing a 18.7 International poverty rate ($1.9) fiscal revenues. Households’ consumption conditions, especially in the context of a 37.3 growth has recovered from last year’s re- the Russia-Ukraine war and associated Lower middle-income poverty rate ($3.2) a 56.9 cession but the deteriorated labor market sanctions from other countries. Elevated Upper middle-income poverty rate ($5.5) Gini index a 63.0 is likely to hamper a more dynamic and global oil prices are expected to trans- School enrollment, primary (% gross) b 98.4 sustainable growth trend. Investment con- late into more inflation, which affects b 64.1 tinues to be weak amid persistent structur- the poor disproportionately. Higher Life expectancy at birth, years al constraints, such as electricity outages. metal prices should help cushion the Total GHG Emissions (mtCO2e) 565.7 Despite slow vaccination uptake (29.6 per- impact on the trade balance and growth Source: WDI, Macro Poverty Outlook, and official data. cent of the population is fully vaccinated), and support fiscal revenue. Domestical- a/ Most recent value (2014), 2011 PPPs. b/ Most recent WDI value (2019). the last wave of COVID-19 infections, dri- ly, additional waves of COVID-19 in- ven by the Omicron variant, has had limit- fections could translate into further job ed health and economic impacts. However, losses. A lack of improvement in living The South African economy rebounded some sectors, such as tourism, remain af- standards would threaten social stability fected by the global pandemic. and put additional pressure on already by 4.9 percent in 2021, driven by a The recovery has not improved social strained public finances. more favorable global environment and outcomes. Net jobs have continued to less severe economic impact of domestic contract over Q1-Q3 2021. The unemploy- COVID-19 waves. However, the recov- ment rate reached 34.9 percent end-Sep- ery has been jobless so far. Poverty has tember 2021. Labor force participation is Recent developments also low, resulting in only about 1 in reached levels not seen in over a decade, 3 South African of working age having South Africa’s economy started to re- which puts further pressure on budget a job. Consequently, poverty rates have cover in 2021, with GDP growth reach- spending. Domestic growth drivers re- climbed to the levels of more than a ing 4.9 percent. Buoyed by favorable main weak and structural reforms need decade ago, undoing years of progress. global demand and prices, the mining This social hardship translated into civil sector grew by 11.8 percent. Terms of to continue to achieve higher growth unrest in July 2021, causing significant trade are more than 10 percent high- and job creation. economic damage and putting pressure er than their pre-pandemic level, sup- on the government to increase social sup- porting the external sector. The mer- port, with calls from different stakehold- chandise trade balance recorded a sur- ers to introduce basic income support. plus of 7.2 percent of GDP in 2021. FIGURE 1 South Africa / Real GDP and employment FIGURE 2 South Africa / Actual and projected poverty rates and real GDP per capita In percent of Q1 2020 value Poverty rate (%) Real GDP per capita (constant LCU) 106 80 82000 103 70 80000 100 60 78000 97 50 76000 94 40 74000 91 30 72000 88 20 70000 85 10 68000 Sep-19 Jan-20 Sep-20 Jan-21 Sep-21 Jul-19 Jul-20 Jul-21 Mar-19 Nov-19 Mar-20 Nov-20 Mar-21 May-19 May-20 May-21 0 66000 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 International poverty rate Lower middle-income pov. rate Real GDP Employment Upper middle-income pov. rate Real GDP pc Sources: Stats SA, World Bank. Source: World Bank. Notes: see table 2. MPO 82 Apr 22 South Africa’s inflation rate has been rising 2024. To mitigate theses social impacts, but pressures have been more muted than Government has extended the Social Relief in other emerging countries, with inflation Outlook of Distress grant (“COVID-19” grant) pro- expectations well anchored within the vided to unemployed working-age adults Central Bank’s target band of 3-6 percent. Hampered by persistent structural con- by another year, for an estimated cost of Average inflation reached 4.6 percent last straints, GDP growth is expected to slow R44 billion. year while core inflation was 3.1 percent. down to 2.1 percent in 2022 and to average Despite recent improvements, South This allowed the South African Reserve 1.7 percent over the medium term. Weak Africa’s public finances remain in a dif- Bank (SARB) to maintain an accommoda- investment, electricity shortages, transport ficult situation. The revenue performance tive monetary policy stance. It only started and logistical costs, and bottlenecks con- is expected to be temporary. The govern- hiking the key repo rate end-2021. After tinue to weigh on economic activity. Im- ment has an ambitious consolidation plan, three 25 basis points increases, the mone- portant long-standing steps were taken which mostly relies on controlling the pub- tary policy rate stands at 4.25 percent. last year, including the increase in the li- lic sector wage bill. Slippages coming from Boosted by higher growth and commod- censing threshold for embedded electricity pressures from the wage bill, financially ity prices, fiscal revenue outperformed generation. However, more needs to be distressed SOEs, and social protection budget forecasts. Tax revenue is estimat- done to stimulate private investment and would put fiscal sustainability at risk. This ed at R1.55 trillion for fiscal year 2021, job creation. Inflation is projected at 5.5 would also crowd-out developmental ex- R182 billion more than in the budget percent in 2022, before returning to the penditure, as debt service costs are already (+2.9 percent of GDP). This windfall has SARB target rate in 2023-2024. the fastest spending category and repre- been used to increase spending, notably Unemployment is expected to remain el- sent about 15 percent of total spending. R38 billion (about 0.6 percent of GDP) to evated, projected at 33.4 percent in 2022, Prioritizing the allocation of limited re- mitigate the persistent effects of the pan- which will limit the potential for progress sources where they can have the highest demic after the July unrest, and to reduce on poverty and inequality. The upper-mid- impact will be critical to balance fiscal sus- the fiscal deficit, now projected at 5.8 per- dle-income-country poverty rate is esti- tainability and developmental needs. cent of GDP (against 7.8 percent of GDP mated to reach 58.6 percent this year and in the last MPO). decline only marginally to 58.3 percent in TABLE 2 South Africa / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 0.1 -6.4 4.9 2.1 1.5 1.8 Private Consumption 1.1 -6.5 5.7 3.0 2.8 2.4 Government Consumption 2.7 1.3 0.0 -0.9 -1.6 0.6 Gross Fixed Capital Investment -2.4 -14.9 2.0 5.5 4.4 4.4 Exports, Goods and Services -3.4 -12.0 9.9 2.5 2.5 3.0 Imports, Goods and Services 0.5 -17.4 9.4 6.0 5.0 5.0 Real GDP growth, at constant factor prices 0.1 -5.9 4.8 2.1 1.5 1.8 Agriculture -6.3 13.4 8.3 2.5 2.5 2.5 Industry -1.7 -12.6 6.2 1.6 1.2 1.2 Services 0.9 -4.3 4.2 2.3 1.6 2.0 Inflation (Consumer Price Index) 4.1 3.3 4.6 5.5 4.3 4.5 Current Account Balance (% of GDP) -2.6 2.0 3.7 0.4 -1.0 -1.5 Net Foreign Direct Investment (% of GDP) 0.5 1.5 9.5 0.4 0.5 0.5 Fiscal Balance (% of GDP) -5.1 -10.0 -5.8 -6.2 -5.9 -5.5 Debt (% of GDP) 57.4 70.7 69.1 73.7 76.6 78.4 Primary Balance (% of GDP) -1.5 -5.8 -1.4 -1.5 -0.9 -0.3 a,b International poverty rate ($1.9 in 2011 PPP) 19.4 21.4 20.5 20.3 20.3 20.0 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 38.2 40.8 39.6 39.4 39.3 39.1 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 57.7 59.8 58.8 58.6 58.5 58.3 GHG emissions growth (mtCO2e) 4.5 0.9 3.1 1.4 0.3 0.1 Energy related GHG emissions (% of total) 83.8 83.8 84.4 84.3 84.1 83.8 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2014-LCS. Actual data: 2014. Nowcast: 2015-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2014) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 83 Apr 22 2.3 million South Sudanese remain refugees hosted in neighboring countries. SOUTH SUDAN Key conditions and While the signing of the 2018 peace deal started to bring positive economic out- challenges comes in FY2018/2019, the COVID-19 pan- demic and natural disasters halted this Table 1 2021 South Sudan is at a crossroads in its re- positive dynamic. With lower oil exports, Population, million 11.4 covery, reconstruction, and development government revenues, and disrupted agri- GDP, current US$ billion 5.0 path. Having gained independence in cultural production, the economy contract- GDP per capita, current US$ 437.3 2011 in what was expected to be a new ed by an estimated 5.1 percent in FY2020/ a 76.5 International poverty rate ($1.9) dawn for the conflict-torn country, op- 21, while 4 in 5 individuals remain under a 91.7 timism was high on the back of high the international poverty line. Going for- Lower middle-income poverty rate ($3.2) a 97.8 commodity prices, abundant natural re- ward, strengthening service delivery insti- Upper middle-income poverty rate ($5.5) Gini index a 44.2 sources, and international goodwill. tutions, governance, and economic and School enrollment, primary (% gross) b 73.0 However, weak institutions and recurring public financial management systems will b 57.8 cycles of conflict have curtailed progress. prove critical as the country seeks to build Life expectancy at birth, years Initial peace efforts proved futile as suc- resilience to future shocks, providing Total GHG Emissions (mtCO2e) 71.0 cessive peace agreements collapsed and building blocks for a diversified, inclusive, Source: WDI, Macro Poverty Outlook, and official data. the country relapsed to conflict in 2013 and sustainable growth path. a/ Most recent value (2016), 2011 PPPs. b/ WDI for School enrollment (2015); Life expectancy and again in 2016. The conflict precipitat- (2019). ed a macroeconomic crisis and economic decline with widening fiscal deficits, high and persistent inflation, and spiraling for- Recent developments South Sudan’s recovery is constrained by eign exchange rate premia. Oil produc- falling oil production and climate shocks. tion plummeted and did not recover to South Sudan faced significant head- pre-independence levels. winds in FY2020/21, with the pandemic, Consequently, the economy is projected to Consequently, a decade after indepen- floods, and violence flareups affecting contract by 0.8 percent in FY2021/22 de- dence, South Sudan remains caught in a economic activities. Consequently, the spite higher oil prices. Food insecurity de- web of fragility, economic stagnation, and economy is estimated to have contracted teriorated, and poverty is estimated to in- instability. Due to this fragility, real house- by 5.1 percent in FY2020/21 and poverty hold incomes declined and living stan- to increase by 2.3 percentage points. crease for the second consecutive year, dards deteriorated. Poverty and food in- Oil production declined by 0.3 percent, reaching 80 percent in FY2021/22. Liv- security remain major concerns and have as floods affected production and the ing conditions continue to be impacted by been reinforced by inadequate provision of COVID-19 pandemic delayed new in- violence, displacement, climate shocks, services, infrastructure deficits, displace- vestments to replace exhausted wells. In and inadequate service delivery. ment, and recurring climatic shocks. In the agriculture sector, cereal production 2021, there were 2 million internally dis- declined by 4 percent as flooding pre- placed persons in the country (55 per cent cipitated estimated losses of 38,000 tons of whom were women and girls), as com- of cereals and 800,000 livestock accord- pared to 1.7 million in 2020. An additional ing to FAO estimates. These events had FIGURE 1 South Sudan / Exchange rate developments FIGURE 2 South Sudan / Actual and projected poverty rates and real GDP per capita SSP/USD Percent Poverty rate (%) Real GDP per capita (constant LCU) 700 300 120 3500 600 250 3000 100 500 2500 200 80 400 2000 150 60 300 1500 40 100 1000 200 20 500 100 50 0 0 0 0 2009 2011 2013 2015 2017 2019 2021 2023 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 International poverty rate Lower middle-income pov. rate Spread, % (rhs) Official XR (lhs) Parallel XR (lhs) Upper middle-income pov. rate Real GDP pc Source: World Bank. Source: World Bank. Notes: see Table 2. MPO 84 Apr 22 detrimental effects on household wellbe- percent in FY2020/21 from 20.3 percent in use of budgetary resources, are vital to ing as flooding was concentrated in ar- FY2019/20. South Sudan remains at a high create opportunities for the achievement eas that were already facing high levels risk of debt distress for both external and of faster and more inclusive growth. of food insecurity. overall public debt. High frequency data indicate that food Inflation averaged 43 percent in FY2020/ prices started increasing in February 2022. 2021 (compared to 33 percent in FY2019/ Nevertheless, inflation is expected to de- 2020) but was on a declining path in cline gradually over the medium term the first half of FY2021/2022. According Outlook and will benefit from improved fiscal and to official CPI data, the 12-month infla- monetary discipline, exchange rate mar- tion rate for Juba declined to 1.6 per- South Sudan’s economy is projected to ket liberalization, and deepening public cent in December 2021, from a peak of contract by 0.8 percent despite higher financial management reforms. Non-oil 93.8 percent in January 2021. This brings oil prices and improving macroeconomic tax revenue performance is projected at some degree of relief to households amid conditions in FY2021/22. These devel- 3.2 percent of GDP in FY2021/22, higher stalled disposable incomes. These pos- opments reflect falling oil production, than the 2.6 percent of GDP contained in itive developments are consistent with which is projected to decline by 7.2 per- the FY2021/22 budget, reflecting the Na- recent reform efforts. The premium be- cent in FY2021/22, and the impact of cli- tional Revenue Authorities’ efforts to ex- tween the official and parallel exchange mate shocks on agriculture. Neverthe- pand the tax base and the implementa- rates has been eliminated in 2021 and less, higher budget revenues are expect- tion of a range of measures to strengthen monetization of the fiscal deficit has ed to support domestic demand, with its tax administration functions. ceased since September 2020. growth in the services sector project- The fiscal deficit could narrow to 2.5 per- The FY2021/22 budget includes a fiscal sur- ed to recover to 4.7 percent in FY2021/ cent of GDP in FY2021/22 from an esti- plus equivalent to 1.1 percent of GDP, re- 22 from a contraction of 9.7 percent in mated 6.9 percent of GDP in FY2020/21, flecting a large planned fiscal adjustment previous year. Over the medium-term, on the back of a strong recovery of inter- from an estimated fiscal deficit of 6.9 per- growth could average around 2.5 – 4.0 national oil prices. In parallel, the current cent realized in FY2020/21. However, the percent, with developments in the non- account is expected to record a surplus of financing gap in the FY2021/22 budget is oil sectors and a recovery in consump- 0.3 percent of GDP in FY2021/22, from a estimated at 1.8 percent of GDP, despite a tion being the main contributing fac- deficit of 5.5 percent in FY2020/21, reflect- budgetary drawdown of SDRs equivalent tors. Poverty, in turn, is expected to re- ing higher oil export revenues, lower fi- to 2.7 percent of GDP. Due to higher oil ex- main stagnant at 80 percent in the com- nancial transfers to Sudan, and lower im- port values, lower financial transfers to Su- ing years. Successful implementation of port demand for capital projects especial- dan, and weaker import demand growth the ongoing public financial manage- ly in the oil sector. for capital projects, the current account ment reforms and macroeconomic sta- deficit is estimated to have narrowed to 5.5 bilization program, along with prudent TABLE 2 South Sudan / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 3.2 9.5 -5.1 -0.8 2.5 4.0 Real GDP growth, at constant factor prices 3.2 9.5 -5.1 -0.8 2.5 4.0 Agriculture 9.9 6.0 -4.0 -1.3 2.1 3.4 Industry 20.9 27.5 -2.3 -4.0 0.9 3.1 Services -12.1 -9.6 -9.7 4.7 5.1 5.6 Inflation (Consumer Price Index) 63.6 33.3 43.1 24.0 16.0 12.1 Current Account Balance (% of GDP) -6.3 -20.3 -5.5 0.3 2.8 1.2 Net Foreign Direct Investment (% of GDP) -1.7 -0.4 0.9 0.9 0.8 2.1 Fiscal Balance (% of GDP) -1.0 -9.8 -6.8 -2.6 -1.8 -3.5 Debt (% of GDP) 32.7 40.7 57.6 53.7 49.2 44.9 Primary Balance (% of GDP) -0.5 -7.8 -4.4 -0.5 -0.2 -2.4 a,b International poverty rate ($1.9 in 2011 PPP) 79.6 77.0 79.3 80.2 80.2 79.6 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 92.9 91.9 92.7 93.1 93.0 92.9 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 98.3 97.9 98.2 98.4 98.4 98.3 GHG emissions growth (mtCO2e) 1.3 0.5 1.9 3.9 6.5 10.7 Energy related GHG emissions (% of total) 2.4 2.1 1.8 1.6 1.3 1.1 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2016-HFS-W3.Actual data: 2016. Nowcast: 2017-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2016) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 85 Apr 22 term. Priority policy actions should focus on saving lives, protecting poor and vul- TANZANIA Key conditions and nerable households, attracting new foreign and domestic investment, supporting an challenges employment-intensive and resilient recov- ery, and expanding the available fiscal Table 1 2021 Tanzania became a lower middle-income space while maintaining debt sustainabili- Population, million 61.4 country in July 2020 following a long ty. Achieving Tanzania’s development vi- GDP, current US$ billion 67.3 period of sustained income growth and sion of becoming a successful middle-in- GDP per capita, current US$ 1095.8 macroeconomic stability. In the last two come country by 2025 will require the gov- a 49.4 International poverty rate ($1.9) decades, GDP growth averaged 6.5 per- ernment to revise, strengthen, and expand a 76.8 cent annually and inflation remained low its existing efforts to support struggling Lower middle-income poverty rate ($3.2) a 91.8 while fiscal and current-account deficits firms while implementing structural re- Upper middle-income poverty rate ($5.5) Gini index a 40.5 remained manageable. Investment was a forms to address longstanding constraints School enrollment, primary (% gross) b 96.9 key driver of growth, with about three on private investment and women’s access b 65.5 quarters coming from private sources. In to economic opportunities. Life expectancy at birth, years recent years, however, private investment Total GHG Emissions (mtCO2e) 191.1 has declined with waning extractives FDI Source: WDI, Macro Poverty Outlook, and official data. and a more challenging business envi- a/ Most recent value (2018), 2011 PPPs. b/ WDI for School enrollment (2020); Life expectancy ronment, including excessive bureaucra- Recent developments (2019). cy, high taxes, inadequate infrastructure, and skills shortages. High-frequency indicators suggest that eco- The poverty impact of economic growth has nomic activity is gradually recovering. The The Tanzanian economy is on a gradual waned in recent years. High population accommodation and restaurants, mining, recovery path. GDP growth increased growth, insufficient levels of education, low and electricity sectors drove a sharp re- agricultural productivity, and slow and un- bound of 5.2 percent in quarterly GDP dur- from 2.0 percent in 2020 to an estimat- even creation of more productive income ing Q3 2021. Leading indicators such as ce- ed 4.3 percent in 2021. As employment earning opportunities have hindered the in- ment production, electricity generation, and nonfarm business revenues recover, clusiveness of growth. The COVID-19 pan- private-sector credit, goods and services ex- the poverty rate should fall slightly in demic has further exacerbated these chal- ports, nonfuel goods imports, telecommu- lenges, reversing some of the gains in pover- nications, mobility, and tourist arrivals all 2022. Continued recovery hinges on eas- ty reduction achieved over the last decade, improved in 2021, though activity in most ing pandemic conditions and supportive especially in urban areas. The Tanzanian sectors remains below pre-pandemic levels. private sector policies, but faces risks government is implementing a nationwide Meanwhile, the preliminary findings from from an uncertain external environment. COVID-19 vaccination program, but the a recent survey suggest that by the end of Policy priorities should be to strengthen pace of vaccination remains slow. 2021, the proportion of heads of household The government will need to strengthen its indicating they were working was higher pandemic response while laying the than the pre-pandemic level by about 5 per- pandemic response in the short term while groundwork for inclusive private-sector- laying the groundwork for a private-sec- centage points, with stronger recovery for led growth. tor-led recovery over the medium-to-long men than for women. As a result, the World FIGURE 1 Tanzania / Real GDP growth forecasts under FIGURE 2 Tanzania / Actual and projected poverty rates alternative scenarios and real GDP per capita Percent change Poverty rate (%) Real GDP per capita (constant LCU) 7 100 800 90 700 6 6.1 80 5.8 5.7 600 5.4 70 5.3 5 60 500 4.3 50 400 4 40 300 30 3 200 20 10 100 2 2.0 0 0 2009 2011 2013 2015 2017 2019 2021 2023 1 International poverty rate Lower middle-income pov. rate 2018 2019 2020 2021e 2022p 2023p 2024p Upper middle-income pov. rate Real GDP pc Sources: World Bank Staff Estimates and Projections (2018-2024). Source: World Bank. Notes: See table 2. MPO 86 Apr 22 Bank estimates a real GDP growth rate of 4.3 is estimated to have declined marginally result in inflationary pressures and ex- percent. Inflation remained low and stable from 27.1 percent in 2020 to 27.0 percent panded current and fiscal deficits. An ac- averaging 3.7 percent in 2021 but increased in 2021, driven by the recovery of employ- celerated domestic vaccination program, to 4.0 in January 2022, largely driven by ment and agricultural growth. increased regional trade and cooperation, higher energy prices. and policy reforms designed to improve Tanzania’s current-account deficit has the business environment and support the widened slightly to 2.0 percent of GDP at growth of the private sector have some- end-September 2021, as imports grew Outlook what mitigated downside risks, but the faster than exports. The current-account emergence of new coronavirus variants, deficit was funded largely by external Tanzania’s real GDP growth rate is project- reduced capital flows, elevated debt levels, loans and, and to a lesser extent, by foreign ed to reach 5.3 percent in 2022 assuming persistent inflationary pressures, supply direct investment. The Tanzanian shilling continued easing of pandemic conditions bottlenecks, and the Russia invasion and remained relatively stable against the cur- and implementation of supportive policies associated sanctions continue to threaten rencies of major trading partners in 2021. for the private sector, but risks from an un- the projected recovery. Gross official reserves increased to about certain external environment have in- The international poverty rate is projected US$6.7 billion by end-October 2021. creased. The current-account deficit is pro- to fall by more than a percentage point to The fiscal deficit, which was largely fund- jected to widen to 3.9 percent of GDP in 2022 48.6 percent in 2021 and drop to below the ed by increased domestic borrowing, ex- due to rising imports (capital goods and oil), pre-crisis level. But to sustainably reduce panded to 4.2 percent of GDP in 2020/21 as which will more than offset an expected in- poverty, and lower the number of poor a result of significant shortfalls in revenue. crease in exports. The fiscal deficit is project- people, the recovery must create more The public and publicly guaranteed debt ed to widen to 3.7 percent of GDP in 2022, jobs, including for low-skilled workers, en- stock remained relatively low at US$29.6 driven by pandemic-related public spend- able small enterprises growth, and foster billion (40.6 percent of GDP) in October ing and the implementation of several ma- productivity of agriculture, on which 2021 and interest payment consumes jor capital projects, including SGR and the three-quarters of poor households depend. about 12 percent of domestic revenue. The Nyerere Hydro Power Project. Inflation driven by higher energy and latest joint IMF-World Bank Debt Sustain- Under alternative scenarios, real GDP is grain prices caused by the Russia-Ukraine ability Analysis, conducted in September expected to grow by between 4.5 and 5.5 crisis could undermine purchase power, 2021, concluded that Tanzania’s risk of ex- percent in 2022, below its long-run poten- with the poor and the urban consumers ternal debt distress had increased from tial growth rate of about 6 percent. Tanza- being particularly vulnerable to food price low to moderate. nia’s vulnerability to the global pandem- rises putting poverty reduction at risk. The The GDP per capita growth rate is estimat- ic remains high amid the slow vaccination government will need to carefully monitor ed at 1.3 percent in 2021, following a 1.0 rollout. Additionally, the Russia-Ukraine the impact of price rises on low-income percent of per capita GDP contraction in conflict would affect Tanzania through the groups and expand the TASAF social safe- 2020. Meanwhile, the national poverty rate commodity prices channel, which could ty net to affected population groups. TABLE 2 Tanzania / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 5.8 2.0 4.3 5.3 5.7 6.1 Private Consumption 3.1 1.0 3.9 5.2 3.9 3.5 Government Consumption 2.3 7.4 10.9 6.2 3.6 3.3 Gross Fixed Capital Investment 8.0 2.4 7.5 8.2 8.0 8.9 Exports, Goods and Services 19.0 -8.6 2.2 5.2 7.5 7.6 Imports, Goods and Services -1.4 -7.6 13.3 12.6 6.3 5.2 Real GDP growth, at constant factor prices 5.8 2.0 4.3 5.3 5.7 6.1 Agriculture 3.5 3.1 3.5 3.8 4.1 3.9 Industry 10.3 2.5 6.5 7.6 8.2 8.6 Services 4.2 0.9 3.0 4.4 4.6 5.4 Inflation (Consumer Price Index) 3.5 3.4 3.7 4.5 4.2 4.0 Current Account Balance (% of GDP) -2.3 -1.6 -2.9 -3.9 -3.6 -3.1 Net Foreign Direct Investment (% of GDP) 2.0 1.1 1.0 1.3 1.4 1.6 Fiscal Balance (% of GDP) -2.2 -2.0 -3.5 -3.7 -3.2 -2.5 Debt (% of GDP) 38.3 38.7 38.8 39.0 39.1 38.8 Primary Balance (% of GDP) -0.5 -0.3 -1.7 -1.9 -1.3 -0.6 a,b International poverty rate ($1.9 in 2011 PPP) 49.3 50.4 49.8 48.6 48.0 47.6 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 76.7 77.5 77.1 76.3 75.8 75.5 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 91.8 92.1 92.0 91.6 91.4 91.3 GHG emissions growth (mtCO2e) 3.0 2.5 3.1 2.9 3.3 3.2 Energy related GHG emissions (% of total) 21.3 21.9 22.7 23.2 23.7 24.1 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2018-HBS. Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2018) with pass-through = 1 based on private consumption per capita in constant LCU. MPO 87 Apr 22 Despite the ongoing recovery, the Ukraine conflict could further increase TOGO Key conditions and food/fertilizer and energy price inflation and is a threat to poverty reduction and challenges could lead to increased social tensions. According to a household survey realized Table 1 2021 Togo experienced a robust economic by the National Statistics Office, over 30 Population, million 8.5 growth prior to the COVID-19, but with percent of Togolese households were un- GDP, current US$ billion 8.0 only limited impacts on living standards able to access main staple foods when GDP per capita, current US$ 940.1 and poverty. Growth averaged 5 percent needed, with poor and rural households a 24.1 International poverty rate ($1.9) between 2017-19 (2.4 percent in per capi- disproportionately affected (40 percent of a 51.8 ta terms), driven by private investment the poor and 43 percent of the rural Lower middle-income poverty rate ($3.2) a 78.0 as the business climate improved. Pru- households). Heightened regional insecu- Upper middle-income poverty rate ($5.5) National GINI (2018/19) 38.1 dent fiscal management underpinned rity could trigger higher security spend- School enrollment, primary (% gross) b 126.3 growth and helped reduce debt vulnera- ing and increase fragility in the north. b 61.0 bilities. However, growth did not trans- Other risks include domestic debt vulner- Life expectancy at birth, years late into higher living standards, i.e. ac- abilities and weather shocks, which could Total GHG Emissions (mtCO2e) 9.9 cess to electricity and safe drinking water negatively affect agricultural production. Source: WDI, Macro Poverty Outlook, and official data. were 52.2 percent and 60.3 percent re- a/ Most recent value (2018), 2011 PPPs. b/ WDI for School enrollment (2020); Life expectancy spectively in 2018/19, whereas in rural ar- (2019). eas these were only 27.2 percent and 44.5 percent, respectively. Recent developments COVID-19 disrupted growth, fiscal con- Growth rebounded to pre-crisis levels in solidation, and poverty reduction. It After decelerating to 1.8 percent in 2020, 2021, reflecting health measure rollbacks heightened the urgency to deal with ma- growth rebounded in 2021 to 5.1 percent jor development challenges and to revert (2.7 percent per capita). The global eco- and a global recovery. Growth is expect- toward the WAEMU fiscal target to con- nomic recovery enabled export expansion, ed to stabilize in 2022 and strengthen tain debt vulnerabilities. Structural re- and domestic activity rebounded follow- in the medium term, supported by in- forms to improve infrastructure, notably ing containment measure abatements. Pri- vestment and consumption, while pover- in energy and telecommunications, gov- vate consumption picked-up, benefitting ernance and customs procedures would from increases in business activity and la- ty should decline. New debt manage- help Togo harness its potential as a trans- bor income (6.5 percent). Growth was par- ment and revenue mobilization measures port and logistics hub. Digital technology tially offset by rising inflation, at 4.3 per- should create fiscal space. Risks include also presents untapped opportunities for cent in 2021, as higher consumption de- slower global growth and higher infla- innovation in key economic sectors de- mand and supply chain disruptions raised tion due to the impact of the Ukraine spite large inequalities in access: the share food and energy prices. of the population aged 15 years or older The current account deficit widened to conflict, regional insecurity, debt vul- 3.2 percent in 2021, more than doubling with access to the internet was 6 percent nerabilities, and climatic shocks. and 35 percent, respectively, among the its 2020 level. Increases in imports out- poor and the nonpoor. paced exports due to import growth FIGURE 1 Togo / Evolution of fiscal indicators FIGURE 2 Togo / Actual and projected poverty rates and real GDP per capita Government balance (Percent of GDP) Public debt (Percent of GDP) Poverty rate (%) Real GDP per capita (constant LCU) 2 66 100 700000 1 64 90 600000 0 80 62 -1 70 500000 -2 60 60 400000 -3 58 50 40 300000 -4 56 -5 30 200000 54 -6 20 100000 -7 52 10 -8 50 0 0 2019 2020 2021 2022 2023 2024 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 International poverty rate Lower middle-income pov. rate Fiscal Balance (lhs) Primary Balance (lhs) Debt (rhs) Upper middle-income pov. rate Real GDP pc Sources: INSEED and World Bank staff estimates. Source: World Bank. Note: See table 2. MPO 88 Apr 22 from increasing domestic demand from some households into poverty: simulations WAEMU convergence criteria in 2024, with infrastructure projects and increases in show an increased poverty of about 4 per- delays to 2025 if additional expenditure re- private consumption. centage points, disproportionately affect- quirements materialize. Revenues should The fiscal deficit remained high at 6.5 per- ing urban populations. rise with GDP growth, supported by im- cent of GDP in 2021. Tax revenues re- provements in revenue management and bounded in 2021, reflecting an improve- tax holiday expirations. Total expenditure ment in economic conditions and new tax as a percent of GDP will decrease starting measures (digitalization of tax administra- Outlook in 2023, as counter-cyclical pandemic tion and tax registries), but remained be- spending winds-down. Public debt will low pre-crisis levels. Expansionary public Real GDP is projected to stabilize at 5 per- decrease to 64 percent of GDP in 2022, de- spending continued with the implementa- cent in 2022, 2.6 percent in per capita clining over the medium-term as growth tion of an ambitious investment program. terms, and accelerate over 2023-24. Down- outpaces a declining primary fiscal deficit, Reliance on external financing continues to ward revisions to the forecasts in 2022 to almost reach 60 percent in 2024. cover the fiscal deficit. Public debt in- mainly reflect the negative impacts of the WAEMU reserves will decrease to around creased from 60.3 percent of GDP in 2020 Ukraine conflict, through higher energy 5.5 months of imports in 2022 and 5.3 in to 64.7 percent in 2021. The risk of external and food prices, lower public investment 2023/24, reflecting fast growth in imports debt distress remains moderate, while the as authorities allocate more resources to and a reduction in net capital inflows (as a risk of overall debt distress was high. transfers to the poorest, and lower private percent of GDP), with uncertainty around Togo’s monetary and exchange rate poli- investment because of higher uncertainty. global monetary policy. Growth-friendly cies are managed by the BCEAO, which Growth should still be supported by the fiscal consolidation and implementation of maintains a peg between the CFA Franc “Togo 2025 Roadmap” public investments, structural reforms will be key to maintain- and the Euro. Reserves reached 5.8 before gradually giving way to private in- ing reserves at an optimal level. months of imports in 2021, due to a re- vestment following positive business cli- Extreme poverty declined to 22.4 percent covery in exports, an SDR allocation, and mate developments, but a changing global in 2021 (-0.9 percentage points from portfolio inflows. policy environment creates significant un- 2020), as food prices remain high. Ex- Poverty remains high and concentrated in certainty around the investment climate. treme poverty should decrease by one rural areas. The national poverty incidence The current account deficit will keep dete- percentage point to 21.4 percent in 2022 was 45.5 percent in 2018-19 (749.6 CFAF/ riorating, reaching 6.4 percent of GDP in and decrease in the medium-term, sup- day), while extreme poverty was 23.15 per- 2022, as rising import demand from in- ported by the scaling-up of Government cent (US$1.9 2011 PPP/day) in 2019. Pover- creased consumption and investment out- cash transfer programs. Inclusive service- ty projections estimate that extreme pover- paces export growth. sector programs and agricultural growth ty rate maintained at 23.2 percent between The fiscal deficit is projected to gradually will be needed for inclusive and sus- 2019 and 2020. Despite steady extreme decline from 5 percent of GDP in 2022. tained poverty reduction. poverty, the pandemic probably pushed Current forecasts indicate meeting the TABLE 2 Togo / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 5.5 1.8 5.1 5.0 5.8 6.4 Private Consumption 3.0 -4.9 5.3 5.5 7.1 7.4 Government Consumption -2.9 21.1 6.4 0.2 7.0 8.9 Gross Fixed Capital Investment 20.2 13.7 8.9 12.9 2.7 2.5 Exports, Goods and Services 1.0 3.6 12.0 7.0 6.5 5.5 Imports, Goods and Services 1.2 4.1 13.8 10.5 6.9 6.1 Real GDP growth, at constant factor prices 4.4 1.9 5.1 4.9 5.9 6.4 Agriculture 1.9 4.0 6.0 5.6 3.6 5.9 Industry 6.5 0.8 6.8 7.3 5.6 7.3 Services 4.5 1.5 4.0 3.4 7.1 6.2 Inflation (Consumer Price Index) 0.7 1.8 4.3 6.0 4.0 2.0 Current Account Balance (% of GDP) -0.8 -1.5 -3.2 -6.4 -7.3 -6.3 Net Foreign Direct Investment (% of GDP) -4.2 -0.2 -0.3 -0.4 -0.5 -0.6 Fiscal Balance (% of GDP) -0.9 -6.9 -6.5 -5.0 -4.0 -3.1 Debt (% of GDP) 52.4 60.3 64.7 64.0 62.7 60.5 Primary Balance (% of GDP) 1.2 -4.6 -4.0 -2.6 -1.5 -0.6 a,b International poverty rate ($1.9 in 2011 PPP) 23.2 23.2 22.4 21.4 20.2 19.2 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 50.6 50.9 49.8 48.7 47.3 45.7 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 76.9 77.2 76.5 75.5 74.1 72.9 GHG emissions growth (mtCO2e) 1.9 1.4 3.3 3.6 4.2 4.4 Energy related GHG emissions (% of total) 29.7 27.8 26.6 25.4 24.3 23.3 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2018) with pass-through = 0.7 based on GDP per capita in constant LCU. MPO 89 Apr 22 which emphasizes infrastructure and has crowded out private sector borrow- UGANDA Key conditions and ing – needs to be replaced with one where the private sector drives growth. challenges The state can then provide support through a better balance of investments Table 1 2021 Compared to the strong performance in in human capital and infrastructure, Population, million 47.1 the 2000s, recent economic growth has alongside targeted regulations to pro- GDP, current US$ billion 34.6 slowed considerably. With reduced reform mote inclusive growth that reduces in- GDP per capita, current US$ 733.9 momentum, a less supportive external en- equality and ensures sustainability. The a 41.0 International poverty rate ($1.9) vironment, and other exogenous shocks prospects for this shift will also rely a 70.5 like droughts, growth since 2011 has bare- on maintaining macroeconomic stability; Lower middle-income poverty rate ($3.2) a 89.0 ly surpassed the high population growth better supporting the vulnerable, farm- Upper middle-income poverty rate ($5.5) Gini index a 42.7 rate. As a result, in the five years prior to ers, and small enterprises; increasing the School enrollment, primary (% gross) b 102.7 the COVID-19 crisis, per capita real GDP uptake of digital technologies; and more b 63.4 growth halved to 1.1 percent on average effective use of public resources. Life expectancy at birth, years per year. Total GHG Emissions (mtCO2e) 75.8 Structural transformation is key for Source: WDI, Macro Poverty Outlook, and official data. growth and poverty reduction. However, a/ Most recent value (2019), 2011 PPPs. b/ WDI for School enrollment (2017); Life expectancy most of the workforce remains in low pro- Recent developments (2019). ductivity jobs, and total factor productivity growth has been negative. Whereas the Uganda’s recovery slowed after the second services sector contributes to a large share COVID-19 wave and lockdown in Real GDP growth is expected to rise from of growth, many jobs are informal and mid-2021. Although Omicron introduced 3.4 percent in FY21 to 3.7 percent in low-skilled. Instead, the majority of the some uncertainty, the economy has since poor rely heavily on agriculture and re- rebounded, with the PMI increasing for FY22, as the economy reopens. The main vulnerable to climate change and the seventh successive month to a high of planned reduction in the fiscal deficit, to weather shocks. Although there were posi- 55.7 in February 2022. Economic condi- 3.5 percent of GDP by FY24, augurs well tive signs leading into the COVID-19 crisis tions continue to improve, buoyed by the for debt sustainability. Growth is expect- – including a decline in poverty, reduction reopening of schools, lifting of all mobility in the workforce employed in agriculture, restrictions, and a milder third wave of in- ed to average 5.7 percent in FY23 and take-off in agro-processing, and expansion fections. Over 5 of the 22 million target FY24, given the elevated trade, inflation, of the services sector – some of this has population (aged 18+) were fully vaccinat- and investment risks from the Russia- been reversed, and poverty and inequality ed by mid-February 2022. Ukraine crisis. Poverty should fall as in- have increased. Despite the economic rebound, inflation comes recover. As Uganda moves towards oil produc- has been modest, which has allowed the tion, achieving structural transformation central bank to maintain the policy rate at will require changing the growth model 6.5 percent to support the recovery. Lend- and role of the state. The current model ing rates remain high though, thereby of debt-financed public spending – slowing growth in private sector credit. An 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 private consumption per capita (millions constant LCU) 16 60 100 3 14 90 50 12 80 2 40 70 10 60 2 8 30 50 6 40 1 20 30 4 10 20 1 2 10 0 0 0 0 2019 2020 2021 2022f 2023f 2024f 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 International poverty rate Lower middle-income pov. rate Public debt (rhs) Primary fiscal deficit (lhs) Tax (lhs) Upper middle-income pov. rate Real priv. cons. pc Sources: Ministry of Finance, Planning and Economic Development, and World Source: World Bank. Notes: see Table 2. Bank calculations. MPO 90 Apr 22 uptick in annual headline inflation to 3.2 significantly lower revenues for non-farm Inflationary and exchange rate pressures percent in February was anticipated, given household enterprises. may then induce monetary policy tight- the reopening of the economy and sudden ening, which would constrain the private increase in demand. sector recovery. Whilst gold imports and exports have The decline in the fiscal deficit will be dri- stalled in the first half of FY22 – due to Outlook ven by expenditure cuts (Figure 1), as mea- a new FY22 tax levy on gold exports – sures to enhance revenues will take longer coffee exports are up over 60 percent and Given a more positive COVID-19 and vac- to pay off. This adjustment will ultimately tourist receipts in early FY22 were ap- cine outlook, and the recent signing of the shift debt to a more sustainable path – proaching pre-COVID levels. This bodes final investment decision in the oil sector, peaking at around 54 percent of GDP in well for an improvement in the current growth was projected to accelerate to an FY23 – and limit private sector crowding account deficit compared to the sharp de- average of over 6 percent in FY23 and out. Nonetheless, debt vulnerabilities will terioration in FY21. FY24. Following Russia’s invasion of persist if spending pressures remain, new In line with government’s consolidation Ukraine, this average will likely drop to shocks arise, or reliance on non-conces- agenda, the fiscal deficit has narrowed to below 6 percent and possibly lower, given sional and/or domestic debt continues. an estimated 5 percent of GDP in the first the trade disruptions, higher commodity Even with stronger growth in the medium- half of FY22, driven by cuts to lower pri- prices, and increased risk aversion that term, per capita GDP will remain below ority recurrent spending (e.g. travel and may slow investments. Costlier inputs (e.g. the NDPIII target. As a result, zero growth workshops) and delaying investments that fertilisers and transport) will also pose is projected in private consumption per are not critical or ready. challenges for agricultural production, capita, which will keep the international With lower consumption growth – due to food security, and household incomes that poverty rate at about 41 percent in 2022. reduced remittances, limited credit, and are still recovering. Accelerated growth may reduce poverty to job losses – poverty increased from 27.5 The combination of pent-up domestic de- 39.3 percent by 2024, but this will depend to 32.7 percent (using Uganda’s official mand – as economic activity picks up – on how COVID-19 evolves, how long Rus- upper poverty line) after the first lock- and increasing commodity prices will ex- sia’s invasion continues, the pace of food down in 2020. Employment rates fell ert additional pressures on prices, which inflation, and any environmental shocks again after the second lockdown, accom- could raise inflation above the official that adversely affect households due to panied by increased food insecurity and target of 5 percent over the next year. their limited adaptive capacity. TABLE 2 Uganda / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 6.4 3.0 3.4 3.7 5.1 6.5 Private Consumption 5.9 2.0 4.2 2.8 4.4 4.6 Government Consumption 6.9 7.9 6.1 0.9 -0.6 0.7 Gross Fixed Capital Investment 9.9 -0.1 5.1 4.1 7.0 10.5 Exports, Goods and Services 6.3 -1.2 2.6 11.1 12.4 13.3 Imports, Goods and Services 8.6 -5.4 8.6 5.3 8.4 8.6 Real GDP growth, at constant factor prices 6.4 3.0 3.4 3.7 5.1 6.5 Agriculture 5.2 4.6 3.8 3.4 3.6 4.0 Industry 9.0 3.1 3.4 2.6 6.8 7.9 Services 5.6 2.2 3.3 4.6 4.9 6.9 Inflation (Consumer Price Index) 2.6 2.3 2.5 3.7 6.0 5.0 Current Account Balance (% of GDP) -7.1 -6.7 -10.2 -8.2 -7.9 -7.0 Net Foreign Direct Investment (% of GDP) 3.5 2.6 2.1 2.5 2.7 3.3 Fiscal Balance (% of GDP) -4.9 -7.1 -9.5 -7.5 -4.7 -3.5 Debt (% of GDP) 36.6 40.4 49.6 52.5 53.5 52.4 Primary Balance (% of GDP) -2.8 -4.8 -6.8 -4.4 -1.9 -0.7 a,b International poverty rate ($1.9 in 2011 PPP) 41.0 41.5 41.1 41.0 40.3 39.3 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 70.5 71.0 70.6 70.6 70.1 69.4 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 89.0 89.2 89.1 89.1 88.9 88.5 GHG emissions growth (mtCO2e) 2.5 1.8 2.8 3.9 4.0 4.1 Energy related GHG emissions (% of total) 31.9 31.3 31.0 31.4 31.9 32.4 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2019-UNHS.Actual data: 2019. Nowcast: 2020-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2019) with pass-through = 0.7 based on private consumption per capita in constant LCU. MPO 91 Apr 22 of these significant economic reforms, in- cluding to improve the efficiency and in- ZAMBIA Key conditions and clusiveness of public spending and pro- moting a private sector-led and export- challenges oriented growth path. To bear fruits on debt sustainability and growth, these re- Table 1 2021 The Zambian economy remains structural- form efforts will need to be complement- Population, million 18.9 ly fragile and vulnerable to external ed by comprehensive and timely debt re- GDP, current US$ billion 21.2 shocks. The economy was already weak structuring. In early 2021, Zambia asked GDP per capita, current US$ 1120.6 before the COVID-19 crisis, with declining for debt treatment under the G-20 Com- a 58.7 International poverty rate ($1.9) growth, increasing inflationary pressures, mon Framework (CF) to help restore a 75.4 a tightening fiscal space and weak external public debt to sustainable levels. Lower middle-income poverty rate ($3.2) a 88.1 balances. The public-investment-led Upper middle-income poverty rate ($5.5) Gini index a 57.1 growth model that relied heavily on debt School enrollment, primary (% gross) b 98.7 financing did not deliver sustained eco- Life expectancy at birth, years b 63.9 nomic growth or poverty reduction. As a Recent developments result, Zambia’s public debt became un- Total GHG Emissions (mtCO2e) 99.2 sustainable by 2019. The onset of the Economic activity picked up in 2021 with Source: WDI, Macro Poverty Outlook, and official data. COVID-19 crisis unraveled these structural GDP growth at an estimated 3.6% per an- a/ Most recent value (2015), 2011 PPPs. b/ WDI for School enrollment (2017); Life expectancy weaknesses and amplified existing macro- num, reflecting recovery from initial (2019). economic vulnerabilities. The country has COVID-19 shocks and lockdown mea- had persistently high poverty rates. Pover- sures, post-election market confidence, ty in Zambia is concentrated in rural areas and improved global copper price outlook. The Zambian economy grew by an esti- – where 80% of the poor reside. In contrast, Monetary policy stance tightened by a cu- mated 3.6% in 2021 following a 2.8% the recent surge following the COVID-19 mulative 100 basis points during the year, pandemic has disproportionately come as the central bank balanced between re- recession in 2020; bolstered by firmer from urban households. sponding to persistently high inflationary copper prices, favorable external de- The key challenge for Zambia is to re- pressures and weak aggregate demand. mand, good rainfall, and post-election store macroeconomic stability and debt Despite stronger revenue performance, market confidence. However, poverty re- sustainability and to return to an eco- the fiscal outturn was more expansion- nomic growth path that uplifts more ary than planned, resulting in a deficit mained high, at about 60%, reflecting Zambians out of poverty. Resolving the (on cash basis) of over 10% of GDP. the impact of the COVID-19 crisis. severe macroeconomic imbalances that Domestic revenues performed better on The medium-term outlook, while posi- built up over the past decade and cul- account of favorable copper prices and tive, faces downward risks from pro- minated into a debt crisis will require improved non-tax revenue collection. longed debt negotiations, low a combination of ambitious fiscal adjust- However, this was outweighed by ex- ment, structural fiscal reforms, and public penditure overruns in the run-up to the COVID-19 vaccination rates, and the elections, including in goods and ser- debt restructuring. The new administra- impact of the Russia-Ukraine war. tion, elected to office in August 2021, vices, and agriculture and fuel subsi- has shown willingness to undertake some dies. The large deficit was financed by FIGURE 1 Zambia / Developments in the current account FIGURE 2 Zambia / Actual and projected poverty rates and balance (2013-21) real GDP per capita Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU) 60 100 8500 50 95 8000 90 40 85 7500 30 80 7000 20 75 70 6500 10 65 6000 0 60 5500 -10 55 2013 2014 2015 2016 2017 2018 2019 2020 2021 50 5000 Export of goods Imports of goods 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Copper exports Non-traditional exports International poverty rate Lower middle-income pov. rate Current account Upper middle-income pov. rate Real GDP pc Sources: Zambian authorities and World Bank staff estimates and projections. Source: World Bank. Notes: see table 2. MPO 92 Apr 22 further accumulation of domestic arrears holds reported a drop-in income from from inefficient subsidies to more social and increased domestic borrowing. nonfarm business, and that 1 in 3 report- spending (education, health, and social On the external sector, strong growth in ed a reduction or disappearance of wages protection), and bringing public services exports outpaced the rebound in imports due to the pandemic. Job losses have been closer to the communities. Implementation resulting in a large trade surplus and a cur- particularly severe in the tourism, manu- of structural reforms aimed at removing rent account surplus of 7.7% of GDP in facturing, and services sectors. Food secu- market distortions and bringing financial 2021. The Kwacha appreciated by 21% in rity indicators are also of increasing con- sustainability in the energy sector (electric- 2021, reflecting an improved reserve po- cern. A recent Socio-economic Impact As- ity and petroleum), improving transparen- sition from the new IMF SDR allocation, sessment conducted by the National Sta- cy, and fighting corruption, will also be high post-election consumer and investor tistical Office found that 9 in 10 house- critical to achieving this growth path. It confidence, and increased portfolio in- holds have experienced spikes in the also assumes normal rainfall patterns and flows from non-resident holders of domes- price of food, and that 64% of these had timely completion of the debt restructur- tic sovereign debt. However, the continued to reduce food consumption as a result. ing process. The pace of poverty reduction, weak fiscal position saw Zambia continue however, is expected to remain slow. At to accumulate external debt service ar- current growth rates, the poverty rate will rears, which amounted to $1.8 billion at fall by less than a percentage point by 2024. end-September 2021. Outlook Risks to the baseline outlook are tilted The effects of the pandemic on poverty downwards. A sustained upward trajecto- and vulnerability have continued in 2021. Growth is projected to pick up over the ry in global copper prices will boost cop- After an estimated 1.5 percentage point medium-term, averaging 3.8% in 2022-24, per production, domestic revenue, and ex- increase in the international poverty rate buoyed by an improved macroeconomic ternal stability. However, delays in con- between 2019 and 2020, the poverty head- environment; a positive copper price out- cluding the debt restructuring process and count is projected to have remained stag- look and stable and predictable mining risks of any COVID-19 resurgence given nant at 60% in 2021, with GDP per capita policy environment; and improved elec- the low vaccination rates could dampen growth projected to be at only 0.7% in tricity supply supported by new genera- market confidence and perpetuate an un- 2021. The rise in poverty has been largely tion capacity at Kafue Gorge. The outlook certain economic environment. Moreover, driven by falling incomes in urban areas, is anchored on government’s implementa- the impact of the Russia-Ukraine war on especially among those relying on em- tion of the macro-fiscal reforms outlined global oil and fertilizer prices presents key ployment income from the informal sec- in its 2022-24 medium-term budget plan, risks to Zambia’s economic recovery and tor. A World Bank Household Monitoring aimed at restoring fiscal sustainability and reform efforts. phone survey found that 4 in 5 house- credibility, re-orienting expenditure away TABLE 2 Zambia / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 1.4 -3.0 3.6 3.3 3.6 4.0 Private Consumption 2.3 3.1 3.6 4.5 4.5 4.5 Government Consumption -10.1 10.8 3.6 -6.1 13.7 7.2 Gross Fixed Capital Investment -14.3 -35.8 -15.9 44.0 6.6 2.4 Exports, Goods and Services -7.2 10.7 24.3 -3.9 6.9 6.9 Imports, Goods and Services -13.7 -10.7 17.4 14.3 13.1 7.5 Real GDP growth, at constant factor prices 1.5 -2.5 3.6 3.3 3.6 4.0 Agriculture 7.7 17.2 14.2 3.0 4.0 4.0 Industry -3.3 0.6 1.8 3.3 3.5 3.9 Services 3.5 -6.2 3.2 3.3 3.6 4.0 Inflation (Consumer Price Index) 9.1 15.7 22.1 13.0 10.0 9.7 Current Account Balance (% of GDP) 0.6 12.8 10.7 3.7 4.3 4.1 Net Foreign Direct Investment (% of GDP) -0.6 -1.1 1.9 2.4 2.3 2.1 Fiscal Balance (% of GDP) -9.6 -11.0 -10.3 -7.8 -5.5 -4.6 Debt (% of GDP) 87.8 86.2 77.6 74.9 99.2 114.2 Primary Balance (% of GDP) -5.6 -7.7 -7.0 -4.3 -2.9 -2.4 a,b International poverty rate ($1.9 in 2011 PPP) 58.6 60.1 59.9 59.9 59.7 59.3 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 75.3 76.4 76.2 76.2 76.0 75.8 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 88.0 88.8 88.6 88.6 88.6 88.5 GHG emissions growth (mtCO2e) -1.8 2.0 3.2 2.6 2.9 2.6 Energy related GHG emissions (% of total) 11.6 11.5 10.8 10.6 10.8 11.0 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2015-LCMS-VII. Actual data: 2015. Nowcast: 2016-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2015) with pass-through = 0.7 based on GDP per capita in constant LCU. MPO 93 Apr 22 (42 percent). Inequality has also increased over the last decade, with the Gini coeffi- ZIMBABWE Key conditions and cient increasing from 42 in 2011 to 50.3 in 2019 – among the highest in the world. Un- challenges employment remained high at 19.1 percent in 2021. Table 1 2021 Macroeconomic challenges and natural In addition to further efforts to solidify Population, million 15.1 disasters have kept Zimbabwe’s growth macroeconomic stability, Zimbabwe’s re- GDP, current US$ billion 26.2 volatile. High inflation, unstable exchange covery needs to be underpinned by poli- GDP per capita, current US$ 1737.2 rates, and unsustainable debt have con- cies promoting productivity growth. a 39.5 International poverty rate ($1.9) strained macroeconomic stability and pro- These policies would include reducing a 63.8 ductivity growth. Trade integration has state intervention in the economy, less- Lower middle-income poverty rate ($3.2) a 82.8 declined, and foreign direct investment ening the regulatory burden, strengthen- Upper middle-income poverty rate ($5.5) Gini index a 50.4 (FDI) remained low, limiting transfer of ing governance and anti-corruption ef- School enrollment, primary (% gross) b 97.3 new technologies and investment in mod- forts, lowering barriers to regional trade b 61.5 ernizing the economy. After almost three integration, and removing forex retention Life expectancy at birth, years years of droughts, favorable rains boosted requirements. Service delivery needs to Total GHG Emissions (mtCO2e) 116.1 economic growth in 2021, supporting the be strengthened and household vulnera- Source: WDI, Macro Poverty Outlook, and official data. recovery. Steps to stabilize prices and ex- bility reduced through robust social safe- a/ Most recent value (2019), 2011 PPPs. b/ WDI for School enrollment (2020); Life expectancy change rates, as well as relaxation of ty net programs. (2019). COVID-19 restrictions, improved the envi- ronment for doing business. As a result, after two years of recession, Zimbabwe’s GDP growth is estimated to have re- economy is estimated to have grown by 5.8 Recent developments bounded to 5.8 percent in 2021, reflecting percent in 2021. The extreme poverty rate has increased The economy rebounded in 2021 driven an exceptionally good harvest and relative steadily between 2011 and 2020, only de- by recovery of agriculture and industry stabilization of prices. Disinflation poli- clining in 2021 following exceptionally and relative stabilization of prices and ex- cies were effective in bringing down infla- good harvest and disinflation policies. In- change rates. GDP is estimated to have tion to double digits for the first time in ternational poverty rate was 22 percent in grown by 5.8 percent in 2021 after con- 2011, and it was estimated to be 41 percent tracting by 6.2 percent in 2020. An excep- two years. As a result, poverty levels de- in 2021 and 40 percent in 2022. Although tionally good agriculture season, coupled clined. The economy is projected to con- poverty remains an overwhelmingly rural with slowing inflation and higher re- tinue to recover in 2022, albeit at a slower phenomenon, in recent years it has in- mittances boosted domestic demand. Re- pace, as agriculture conditions worsen creased relatively faster in urban areas, laxed pandemic restrictions, good vac- and food and fuel prices surge. leading to an urbanization of poverty. cination levels, and favorable terms of Zimbabwe’s international poverty rate trade supported stronger industrial pro- (PPP $1.90/person/day) was half the level duction and exports, with exports of min- in sub-Saharan African in 2011 but by 2019, erals expanding by over 51 percent in a it was on par with the rest of the continent year. A widening of the current account FIGURE 1 Zimbabwe / Exchange rates FIGURE 2 Zimbabwe / Actual and projected poverty rates and real GDP per capita ZWL$/US$ Poverty rate (%) Real GDP per capita (constant LCU) 250 90 16000 80 14000 200 70 12000 60 10000 150 50 8000 40 100 6000 30 20 4000 50 10 2000 0 0 0 2011 2013 2015 2017 2019 2021 2023 Jan-20 May-20 Sep-20 Jan-21 May-21 Sep-21 Jan-22 International poverty rate Lower middle-income pov. rate Official exchange rate Parallel market exchange rate Upper middle-income pov. rate Real GDP pc Sources: Zimstat and World Bank staff estimates. Source: World Bank calculations using data from Zimstat PICES surveys 2011, 2017 and mini-PICES 2019. MPO 94 Apr 22 surplus in 2021 and the SDR allocation harvest of 2021. There was also a marked cent in 2022 from double digit-growth in helped increase international reserves. improvement in food security, with the 2021 on the account of falling rain lev- Disinflation policies were effective in share of population in severe or moderate els and rising prices of key agriculture bringing down inflation in 2021. Inflation food insecurity falling from 61 to 38 per- inputs. Mining production and exports slowed from 838 percent in July 2020 to cent between March and November 2021. are expected to benefit from continuing 60.7 percent in December 2021. Monetary The lack of improvement in the extreme high international prices while tourism, policy was further tightened in the end of poverty rate in urban areas suggests that trade, and transport are likely to start 2021 and in early 2022 to calm inflationary despite the reopening of the economy and recovering with positive spillover effects pressures from continuing distortions in loosening of mobility restrictions, intermit- on other sectors of the economy. The the foreign exchange market and rising in- tent closures continue to affect employ- risks to the outlook are significant with ternational prices. ment, incomes, and livelihoods of urban heightened global risks as global growth Fiscal policy remained relatively tight, residents. Social assistance programs play slows down and uncertainty about the with most of the additional spending fi- a limited role in reducing poverty and vul- pandemic remains. Domestic risks also nanced by SDRs. The fiscal balance turned nerability due to their low coverage and weigh on growth performance and are into a cash deficit of 1.5 percent of GDP. lack of poverty focus in targeting. linked to climatic shocks, expansionary Procurement of vaccines and higher fiscal and monetary policy in the run spending on agriculture and public infra- up to the 2023 parliamentary elections structure contributed most to the fiscal that might undermine disinflation poli- deficit. Revenue collection improved, dri- Outlook cies and keep large distortions in the for- ven by better performance of corporate in- eign exchange market, thereby delaying come tax, VAT, and money transfer tax. The economy is projected to continue to economic recovery. Public indebtedness worsened further as recover in the medium term, amid down- Poverty levels are expected to further de- the government assumed RBZ’s legacy side risks. GDP is projected to grow by cline in 2022, albeit marginally. As condi- debt, adding over US$2.5 billion to exter- 3.7 percent in 2022 but slowdown in the tions for a good harvest deteriorate, prices nal arrears and external debt reached medium term as the positive base effects remain high, and the capacity of the social US$14.5 billion. diminish. The downward revision to the system to target and reach the poor with Poverty levels decreased, reflecting the growth outlook is based on worsening adequate social safety nets is constrained. bumper maize harvest of the 2021 season. agriculture conditions as well as global If inflation is not adequately managed, the After peaking at 43 percent, in 2020, inter- price increases and supply side disrup- purchasing power of incomes will be erod- national poverty rate fell to 41 percent in tions due to the conflict in Ukraine and ed, putting more people in or at risk of 2021. The decline in poverty is primarily associated sanctions on Russia. Agricul- poverty and delaying improvements in ba- driven by rural areas thanks to the bumper ture output is set to contract by 1.5 per- sic service delivery. TABLE 2 Zimbabwe / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices -6.1 -6.2 5.8 3.7 3.6 3.6 Private Consumption -19.9 -5.2 11.6 3.3 3.4 3.5 Government Consumption -1.7 -2.0 3.0 4.3 5.5 4.4 Gross Fixed Capital Investment -9.0 -3.0 6.2 4.9 4.8 4.0 Exports, Goods and Services 29.7 1.6 6.0 3.3 3.2 3.4 Imports, Goods and Services -29.5 9.8 25.1 2.9 3.4 3.5 Real GDP growth, at constant factor prices -7.5 -6.6 5.8 3.7 3.6 3.6 Agriculture -17.8 4.2 17.2 -1.5 2.5 2.7 Industry -11.1 0.0 6.4 4.6 3.6 4.1 Services -2.1 -13.6 2.5 4.3 3.9 3.5 Inflation (Consumer Price Index) 255.3 557.2 98.5 72.0 44.0 34.0 Current Account Balance (% of GDP) 4.6 3.6 4.0 2.6 0.3 -0.7 Net Foreign Direct Investment (% of GDP) -1.2 -0.8 -0.4 -0.7 -0.5 -0.4 Fiscal Balance (% of GDP) 0.2 1.7 -1.5 -1.7 -2.0 -1.1 Debt (% of GDP) 94.8 109.7 88.4 81.6 78.3 76.3 Primary Balance (% of GDP) 0.4 1.8 -1.4 -1.5 -1.9 -0.9 a,b International poverty rate ($1.9 in 2011 PPP) 39.5 42.7 40.9 40.1 39.4 38.6 a,b Lower middle-income poverty rate ($3.2 in 2011 PPP) 63.8 66.7 65.2 64.6 63.7 63.0 a,b Upper middle-income poverty rate ($5.5 in 2011 PPP) 82.8 84.4 83.6 83.0 82.7 82.3 GHG emissions growth (mtCO2e) -1.6 -2.9 2.3 1.2 0.7 0.8 Energy related GHG emissions (% of total) 12.6 10.5 10.4 10.1 9.5 8.9 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Calculations based on 2019-PICES.Actual data: 2019. Nowcast: 2020-2021. Forecasts are from 2022 to 2024. b/ Projection using neutral distribution (2019) with pass-through = 0.87 based on GDP per capita in constant LCU. MPO 95 Apr 22 Macro Poverty Outlook 04 / 2022