LIBERIA

Key conditions andchallenges

Table 1

2023

Population, million

5.4GDP, current US$ billion

4.3

GDP per capita, current US$799.5

International poverty rate ($2.15)

a27.6
a60.6

a88.9

Lower middle-income poverty rate ($3.65)
Upper middle-income poverty rate ($6.85)
Gini index

a35.3

School enrollment, primary (% gross)

b72.9

b60.7

Total GHG emissions (mtCO2e)

17.2Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2016), 2017 PPPs.
b/ Most recent WDI value (2021).

Liberia’s economy expanded by an estimated 4.7 percent in 2023. Inflationarypressures increased due to rising food andtransportation costs. Medium-term
growth prospects are promising but require maintaining macroeconomic stability, prudent fiscal consolidation, and implementation of ongoing structural reforms in key enabling sectors. However,risks to the outlook are tilted to the downside as inflationary pressures, fiscal slippages, and fluctuations in commodity
prices could undermine macroeconomicstability and growth.

Since 2021, Liberia has seen steady economic progress, but not at a rate fastenough to accelerate the country's efforts
to reduce poverty. The medium-term outlook for the country is promising; however, to accelerate growth, macroeconomic
stability and fiscal sustainability must be
upheld in the near term, and infrastructure
and private investment enhanced in themedium term. Macroeconomic stability
must be complemented by institutional
reforms, enhancements in the businessenvironment, and significant upgrades tobasic services and infrastructure to unlock the country's growth potential. In
addition, investing in human capital andbuilding climate resilience are essential
for long-term growth and breaking thecycle of entrenched poverty. Liberia has
limited access to health care, education,and basic utilities by regional and global
standards, and despite being among thenations with the lowest greenhouse gas
emissions, the country faces significant
challenges in adapting to consequences ofclimate change.

Recent developments
Liberia’s economy expanded by an estimated 4.7 percent in 2023, driven mainly
by mining, specifically gold production.

Growth in the primary sector was sluggish–1.4 percent, as the outputs of key agricultural products such as rubber and crude
palm oil declined by 2.0 percent and 10.7
percent, year-on-year (y/y), respectively.
The secondary sector expanded by 13.9
percent, led by mining. Gold production
increased by 16.4 percent (y/y) in response
to higher international demand, while ironore output grew by 1.0 percent (y/y). In
manufacturing, cement production expanded by 5.6 percent, driven by increased
construction activity. The services sector
expanded by 3.8 percent.
Headline inflation rose to 10.1 percent in2023, from 7.6 percent in 2022, driven byincreases in transport and food prices, anda weaker Liberian dollar. As of December
2023, the Liberian dollar to US dollar exchange rate had increased by 22.0 percent(y/y) but was broadly stable during the last
half of the year, trading at L$186.6 per US
dollar. Nonfood inflation averaged 10.3
percent in 2023, down slightly from 10.6
percent in 2022, while food inflation averaged 12.3 percent, from a disinflation of
1.6 percent during the same period. Foodprices will remain a major driver of inflation and will continue to have a disproportionate impact on the poor, who are net
consumers of food and are at risk of foodinsecurity and falling into deeper poverty.
The rice sector remains vulnerable to externalities, as trends in rice supply, demand,and prices shape food insecurity andpoverty in Liberia. Although rice accounts
for more than 20 percent of total food consumption, its price remains volatile in themarket. This has recently compelled thegovernment to intervene, halting all price

FIGURE 1 Liberia / Real GDP growth and contributions toreal GDP growth

FIGURE 2 Liberia / Actual and projected poverty rates andreal private consumption per capita

Percent, percentage points
7Poverty rate (%)
100

1000

690900

80

800

70700

60600

50500

40400

30300

20200

10100

54321

Real private consumption per capita (constant LCU)

002021Agriculture

2022

2023e
Industry

2024f

2025f

Services02007 2009 2011 2013 2015 2017 2019 2021 2023 20252026f

Real GDP growth

Sources: Liberian authorities and World Bank staff estimates.

International poverty rate

Lower middle-income pov. rate

Upper middle-income pov. rate

Real priv. cons. pc

Source: World Bank. Notes: see Table 2.

MPO1Apr 24

increases and looking at ways to offer alternative varieties of rice. The extreme international poverty rate (US$2.15 per person per day) is estimated to have declined
by 1.1 percentages points to 31.3 percent in2023, from 32.4 percent in 2022.
In 2023, the Central Bank of Liberia (CBL)
raised the policy rate twice in May andJuly by 500 basis points cumulatively to20.0 percent to rein in inflation. The CBLalso removed the ceiling on the offeredamount of CBL bills to help accommodate the growing oversubscription, absorb the excess liquidity in the banking
system, and strengthen its monetary policy operations. The financial sector remained adequately capitalized with minimum capital adequacy ratio at 21.2 percent, well above the floor of 10 percent.
Non-performing loans as share of totalloans also declined to from 16.4 percent
to 11.2 percent, slightly above the tolerable levels of 10 percent.
Liberia’s fiscal deficit remained high, ataround 5.5 percent of GDP due to declines
in revenue and grants and increase in consumption spending. The fiscal deficit wasmainly financed by concessional resources- (i.e., budget support loans and IMF Special Drawing Rights). In March 2024, thenew Government submitted a revised 2024
budget to the legislature for approval.

The current account deficit is estimated tohave risen to 24.4 percent of GDP in 2023,
up from 17.7 percent in 2022. The increasein current account deficit was driven bytrade dynamics. The trade deficit worsened to 18.4 percent of GDP, from 11.8 percent in 2022, as growth in imports driven
by minerals, machinery, and petroleum
outpaced the growth in exports. The current-account deficit was financed by net
IMF credit, loans, and drawdowns of grossofficial reserves. By December 2023, thegross external reserves fell to US$496 million (about 2.3 months of imports), from
US$644 million (3.0 months of imports) in
December 2022.

Outlook
Liberia’s medium-term growth prospects
are positive on balance. The economy is expected to expand by 5.4 percent in 2024
and average of 5.9 percent in 2024–26.
Medium-term growth prospects require
maintaining macroeconomic stability, prudent fiscal consolidation, and implementation of ongoing structural reforms in key
enabling sectors.
Tightening monetary policy will ease inflationary pressures and bring inflation

TABLE 2 Liberia / Macro poverty outlook indicators

down to 5.4 percent by 2026. The fiscal
deficit is projected to moderate to an average of 3.3 percent of GDP in the medium term as the government strengthens
domestic resource mobilization and expenditure controls. The current-accountdeficit is expected to remain elevatedin the medium term due to a surge
in aggregate demand driven by foreign
direct investment (FDI) related imports.
The deficit will be financed by FDI inmining, private financing flows, and disbursements of project grants and loans.
Real income per capita is expected to growand poverty incidence is expected to decline by 3.6 percentage points, from 29.6
percent in 2024 to 26.0 percent in 2026 as
the government addresses supply side
constraints, stimulates growth and job
creation, and takes measures to combat
food insecurity and climate vulnerabilities by mitigating rising food prices andtightening macroeconomic policy to reduce inflationary pressures.
However, the outlook is not without significant risks. Inflationary pressures resulting from elevated import prices (especiallyfood and fuel), combined with potential
decrease in export prices (such as rubber,iron ore, and gold), and fiscal slippages
could undermine macroeconomic stability
and hamper the recovery in growth.

(annual percent change unless indicated otherwise)

Real GDP growth, at constant market prices
Private consumption
Government consumption
Gross fixed capital investment
Exports, goods and services
Imports, goods and services

2021
5.0
4.7
0.2
-7.9
14.7
1.8

2022
4.8
3.3
-5.7
9.4
7.7
3.1

2023e
4.7
3.5
0.0
12.9
8.5
7.0

2024f
5.3
3.7
-6.0
11.8
13.1
7.3

2025f
6.2
3.8
-2.3
12.6
13.6
7.5

2026f
6.3
3.9
6.2
9.0
13.6
7.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

4.8
3.3
13.3
3.0

4.8
5.9
6.7
2.8

4.7
1.4
13.9
3.8

5.3
5.0
6.3
5.1

6.2
5.7
7.5
6.0

6.3
5.9
7.0
6.3Inflation (consumer price index)
Current account balance (% of GDP)

7.8
-17.8

7.6
-17.7

10.1
-24.4

7.7
-21.7

5.6
-21.9

5.4
-21.6

Fiscal balance (% of GDP)
Revenues (% of GDP)
Debt (% of GDP)
Primary balance (% of GDP)

-2.4
27.2
53.2
-1.6

-5.6
21.5
53.4
-4.6

-5.5
20.8
54.5
-4.5

-3.2
22.9
55.4
-2.3

-3.7
22.4
55.6
-2.9

-3.1
20.7
53.7
-2.3

33.4
69.0
93.1

32.4
68.1
92.8

31.3
67.5
92.5

29.6
66.3
91.9

27.8
64.3
91.4

26.0
62.1
90.6

3.2
6.4

3.2
6.3

3.1
6.2

3.1
6.1

3.2
5.9

3.2
5.8

a,b

International poverty rate ($2.15 in 2017 PPP)
a,bLower middle-income poverty rate ($3.65 in 2017 PPP)a,b
Upper middle-income poverty rate ($6.85 in 2017 PPP)
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
Notes: e = estimate, f = forecast.
a/ Calculations based on 2016-HIES. Actual data: 2016. Nowcast: 2017-2023. Forecasts are from 2024 to 2026.
b/ Projections using microsimulation methodology.

MPO2

Apr 24