Sub-Saharan Africa

Macro Poverty Outlook
Country-by-country Analysis and Projections for the Developing World

AnnualMeetings2022

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Sub-SaharanAfricaAngolaBenin
Botswana
Burkina Faso
BurundiCabo Verde
Cameroon
Central African Republic
Chad
Comoros
Congo, Dem. Republic
Congo, RepublicCôte d'Ivoire
Equatorial Guinea
Eritrea
Eswatini
Ethiopia
Gabon
The Gambia
Ghana
GuineaGuinea-Bissau
Kenya
LesothoMPO1

Oct 22

Liberia
Madagascar
MalawiMali
Mauritania
Mauritius
Mozambique
Namibia
Niger
Nigeria
RwandaSão Tomé and Príncipe

Senegal
Seychelles
Sierra Leone
SomaliaSouth Africa
South Sudan
Sudan
Tanzania
Togo
UgandaZambiaZimbabwe

ANGOLAKey conditions andchallenges

Table 1

2021

Population, million

33.9

GDP, current US$ billion

73.2

GDP per capita, current US$

2158.0International poverty rate ($2.15)

a

31.1
a

52.9

a

78.0

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

a

51.3

School enrollment, primary (% gross)

b

113.5

b

61.5

Total GHG emissions (mtCO2e)

129.8Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ WDI for School enrollment (2015); Life expectancy(2020).

After emerging from a five-year recession
with slightly positive GDP growth in
2021, Angola has continued on its path of
economic recovery into 2022. Thanks tohigh oil prices and the strengthening of
non-oil sectors, the outlook for 2022 andthe subsequent years is favorable. Generalelections on August 24 reconducted theincumbent administration. It faces thechallenge of leveraging the currently favorable economic momentum by relieving
extreme poverty while investing in amore sustainable, diversified, and inclusive growth path.

An oil-dependent economy, Angola’s economic performance has been significantly
influenced by the global oil price. The oilled growth model has caused macroeconomic instability and resulted in high levels of poverty and inequality. Oil revenues
were insufficiently (or ineffectively) reinvested, resulting in underdeveloped infrastructure and low human capital, which
limited opportunities for economic diversification. Global decarbonization poses
further challenges to Angola’s growthmodel and increases the urgency of economic diversification.
Recent years have seen structural reforms
undertaken to move Angola away fromits resource dependency. Macroeconomic
stability has been improved through amore flexible exchange rate regime, central bank autonomy, sound monetary
policy, and fiscal consolidation. Laws toincrease the stability of the financial sector, improve fiscal policy effectiveness,and reduce the impact of oil revenue
volatility on public finances have also
been introduced. In addition, the authorities have taken steps to reduce corruption– considered one of the major constraints
for doing business in Angola – and improve the business climate. To combat
poverty and boost human capital, investments in education and health have been
complemented with the roll-out of a social protection registry and a targetedcash transfer program (Kwenda) in 2020,
for which registration reached over
800,000 households by mid-2022.
Adding to Angola’s challenges, the impacts of global warming are increasingly
felt. Especially in the south of the country,
worsening climatic conditions have led toa multi-year severe drought with 1.3 million suffering from food crisis.

Recent developments
Notwithstanding long-term sustainability concerns, higher oil prices in
2022 are contributing to firmer economic activity. Angola exited a fiveyear recession in 2021, growing 0.8
percent thanks to strong performanceof fisheries, agriculture, and services.
In 2022 Q1, GDP growth remained solid, at 2.6 percent. Oil production increased, averaging 1.17 million barrels
per day in the first half of 2022, up 7
percent from last year.
With higher production and oil prices averaging over US$100/barrel in 2022, exports and government revenues, of which
95 and 60 percent are oil-related, have been
increasing, as have net international reserves. Public debt, meanwhile, declined
from over 130 percent of GDP in 2020 to 86
percent in 2021.
High oil prices caused a 24 percent appreciation of the Kwanza against the
USD in July relative to end-2021. Despite currency strength, overall and foodinflation remain high, at 23 and 26.2
percent in June, respectively. This led

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

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

Percent, percentage points
4

Poverty rate (%)

2

Real private consumption per capita (constant LCU)

90

28000

80

26000

70

24000

60

0

22000

50

20000

40

-2
-4
-6

Oil industry

20

16000

Non-oil industry

10

14000

Services

0

2019

2020

2021

2022e

2023f

12000
2008 2010 2012 2014 2016 2018 2020 2022 2024

GDP

-8

18000

30

Agriculture

International poverty rate
Upper middle-income pov. rate

2024f

Sources: Angola National Institute of Statistics and World Bank MTI.

Source: World Bank. Notes: see Table 2.

MPO

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Oct 22Lower middle-income pov. rate
Real priv. cons. pc

to an appreciation of the real effective exchange rate of 92.7 percent in June. With an
inflation target of 18 percent for end-2022,
the central bank has kept its reference rate
at 20 percent but started easing other monetary instruments.
The rising cost of living especially burdens
the urban poor, who rely on informality
and face high unemployment. However,the urban share of the working-age population employed shows signs of recovery,
with 2 percentage points y/y increase to
52 percent 2022 Q2, while the national rate
registered a 1-percentage point y/y increase, reaching 63 percent.
Developments beyond oil have also
been supportive. In April, Angola successfully tapped global bond markets
and saw the start of operations of themobile network operator Africell. In
June, the largest private bank launched
the country’s first initial public offering,and Angola became a member of theExtractive Industries Transparency Initiative (EITI).

OutlookHigh oil prices will strengthen Angola’s
economy in the near term. Real GDP is
projected to grow 3.1 percent in 2022, following a slight expansion of oil production. The non-oil growth is expected topick up, generating approximately 2.8 percent GDP growth in 2023 and 2024 despite
the expected contraction of the oil sector in
2024 as reserves are slowly being exhausted. Economic growth will however continue to trail population growth, and per
capita GDP is expected to further declineor, at best, stagnate, further highlighting
the need to accelerate economic growth. In
2022, oil revenue windfalls will generate afiscal surplus of 1.0 percent of GDP, projected to drive down public debt to 62 and61 percent of GDP in 2022 and 2023. By
2024, the loss of oil revenues will cause afiscal deficit of 0.2 percent of GDP and aslight uptick in public debt.

TABLE 2 Angola / Macro poverty outlook indicators

With stagnating per capita GDP levels, thepoverty rate will remain largely unchanged
at around 34 percent of the population living on less than US$ 2.15 per day (2017 PPP)
- the updated international poverty line.
This highlights the need for the continued
expansion of Kwenda and programs to increase productivity and employment opportunities, especially for youth andwomen. Moreover, if fertilizer prices remain high, agricultural production in theincoming season may significantly fall, increasing food insecurity and food prices.
On August 24, Angola held legislativeand presidential elections, which reappointed the incumbent government. Politically complex reforms that require continued political commitment and ownership, such as the phasing-out of fuel subsidies, remain outstanding. Moreover, the
new administration will have to manage significant economic challenges in themedium-term, aggravated by tighter financing conditions and global uncertainty caused by rising geopolitical tensions.

(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

2019
-0.7
-6.2
-1.6
-1.9
-5.9
-11.0

2020
-5.8
-4.0
-7.1
-1.6
-6.2
-21.7

2021
0.8
2.0
4.0
17.0
-10.7
7.0

2022e
3.1
2.5
9.7
5.5
3.3
10.0

2023f
2.8
2.7
3.3
5.1
2.2
7.0

2024f
2.9
3.3
5.2
6.6
-2.1
6.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-1.2
-1.3
-3.6
2.2

-7.0
1.8
-10.4
-3.9

-0.5
17.3
-8.5
6.2

3.1
5.6
1.9
3.8

2.8
5.4
1.2
4.0

2.9
6.9
-0.1
5.2

Inflation (Consumer Price Index)

17.1

22.3

25.8

22.6

14.1

8.9

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

6.2
-2.1

2.4
3.3

10.1
4.5

15.2
-0.5

14.0
-1.3

10.9
-1.6

0.8
119.6
6.5

-1.9
130.7
4.9

2.9
85.7
8.2

1.0
61.9
5.3

0.2
61.3
4.0

-0.2
62.5
4.5

32.6
54.0
79.6

33.7
54.9
80.9

33.9
55.1
81.2

34.1
55.2
81.3

34.2
55.2
81.4

34.1
55.2
81.4

6.8
16.1

1.1
16.7

0.1
17.1

1.9
19.2

0.5
20.2

1.5
21.9

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)a,bInternational poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
a/ Calculations based on 2013-, 2019-, and 2018-IDREA. Projection using point to point elasticity at regional level with pass-through = 0.7 based on private consumption percapita in constant LCU.
b/ Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024.

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Oct 22

BENINKey conditions andchallenges

Table 1

2021

Population, million

12.5

GDP, current US$ billion

17.8

GDP per capita, current US$

1427.3

International poverty rate ($2.15)

a

19.9
a

53.2

a

83.4

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

a

37.8

School enrollment, primary (% gross)

b

114.2

b

62.1

Total GHG emissions (mtCO2e)

28.0Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ Most recent WDI value (2020).

After a strong rebound in 2021, real
growth is expected to moderate to 5.7 percent in 2022, notably driven by subdued
private consumption due to rising inflationary pressures that also keep the fiscal
deficit elevated, at 5.5 percent of GDP.
Public debt has increased as a result.
Food and energy price volatility, increased security risks in the north, andextreme weather events cloud the outlook
for growth and poverty reduction.

The COVID-19 crisis significantly reduced
Benin’s real growth rate even though aswift economic response, combined withthe continuation of large public infrastructure projects, supported growth throughout 2020 and paved the way for a strong
rebound in 2021 at 7.2 percent. The Government Action Plan (PAG), which initiallycovered the period 2016-2021, was extended to 2026 following the reelection of President Talon in April 2021, and the PAG2
maintains its focus on macroeconomic stability, strengthening governance, and ambitious infrastructure investments (transport, logistics, agriculture, and tourism).
Strengthening the recovery over time will
require continued structural reforms to alleviate key constraints. First, productivity
growth in services and industry has beenslow due to low quality education andskills mismatches. Second, the COVID-19
crisis highlighted the difficulty of targeting
support towards the most vulnerable associal safety net mechanisms are still being
built. Finally, even though fiscal consolidation efforts since 2016 enabled countercyclical fiscal policy in response to the2020-2022 crisis, domestic revenue mobilization remains structurally weak, limiting fiscal space for productive spending.
In terms of risks, sustained food and energy price volatility and supply-side disruptions, e.g., fertilizers fueled by the war
in Ukraine, would negatively impact poorand vulnerable households, increasing
food insecurity and slowing poverty reduction. Extreme climate events could also cause damage and jeopardize agricultural output. An increase in terrorist attacks in the northern regions could also
threaten economic development in theserural communities, pushing more households into fragility.

Recent developments
Real GDP growth is expected to decelerate
to 5.7 percent in 2022 – 1 ppt below preUkraine war projections, due to negative
terms of trade shocks and worsening global economic outlook. On the supply side,
all sectors would decelerate due to the
spike in commodity and fertilizer prices
and supply chain disruptions. On the demand side, private consumption is contracting, while public spending drives up
government consumption. Annual inflation eased to 1.7 percent on average in
2021. On a monthly basis, however itpeaked at 7.9 percent in January 2022 due
to rising global energy and food prices, before government measures to limit staple
food prices resulted in annualized inflation
declining to 2 percent at end-July.
Higher commodity prices coupled withsignificant construction, energy, and security imports are expected to widen the current account deficit (CAD) (including
grants) to 6.2 percent of GDP in 2022, from
4.4 percent in 2021. The CAD will be primarily financed by regional bond emissions and by concessional financing.

FIGURE 1 Benin / Budget balance and change in public andpublicly guaranteed debt

FIGURE 2 Benin / Actual and projected poverty rates andreal GDP per capita

Percent of GDP
10

Poverty rate (%)
100

900000890800000680700000Real GDP per capita (constant LCU)

70

460000060

250000050

040000040

300000

-2

30

-4

20

200000-6

10100000

0

-8
2011

2013

2015

Change in debt (%GDP)

2017

2019

2021

0
2011

2023

2013

2015

2017

International poverty rate
Upper middle-income pov. rate

Budget balance (%GDP)

Source: World Bank.

Source: World Bank. Notes: see Table 2.

MPO

4

Oct 22

2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

The fiscal deficit will remain high at
5.5 percent of GDP in 2022, owing tounanticipated spending to cushion theeffects of the Ukraine war, security-related spending to contain rising security
threats in the North, and lower than expected international trade revenue. Domestic revenues are expected to remain
resilient in 2022 reaching 13.4 percent ofGDP, compared to 13.2 percent in 2021.
Public debt is expected to increase to
51.6 percent of GDP in 2022 (+9.1 ppt
compared to 2019), with the share of external debt significantly increasing overthe last few years.
Monetary and exchange rate policies aremanaged by the Central Bank of West
African States (BCEAO). Its reserves declined to 5.2 months of imports in June
2022, from 5.5 months in 2021, due to higher energy prices and food imports causedby the Ukraine crisis. To counter inflationpressures, the BCEAO raised rates for liquidity calls (2 percent to 2.5 percent) andthe marginal lending window (4 percent to
4.5 percent) in June and September 2022.

Poverty and vulnerability remain highwith substantial spatial disparities. The
poverty headcount rate ($2.15 a day, 2017
PPP) is expected to continue its gradualdecline, from 18.9 percent in 2021 to 18.6
percent in 2022, as a result of sustained
economic growth.

OutlookIn the medium-term, real growth is expected to converge to 6 percent, equivalent to 3.3 percent per capita. Growth
will be driven by private consumption,
as inflationary pressures abate, and total
investment, with a gradual shift frompublic to private. Inflation is projected
to decline gradually from 2023 onwards
after peaking at 3.9 percent in 2022, driven by higher global food and energy
prices. The CAD should improve progressively, averaging 5.1 percent ofGDP, thanks to a normalization of theprice of oil products and supported by

TABLE 2 Benin / Macro poverty outlook indicators

ongoing reforms to improve competitiveness and export diversification.
The planned revenue-based fiscal consolidation, supported by a newly signed IMF
program, along with the removal of exceptional subsidy measures and more efficient
spending, should narrow the deficit to 4.3
percent in 2023. The WAEMU target of 3
percent of GDP should be reached in 2024,
while risks of delaying it by one more year
remain. As a result, public debt is expected
to peak at 52 percent at end-2023, before
gradually declining.
WAEMU reserves are expected to fall toaround 5.3 months in 2023-2024, reflecting
faster growth in imports and a reduction in
net capital inflows (as a percent of GDP),as the environment for Eurobond issuances remains uncertain.
Poverty reduction is expected to gradually
revert to its pre-crisis downward pace as
the economy rebounds. With improving
employment, and social protection programs, the $2.15/day 2017 PPP poverty
headcount rate is expected to decrease to
18 percent by 2024.

(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

2019
7.5
3.5
5.8
6.0
-18.6
-24.2

2020
3.8
3.0
19.6
-6.2
-6.7
-11.3

2021
7.2
4.2
2.0
20.1
19.2
19.6

2022e
5.7
3.0
13.9
13.1
11.6
15.5

2023f
6.2
4.0
0.7
9.7
4.6
0.4

2024f
6.0
4.0
2.4
8.5
5.5
1.3

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

8.0
7.2
6.2
10.1

3.8
1.8
5.2
4.5

7.2
4.7
10.5
6.9

5.7
4.3
7.8
5.2

6.2
4.5
7.7
6.4

6.0
4.5
7.3
6.2

Inflation (Consumer Price Index)

-0.9

3.0

1.7

3.9

3.0

2.5

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-4.0
1.3

-1.7
0.5

-4.4
1.3

-6.2
0.3

-5.7
-0.7

-4.6
-1.0

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-0.5
41.2
1.1

-4.7
46.1
-2.7

-5.7
49.9
-3.5

-5.5
51.6
-3.7

-4.3
52.0
-2.7

-2.9
50.7
-1.2

19.4
52.7
82.5

19.3
52.5
82.3

18.9
52.0
81.5

18.6
51.6
80.9

18.3
51.2
80.3

18.0
50.8
79.7

-0.2
30.8

1.9
31.6

6.6
35.4

1.0
35.4

2.0
35.8

4.2
37.6

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
a/ Calculations based on 2009-, 2014-, 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

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Oct 22

BOTSWANA

Key conditions andchallenges

Table 1

2021

Population, million

2.4

GDP, current US$ billion

17.5

GDP per capita, current US$

7247.6

International poverty rate ($2.15)

a

15.4
a

38.0

a

63.5

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

a

53.3

School enrollment, primary (% gross)

b

99.0

b

69.8

Total GHG emissions (mtCO2e)59.1

Life expectancy at birth, years

in the "Reset Agenda" will help diversify
the economy towards financial services,manufacturing, and tourism.

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2015), 2017 PPPs.
b/ WDI for School enrollment (2021); Life expectancy(2020).

After a strong growth rebound in 2021,
Botswana's economy is projected to expandby 4.1 percent in 2022, surpassing expectations despite the headwinds created by
COVID-19 and the Ukraine war. In 2022,
higher fiscal revenues driven by diamond
exports are helping to replenish the Pula
Fund. Still, the fiscal deficit is set to increase
with higher government spending to cushion households against soaring higher inflation. Structural reforms to boost competitiveness for more and better jobs remain essential to tackling poverty and the unemployment rate of 26 percent.

Botswana has historically enjoyed robust
and stable growth since independence,
supported by the discovery of large diamond deposits and prudent use of the proceeds. However, the limitations of the existing diamond sector-led development
model have become increasingly pronounced: the pace of growth has weakened since the global financial crisis in acontext of higher competition from synthetic diamonds and higher production
costs locally, and job creation is low. The
unemployment rate climbed to 26 percent
in 2021, with youth unemployment posing
a critical challenge. Despite historically declining inequality, Botswana remains one of
the world's most unequal countries, with
the Gini index estimated at 53.3 percent.
Botswana's reliance on a diamond andpublic sector-driven model makes the
economy vulnerable to external shocks, asdiamonds contribute over 80 percent of total exports and are a major source of fiscal
revenues. This vulnerability was evident
during the pandemic when the economy
contracted by 8.7 percent in 2020 and fiscalpressures rose.
COVID-19 exacerbated existing economic
and social challenges, setting back somegains made in alleviating poverty, underscoring the urgent need for a shift towards
a more diversified economy, with the private sector playing a leading role. Steadfast implementation of reforms envisaged

Recent developments
Growth has been broad-based in 2022Q1
and 7 percent higher than in 2021Q1, driven by mining, manufacturing, water &electricity, accommodation, and food services. The diamond industry performed
well, as sanctions against Russia are benefitting Botswana through higher prices andmarket share. Economic activity has also
been boosted by the lifting of COVID-19
restrictions amid a high vaccination rate ofover 95 percent of the eligible population.
Inflation continued to exceed the central
bank's medium-term 3–6 percent objective
range during the 2022H1, reflecting highenergy prices and other input costs. Annual CPI inflation averaged 11.4 percent during January-July 2022 compared to 6.7 percent in 2021. The impact of the Ukraine
war on food and transport prices was high,as they together accounted for 10.9 percentage points of the 14.3 percent inflationin July 2022. As inflationary pressures
mount, the Bank of Botswana has tightened monetary policy, raising the newly
introduced Monetary Policy Rate by a cumulative 151 basis points between April
and August 2022. The poverty rate is projected at 63 percent in 2021, down from
64.6 percent in 2020 (based on the new upper-middle-income poverty line). Unemployment increased to 26 percent in 2021
from 24.5 percent in 2020.

FIGURE 1 Botswana / Diamond prices

FIGURE 2 Botswana / Actual and projected poverty rates
and real GDP per capita

Price, USD/Carat

Poverty rate (%)

170

70

Real GDP per capita (constant LCU)
90000

Diamond index

80000

60

160

70000
50

150

60000

40

50000

30

40000

140
130

30000

20

20000

120

10

110

10000

0

0
2009

100
Jan-19Jul-19Jan-20Jul-20Jan-21

Jul-21

Jan-22

2011

2013

2015

2017

International poverty rate
Upper middle-income pov. rateJul-22

Source: Bank of Botswana.

Source: World Bank. Notes: see Table 2.

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6

Oct 22

2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

In 2022H1, both the current account andfiscal balances improved, driven by thesolid performance of the diamond industry, and foreign reserves stabilized. The external position is expected to record a surplus in 2022 due to solid diamond exports
and lower net capital outflows. On the fiscal side, the rise in revenues reflected elevated diamond sales and improved revenue collection; yet the fiscal deficit is expected to widen by end-2022 due to higher
government spending. On July 27, the Government approved several short-term interventions to cushion households against
heightened inflationary pressures. These
fiscal interventions will cost an estimated 0.8
percent of GDP and mostly support social
programs targeted at households.

Outlook
Following a robust growth rebound in
2021 (11.4 percent), growth is projected

at 4.1 percent in 2022 and to average
4 percent during 2023-2024. Growth will
be supported by strong demand for diamonds, increased copper production,
and an uptick in international tourist
arrivals. Though inflation is expected
to remain in double figures in 2022,
Botswana's relatively strong public
sector governance and predictablemonetary policy framework will support macroeconomic stability in themedium term. The outlook hinges on
the course of the war in Ukraine, diamond prices, the pandemic, and the implementation of fiscal consolidation andeconomic diversification reforms.
The approved short-term fiscal interventions to cushion households against rising inflation is projected to increase thefiscal deficit in 2022, despite the higher
performance of mineral revenues. The
measures (VAT rate will decline from 14
to 12 percent with zero rating of VAT
for cooking oil and fuel) announced inJuly will lead to reduced revenues. The

TABLE 2 Botswana / Macro poverty outlook indicators

projected deficit will be financed throughexternal borrowing, increasing public
debt. However, in the medium term, thefiscal balance is projected to turn into asurplus as authorities move ahead with fiscal consolidation focused on the wage bill,subventions, and SOE reforms.
The current account balance is projected
to be in surplus in the medium-term, as
the rebound in diamond production andfavorable terms of trade owing to subdued diamond supply in Russia anchor
the projected drop in SACU revenues.
Poverty under the new upper-middleincome poverty line is expected to decline slightly to 62.7 percent in 2022. A
sustained reduction in poverty and inequality will require further progress on
diversification and digitalization reforms
to enhance access to good private-sector jobs. There is a need to expedite theimplementation of key strategic priorities
by developing infrastructure, expandingsocial programs, and improving public
service delivery.

(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

2019
3.0
3.5
9.8
10.2
-7.1
11.9

2020
-8.7
3.5
5.3
-10.4
-18.1
5.2

2021
11.4
3.3
3.2
-0.2
32.8
2.7

2022e
4.1
2.6
-5.7
4.1
10.8
5.0

2023f
4.0
4.8
-1.0
-0.6
8.8
4.9

2024f
4.0
2.8
2.3
2.3
7.3
4.8

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

3.2
3.0
-1.5
6.8

-8.7
-5.1
-20.7
-0.2

11.4
-2.9
19.4
7.3

4.1
2.8
11.3
-0.4

4.0
2.8
4.4
3.7

4.0
2.6
4.4
3.8

Inflation (Consumer Price Index)

2.8

1.9

6.7

11.0

5.9

4.5

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-7.0
-1.3

-8.7
0.7

-0.5
-0.6

1.7
-0.8

2.6
-1.0

4.3
-1.1

-6.2
19.4
-5.5

-9.6
22.4
-8.9

-2.9
25.0
-2.1

-3.3
27.4
-2.5

0.3
26.6
1.2

1.6
24.3
2.4

15.0
37.5
62.7

16.0
38.7
64.6

15.1
37.7
63.0

15.0
37.5
62.7

14.8
37.3
62.4

14.7
37.2
62.1

0.6
17.2

-1.4
15.7

3.7
16.8

0.4
17.1

0.3
17.3

0.4
17.7

a

Fiscal Balance (% of GDP)b
Debt (% of GDP)a
Primary Balance (% of GDP)c,dInternational poverty rate ($2.15 in 2017 PPP)c,dLower middle-income poverty rate ($3.65 in 2017 PPP)c,dUpper 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
a/ Fiscal balances are reported in fiscal years (April 1st -March 31st).
b/ Refers to Public and Publicly Guaranteed debt.
c/ Calculations based on 2009-CWIS and 2015-BMTHS. Actual data: 2015. Nowcast: 2016-2021. Forecasts are from 2022 to 2024.
d/ Projection using point to point elasticity at regional level with pass-through = 0.87 based on GDP per capita in constant LCU.

MPO

7

Oct 22BURKINA FASO
Table 1

2021

Population, million

21.5

GDP, current US$ billion

20.0

GDP per capita, current US$

931.9

International poverty rate ($2.15)

a

30.5
a

59.8

a

81.1

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

a

47.3

School enrollment, primary (% gross)

b

92.6

b

62.0

Total GHG emissions (mtCO2e)46.9Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ Most recent WDI value (2020).

The economy grew by an estimated 6.9
percent in 2021 (4.0 percent in per capita
terms), aided by a post-COVID-19 rebound in services. Due to political instability, domestic insecurity, and the impact of the war in Ukraine, growth is projected to slow to 4.3 percent, and inflation
to reach double digits. This will exacerbate food insecurity and delay returning
to a pre-COVID poverty reduction trajectory. The medium-term outlook is clouded
by significant downside risks related tothe political transition and insecurity.

Recent developments

Key conditions andchallenges
Over the past decade, the primary sector
has declined in importance, now contributing less than 20 percent of GDP.
Aided by a boom in the gold mining industry, the contribution of the secondary
sector rose to nearly 20 percent of GDP
and 85 percent of exports. Services account for almost half of GDP, with the
public and retail sectors generating mostjobs and output. However, almost 1 in 3
people continue to live in extreme poverty, and since 2016 strong growth (6.2 percent on average until COVID-19) has contrasted with increasing insecurity. Abouta quarter of schools are currently closed
in the two most affected regions, and thenumber of internally displaced persons
reached 2 million in mid-2022. Unfinisheddecentralization reforms and growing political instability, combined with substantial defense spending and a high public
wage bill, have constrained the deliveryof public services and limited growth-enabling public investments.
Economic prospects are even more uncertain after the January 2022 unconstitutional regime change. The coup triggered a reduction in the international community’s
financial support while heightening thecountry’s risk profile, negatively affecting
private investment and FDI. The primarilyrain-fed agriculture and livestock sectors
remain highly vulnerable to climate shocks
and natural disasters.

Following a strong 2021 post-COVID-19
economic recovery, supported by a rebound in services and the opening of newgold mines, GDP growth slowed sharply
in the first half of 2022 as insecurity spreadto some mining and farming areas, combined with the impact of the war in
Ukraine on global commodity prices.
Higher import prices (especially for foodstuffs, fertilizers, and fuel), global market
access challenges, and lower investment(including FDIs) contributed to a fall ofquarterly GDP in Q1-2022 of 1.9 percent,with extractives (-10.3 percent) and theconstruction sector (-18.9 percent) showing
the most significant contractions. Over theyear, real growth is projected at 4.3 percent(1.5 percent in per capita terms), driven by
consumption and exports. With reduced
donor grants and FDI inflows following
the coup, combined with high oil prices,
the CAD could deteriorate to 6 percent by
the end of the year.
While the rise in import prices has fed into
domestic inflation, the bigger drivers ofprice increases are supply-side shocks
from domestic agriculture production,
namely a bad harvest in late 2021 and the
security situation driving more farmers off
their lands. As of August 2022, year-onyear inflation stood at 18.1 percent, driven
by food (+29.8 percent).
Monetary and exchange rate policies aremanaged by the Central Bank of West
African States (BCEAO). Its reserves declined to 5.2 months of imports in June

FIGURE 1 Burkina Faso / Real GDP growth andcontributions to real GDP growth (demand-side)

FIGURE 2 Burkina Faso / Actual and projected poverty
rates and real GDP per capita

Percent, percentage points
12

Poverty rate (%)

10

90

8

80

6

70

4

60

2

50

0

40

-2

30

-4

20

-6

10
2019

2020

Real GDP per capita (constant LCU)

100

2021

Private Consumption
Gross Fixed Investment
Net Exports

2022

2023

2024

6000005000004000003000002000001000000

Government Consumption
Chg in Inventories
Real GDP growth

0
2009

2011

2013

2015

2017

International poverty rate
Upper middle-income pov. rate

Source: World Bank staff estimates.

Source: World Bank. Notes: see Table 2.

MPO

8

Oct 22

2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

2022, from 5.5 months in 2021, due to higher energy prices and food imports causedby the Ukraine crisis. To counter inflationpressures, the BCEAO raised rates for liquidity calls (from 2 to 2.5 percent) and themarginal lending window (from 4 to 4.5
percent) in June and September 2022.
With a military-led transition in placesince late January, defense spending has
grown. Social spending has also grown
to respond to the worsening humanitarian crisis and inflationary pressures. As aresult, the fiscal deficit is projected at 7.4
percent of GDP in 2022. It will be largely financed through borrowing in the regional market, leading to an increase in
overall public debt to about 61 percent of
GDP at end-2022.
Extreme poverty incidence is projected todecrease by about half a percentage point
to 27.4 percent in 2022, although with population growth, the number of extreme
poor is projected to increase by 43,000.
Food insecurity continues to be a major
challenge, with the entire north-east half ofthe country classified as food insecure. The
rainy season arrived on time, and rainfall
has been regular; however, insecurity anda lack of fertilizers are limiting production.
Prices of cereals remain 73 to 85 percent
higher than the five-year average and morethan double in some of the most insecureareas in the north.

OutlookIn the medium-term, growth is projected
to average slightly above 5 percent, driven
by services and extractives on the supply
side and consumption, private investment,
and exports on the demand side. Continued improvements in domestic tax collection and lower outlays for the military andsocial transfers from improved security
would help fiscal consolidation. However,the fiscal deficit is not expected to reach the
3 percent of GDP target of the West African
Economic and Monetary Union (WAEMU)TABLE 2 Burkina Faso / Macro poverty outlook indicators

before 2025. Mainly due to economic
growth, public debt is projected to gradually decrease from 2023 onwards.
The extreme poverty rate is projected tofall by about one percentage point a year
in 2023 and 2024. The number of poor isalso projected to decrease, albeit modestly,
due to high population growth, and about
6 million Burkinabe will remain poor overthis timeframe. Although the food security
situation is expected to improve after theupcoming harvest, the north will remain in
an emergency or crisis state.
The outlook has significant downside
risks, including persistent political instability, insecurity, climate shocks, food insecurity, and social discontent from highfood inflation. Already faced with high inflation, a poor harvest in 2022 (similar tothat in 2021) could drastically worsen theoutlook for 2023 and beyond. The war in
Ukraine and additional monetary tightening in the eurozone represent additionalrisks through elevated food and energy
prices and regional debt refinancing costs.

(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

2019
5.7
3.5
12.0
3.8
-0.1
-2.7

2020
1.9
8.6
7.1
-4.6
-7.1
5.3

2021
6.9
3.4
6.6
34.8
6.5
15.5

2022e
4.3
8.7
13.2
-10.4
10.0
8.4

2023f
5.0
3.2
11.6
5.8
4.5
5.0

2024f
5.3
5.4
3.2
7.6
3.4
4.8

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

5.7
1.7
2.3
9.5

1.9
5.2
12.8
-4.9

6.9
-4.1
11.0
10.3

4.3
6.3
4.8
3.1

5.0
4.6
5.9
4.6

5.3
6.2
6.9
3.9

Inflation (Consumer Price Index)

-3.2

1.9

3.9

13.6

6.9

4.0

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-3.3
-0.9

-0.1
-0.6

-3.0
-0.5

-6.0
-0.5

-5.7
-0.6

-4.9
-0.5

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-3.2
42.0
-2.0

-5.7
46.5
-4.3

-6.0
55.5
-4.5

-7.4
61.2
-5.3

-5.1
58.7
-2.9

-4.2
56.4
-2.2

29.6
59.0
80.5

30.0
59.2
80.6

27.9
57.5
79.8

27.4
56.8
79.3

26.6
55.8
78.8

25.5
54.8
78.0

5.7
10.5

1.9
10.4

6.9
11.1

4.3
11.4

5.0
11.9

5.3
12.3

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Med (0.87)) based on GDP per capita in constant LCU.

MPO

9

Oct 22

BURUNDI

Key conditions andchallenges

Table 1

2021

Population, million

12.3

GDP, current US$ billion

3.4

GDP per capita, current US$

275.2

International poverty rate ($2.15)

a

65.1
a

86.7

a

96.5

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

a

38.6

School enrollment, primary (% gross)

b

115.1

b

61.9

Total GHG emissions (mtCO2e)

8.6Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2013), 2017 PPPs.
b/ WDI for School enrollment (2021); Life expectancy(2020).

Economic growth is projected at 2.1 percent in 2022, a slight improvement over
2021, driven by agriculture and services.
Industrial growth was subdued due tomining disputes. While recovery is expected to accelerate over the medium
term, the country faces downside risks,
including from fiscal slippages and inadequate external financing. With rapid population growth, per capita GDP is contracting while poverty is expected toreach 82.6 percent in 2023.

Structural weaknesses have locked Burundi’s economy in a state of chronic
underdevelopment characterized by mutually reinforcing fragility and poverty.
Burundi has faced a multidimensionalfragility trap with recurring political instability, low economic diversification,high population growth, and environmental degradation, leading to low andvolatile growth. The cessation of mostaid in 2015 constrained the government's
ability to build infrastructure. Inconsistent macroeconomic policies including
foreign exchange restrictions, exchange
rate overvaluation, fiscal dominance ofmonetary policy, and high public sector
indebtedness exacerbated the country’s
economic challenges. These factors arelinked to low capital accumulation, weak
productivity growth and limited structural transformation of the economy, andcontribute to few job opportunities, highpoverty rates and curtailed human capitaldevelopment. At 0.39, Burundi’s Human
Capital Index is low, while stunting andlearning poverty are high at 52.2 and 93
percent, respectively. Transition to secondary schooling remains low (48 percent), and below LIC and SSA averages,
and among adolescent girls as many as
30 percent are out of school. Monetary
poverty has been estimated at 81.7 percent (based on international poverty lineof $2.15/day) in 2021, up from 65.1 in2013 (the last year with current data availability to the World Bank).
Gradual reengagement with the international community since 2020 creates an opportunity for reforms and for the scaling
up of investments in human capital and infrastructure that could contribute to helping Burundi change its growth trajectory.
However, rising oil and food prices resulting from the Ukraine/Russia conflict represent a negative terms of trade shock likely to slow economic growth, accelerate inflation, and increase fiscal and current account deficits.

Recent developments
Growth in 2022 is projected at 2.1 percent
from 1.8 percent in 2021, driven by agriculture and services. Industrial growth
was subdued due to the ongoing suspension of mining activities as contracts
were renegotiated. Private consumption
and investment supported growth on the
demand side.
The fiscal deficit is expected to increase to
4.5 percent of GDP in 2022 from 4.2 percent
in 2021, with growth in revenue collection
insufficient to offset higher spending on
goods and services and taking public debt
to 67.6 percent of GDP.
Driven by oil prices, the current accountdeficit (CAD) would remain high at 14.5
percent of GDP in 2022, as weak demandin key export markets and mining contract
negotiations affected export performance
while imports of both capital and consumption goods increased. The CAD is

FIGURE 1 Burundi / Public debt, fiscal and current accountdeficit

FIGURE 2 Burundi / Actual and projected poverty rates andreal GDP per capita

Percent of GDP
80

Poverty rate (%)

Percent of GDP
16
14

60

Real GDP per capita (constant LCU)

110

190000180000100

170000

12

40

10

90

8

80

160000150000140000670
20130000

4

0

2

60

0

50

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Public domestic debt
Fiscal deficit (rhs)1200001100001000002006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Public external debt
Current account deficit (rhs)International poverty rate
Upper middle-income pov. rate

Source: Official statistics and World Bank calculations.

Source: World Bank. Notes: see Table 2.

MPO

10

Oct 22Lower middle-income pov. rate
Real GDP pc

primarily financed by trade credits. Although Burundi has used 51 percent of its
new SDR allocation of 146.7 million, international reserves have increased, covering
2 months of imports at end-June 2022 from
0.8 month a year before. The foreign exchange parallel market premium averaged
64 percent in June 2022, compared to 70
percent a year before.
The banking sector remains sound. Capital ratios stand around 20 percent, higher than the regulatory requirement, andnon-performing loans fell to 2.9 percent
in March-2022 from 4.8 percent inMarch-2021. Driven by higher food andfuel prices due to the effects of the
Ukraine/Russia conflict on the global
economy, headline inflation is expected
at 11.8 percent in 2022.
In the wake of increasing food prices, metrics around human capital are poised to
get worse as households are forced toadopt harmful coping strategies, such as
reducing food consumption, selling productive assets, or putting children to work
resulting in premature school dropout,particularly among girls, with long-lasting

effects on Burundi’s aggregate human capital accumulation.

Outlook
Growth is projected to increase to 3-4 percent over 2023-24. Services should continue to recover while agriculture will keep
its growth pace assuming favorable rainfall. Industry is projected to accelerate due
to a moderate loosening of forex constraints, and assuming resolution in mining disputes and increased power generation. Private consumption and public investment are projected to remain high given economic recovery and public infrastructure programs. The fiscal deficit is expected to remain elevated at 4.5 percent of
GDP in 2023 and 5.2 percent in 2024 despite stronger revenue mobilization fueledby higher spending on goods and services
and transfer spending. As a result, public
debt is expected to reach 68.5 percent of
GDP by 2024. External pressures will gradually ease as import prices moderate, andTABLE 2 Burundi / Macro poverty outlook indicators

exports pick up, but the CAD will remainhigh at 11 percent of GDP in 2023. The
CAD would continue to be financed primarily by trade credits.
Amid high population growth, and a resulting youth bulge, ensuing land fragmentation, and rain-fed dependent agriculture, Burundi’s growth path remains
vulnerable. At the same time, private sector employment opportunities for Burundi’s growing young population remainvery limited, with most formal employment concentrated in the public sector.
Against this backdrop, poverty is projected at 81.5percent (based on international
poverty line of $2.15/day, in 2017 PPP) for2024. In addition, the economic outlook
is further exposed to fiscal risks and further spillover effects of the Ukraine/Russia conflict. Domestic fiscal risks include
weaker growth performance and higher
domestic debt service costs. External fiscal risks include weaker grants and higher interest rates on external borrowing.
On the upside, foreign aid could accelerate reflecting the reengagement with theinternational community.

(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

2019
1.8
3.1
8.3
32.9
-0.5
17.1

2020
0.3
0.3
19.2
-16.6
-14.9
3.4

2021
1.8
2.8
5.4
17.8
18.2
13.5

2022e
2.1
3.0
5.6
5.6
8.3
8.0

2023f
3.0
3.2
6.0
7.8
11.2
8.2

2024f
4.0
3.5
6.8
9.6
12.6
8.4

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

1.8
3.1
2.1
0.9

0.3
2.8
1.8
-1.7

1.8
2.9
1.4
1.3

2.1
3.0
1.6
1.7

3.0
3.4
2.5
2.9

4.0
4.1
3.7
3.9

Inflation (Consumer Price Index)

-0.8

7.5

8.3

11.8

9.2

7.4

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-11.6
0.0

-10.4
0.2

-12.5
0.3

-14.5
0.0

-12.8
0.0

-11.1
0.0

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-6.4
60.0
-4.1

-6.6
66.0
-3.6

-4.2
66.6
-1.3

-4.5
67.6
-1.4

-4.5
68.0
-1.5

-5.2
68.5
-2.0

77.9
94.1
99.8

80.5
95.5

81.7
96.2

82.6
96.6

82.6
96.6

81.5
96.1

-3.7
8.6

2.6
8.7

3.9
8.7

4.0
8.6

3.9
8.6

3.9
8.7

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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

Oct 22

CABO VERDE
Table 1

Key conditions andchallenges
2021

Population, million

0.6GDP, current US$ billion

1.8

GDP per capita, current US$

3168.2

International poverty rate ($2.15)

a

4.6
a

19.3

a

50.9

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

a

42.4

School enrollment, primary (% gross)

b

100.9

b

73.2

Total GHG emissions (mtCO2e)0.8Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2015), 2017 PPPs.
b/ WDI for School enrollment (2019); Life expectancy(2020).

The war in Ukraine and the ongoingdrought are exacerbating food and energy-driven inflation in 2022, threatening
growth (projected at 4 percent in 2022
versus 7 percent in 2021) and aggravating food insecurity. Growth-friendly fiscal consolidation should see growth converging to 6 percent over the medium
term. The outlook is subject to substantial
downside risks stemming from new
COVID-19 variants, the Ukraine war,and climatic shocks.

Political stability, democratic institutions,and pro-market reforms have generated
significant economic and social progresssince independence in 1975. However,Cabo Verde’s development model, based
on tourism and foreign direct investment(FDI) has shown signs of fatigue sincethe 2008 global financial crisis. An ineffective counter-cyclical fiscal policy led
to growing fiscal financing needs and increased public debt between 2010-2015. To
put public debt back on a sustainable path,
Government initiated a consolidation program in 2016, including the reform of lossmaking state-owned enterprises (SOEs).
The COVID-19 crisis reversed the progressin fiscal consolidation and exacerbated thegrowth model’s vulnerabilities. Global
travel restrictions led to a sharp contraction in tourism and related activities. Government responded by expanding publichealth services and social protection programs, as well as by providing financial
support to small businesses. However, thepoverty rate increased from 14.5 percent
in 2019, to 20.4 percent in 2020 (using the$3.65 per-day-PPP in 2017), driven by substantial temporary job losses, particularlyin the tourism sector.
The pace of economic recovery is subject tosubstantial downside risks associated withrising uncertainty in Europe due to the
Ukraine conflict, the emergence of new
COVID-19 variants, and climatic shocks.

The Ukraine war exacerbated inflationarypressures and reduced growth prospects
in 2022, affecting the poorest disproportionally through increasing food insecurity
and malnutrition. Food consumption
should be insufficient for around a fifth ofthe population in 2022, according to the
UN World Food Program. A prolonged
war in Ukraine could reduce investments
and tourism flows, trigger fiscal liabilities,
and exacerbate food insecurity.

Recent developments
Economic activity expanded 7 percent in
2021, magnified by base effects after a contraction of 14.8 percent in 2020. On the supply side, manufacturing and construction
drove growth while private and public
consumption did on the demand side. The
strong recovery continued in the firstquarter of 2022, with a real GDP growthof 16.8 percent.
Inflation started to rise in 2021 (from 0.6
percent in 2020 to 1.9 percent) due to higher international oil and food prices. The
impact of war in Ukraine exacerbated inflation pressures in the first half of 2022.
Headline inflation in July climbed to 9 percent, with food and energy inflation respectively at 16.7 and 37.3 percent. Higher
food prices and low agricultural production, driven by the five-year long drought,
intensified food insecurity.
The fiscal deficit remained high at 7.3 percent of GDP in 2021, driven by sustained
current expenditures. Public debt increased slightly to 143 percent of GDP,

FIGURE 1 Cabo Verde / Real GDP growth and inflation

FIGURE 2 Cabo Verde / Actual and projected poverty rates
and real GDP per capita.

Percent change (y-o-y)40Real GDP growth
Headline inflation (rhs)30
Food & beverages inflation (rhs)
Energy inflation (rhs)20

Poverty rate (%)

10

40

0

30

-10

20

-20

10

-30

0

Real GDP per capita (constant LCU)

70

31000060

30000029000050

2800002700002600002500002400002300002007 2009 2011 2013 2015 2017 2019 2021 2023

-40

International poverty rate
Upper middle-income pov. rate

2019Q1 2019Q3 2020Q1 2020Q3 2021Q1 2021Q3 2022Q1
Source: Government of Cabo Verde.

Source: World Bank. Notes: see Table 2.

MPO

12

Oct 22Lower middle-income pov. rate
Real GDP pc

driven by increased domestic debt. In
the first half of 2022, total revenue increased 34 percent, driven by personal
income and VAT taxes, while total expenditure increased 8.4 percent, reflecting higher personnel expenses and interest payments. In April, authorities announced measures, estimated at 4.2 percent of GDP, to protect the most vulnerable from rising food insecurity and tocontrol fuel and energy prices.
The current account deficit (CAD) declined from 15 percent of GDP in 2020
to 11.3 percent in 2021, supported byhigher surplus in net-services exports
and robust remittances. The CAD was
financed by concessional loans and FDI.
International reserves reached 7.2
months of imports.
The rebound in economic activity in 2021
resulted in a reduction in the poverty
rate to 18.5 percent (using US$3.65 per
day PPP in 2017) down from 20.4 percent
in 2020, reflecting nearly 10,000 fewer
people living in poverty. Social protection
programs that were central to mitigate
the impacts of the COVID-19 pandemic
also helped alleviate poverty.

OutlookReal GDP growth is projected to reach 4 percent in 2022 (2.9 percent in per capita terms).
The Ukraine crisis will weigh on growth,
mainly through inflation and its impact on
private consumption and economic activity. Over the medium-term, private consumption, investment in tourism and theblue economy should support growth. The
outlook is subject to substantial downside
risks stemming from climate shocks, new
COVID-19 variants, and increased global
uncertainty due to the Ukraine war.
Inflationary pressures will peak in 2022,with headline inflation expected to reach
7.5 percent. Inflation should start stabilizing in 2023 as supply disruptions abate,
and global commodity prices start normalizing. Over the medium-term, the nominal
anchor (peg to Euro) and return to fiscal consolidation should keep inflation contained,
converging to 2 percent by end-2024.
The authorities are committed to gradualrevenue-driven fiscal consolidation overthemedium-term,whichincludesenhanced

TABLE 2 Cabo Verde / Macro poverty outlook indicators

management of fiscal risks, revenue mobilization, and the waning of exceptional
shock measures. The fiscal deficit is projected to reach 9 percent of GDP in 2022,
driven by increased current expenditure
due to the response package to mitigate
the impact of the Ukraine war, estimatedat US$85 million (4.2 percent of GDP). The
public debt-to-GDP ratio is expected to improve from 147.7 percent in 2022 to 141.1
percent by 2024.
The CAD is projected to reach 14.1 percent
of GDP in 2022, falling to 5.9 percent by
2024, driven by the rebound in services exports and the gradual reduction of importprices. Over the medium-term, higher
public debt amortization outflows are expected to increase external financing
needs, which will be covered by official
borrowing and FDI. International reserves
are expected to remain adequate, at 5.5
months of prospective imports.
The poverty rate (based on the lowermiddle income poverty line of US$3.65
per-day, 2017 PPP) is projected to decline
to 17.2 percent in 2022 and reach 14.5
percent by 2024, supported by growthand inflation stabilization.

(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

2019
5.7
5.9
4.8
-6.3
8.7
0.8

2020
-14.8
-11.3
0.8
19.7
-58.4
-22.5

2021
7.0
9.4
30.1
-9.1
5.8
4.3

2022e
4.0
3.0
5.9
13.5
6.5
11.2

2023f
4.8
4.5
1.2
7.0
12.6
7.6

2024f
5.7
5.1
1.9
6.2
10.4
5.9

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

5.7
-6.8
7.5
6.3

-14.8
-6.3
-2.0
-19.2

7.0
4.8
9.5
6.3

4.1
1.0
2.3
5.0

4.8
1.8
4.7
5.0

5.7
3.8
6.5
5.6

Inflation (Consumer Price Index)

1.1

0.6

1.9

7.5

3.5

2.0

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-0.2
-4.2

-15.0
-3.7

-11.3
-3.5

-14.1
-3.8

-7.2
-5.3

-5.9
-4.0

-1.7
114.0
0.6

-9.1
142.6
-6.5

-7.3
143.0
-5.1

-9.0
147.7
-6.3

-7.2
143.9
-4.2

-5.8
141.1
-3.0

3.0
14.5
44.5

5.1
20.4
52.2

4.3
18.5
49.8

3.8
17.2
48.4

3.4
15.8
46.6

3.0
14.5
44.5

2.5
87.5

2.2
88.1

2.1
88.7

2.5
88.9

2.4
89.1

1.5
90.1

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)a,bInternational poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
a/ Calculations based on 2015-IDRF. Actual data: 2015. Nowcast: 2016-2021. Forecasts are from 2022 to 2024.
b/ Projection using neutral distribution (2015) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU.

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13

Oct 22

CAMEROON

Key conditions andchallenges

Table 1

2021

Population, million

27.2

GDP, current US$ billion

42.1

GDP per capita, current US$

1544.7

International poverty rate ($2.15)

a

25.7
a

47.0

a

74.8

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

a

46.6

School enrollment, primary (% gross)

b

105.7

b

59.6

Total GHG emissions (mtCO2e)

125.0Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2014), 2017 PPPs.
b/ WDI for School enrollment (2019); Life expectancy(2020).

Despite the adverse consequences of thewar in Ukraine, Cameroon’s real GDP is
expected to expand in 2022 and extreme
poverty incidence to decline. Driven byhigher oil prices, the fiscal deficit is projected to narrow in the medium term
while the current account deficit would
decline gradually. Inflation is expected torise above the regional target of 3 percent
in 2022. The outlook remains positive,
but is subject to several risks, hence theneed to accelerate structural reforms.

Cameroon is the largest economy in the
Economic and Monetary Community ofCentral Africa (CEMAC), accounting forover 40 percent of the region’s GDP andover 60 percent of regional foreign exchange reserves. It is exposed to commodity and oil price shocks, with theoil sector accounting for 4 percent of thecountry’s GDP and 14 percent of its fiscal
revenues in 2021. Public debt has been
rising since 2016, calling for improved
debt management.
The current development model is running out of steam, as governance indicators have deteriorated, human capitalremains weak, the business environmentis unfavorable, and climate change represents a growing threat. High market concentration and state ownership of commercial enterprises also limit domestic
competition. The country has become
more fragile since conflicts affecting 6
out of 10 of its regions have displaced
people, increased violence, and led to acollapse in social services. The country is
struggling to meaningfully lower poverty
in the face of conflicts and other shocks.

Recent developments
Cameroon had started to recover fromthe COVID-19 shock with real GDP

growth estimated at 3.6 percent in 2021.
This economic recovery is, however,threatened by the war in Ukraine, heightened inflation pressures and the mentioned domestic structural vulnerabilities.
The war in Ukraine has caused supply
chain disruptions, resulting in increased
import costs. Staple food prices and administratively controlled prices of selectedmass consumption products have increased accordingly. In the primary sector,
cotton production dropped by 9 percent
y-o-y by end-August 2022. The output offood crops has also dropped because ofhigher farm input prices. In the secondary
sector, oil production declined 2.6 percent
y-o-y in end-April 2022, even as LNG production, supported the primary sector activity, went up by 13.5 percent. A higher
supply of services, including financial services and communications, has driven theactivities in the tertiary sector.
Higher export and oil prices and privatetransfers
fromabroadimproved
Cameroon’s current account balance in2022Q1. Imports increased moderately
compared to the same period in 2021, as
the government stepped up efforts to improve the competitiveness of locally produced mass consumed items, including
rice, wheat, maize, fish, and sugar.
The fiscal balance was in surplus, representing 0.5 percent of GDP at the endJune 2022, owing to improved revenue
collection amid high oil and non-oil commodities prices and delays in expenditurecommitments. On the expenditure side,higher international prices have led to
an increase in fuel subsidies (reaching
USD 500 million in 2022H1, compared to

FIGURE 1 Cameroon / Real GDP growth and contributions
to real GDP growth

FIGURE 2 Cameroon / Actual and projected poverty rates
and real private consumption per capita

Percent, percentage points

Poverty rate (%)

8

90

6

80

Real private consumption per capita (constant LCU)
600000500000

70

4

60

2

40000050

0300000

40

-2

30

-4

20

-6

10
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gov. cons.
Inventories
Statistical disc.

Exports
Private cons.
GDP

200000100000002007 2009 2011 2013 2015 2017 2019 2021 2023

GFCF
Imports

International poverty rate
Upper middle-income pov. rate

Source: World Bank.

Source: World Bank. Notes: see Table 2.

MPO

14

Oct 22Lower middle-income pov. rate
Real priv. cons. pc

USD 170 million provisioned in the initial 2022 finance law). Capital spendingstood at 1.7 percent of GDP in end-June
2022, same as in the corresponding period in 2021. The public debt stock only
slightly reduced to 41.5 percent of GDP at
the end-June 2022, compared to 42.8 percent at the end-June 2021.
Monetary conditions have continued totighten to contain inflationary pressuresand support the external viability of the exchange rate arrangement. Following a 25
basis points increase in November 2021,
the Bank of Central African States (BEAC)
further increased the policy rate by 50 basis points to 4 percent on March 28, 2022.
The BEAC also decreased its weekly liquidity injections from CFAF 250 billion to
CFAF 160 billion in April 2022.
Simulation results suggest that despite
recent or ongoing shocks increasing inflation, poverty incidence will continue
to decrease, although at a slower pacethan in recent years. Between 2021 and
2022, the poverty headcount at $2.15 PPP
a day declined by 0.4 percentage points,from 22.1 to 21.7 percent. The slow paceof poverty reduction resulted in an increase in the number of poor by about
30,000 people due to population growth.

OutlookDespite the global economic turmoil, economic recovery is expected to gradually
gain momentum, with real GDP growth
projected to reach 4.0 percent in 2022 and 4.6
percent by 2024. Economic growth would be
supported by sustained activity in the secondary and tertiary sectors as the pandemic
loses steam. The war in Ukraine has substantial implications for the outlook, including(i) increased food, fertilizers, and energy
prices; (ii) supply chain disruptions andspeculation in local markets; and (iii) higher
costs of borrowing. Inflation is projected torise to 4.6 percent in 2022 but remain below
3 percent in the medium term, reflecting theresults of monetary policy tightening.
The current account balance should improve, owing to robust oil and non-oil commodity exports. The fiscal deficit is projected to narrow as non-oil revenues increase
due to simplified administrative measureson property income and a new tax on mobile
money transfers. Spending reprioritization,
including the gradual reduction of subsidies for fuel and to SOEs, would contain expenditure in the medium term. Cameroon

TABLE 2 Cameroon / Macro poverty outlook indicators

remains at high risk of external and overall
debt distress, although debt is assessed assustainable, according to the July 2022 Debt
Sustainability Analysis.
The outlook remains subject to risks associated with: (i) a sharp increase in global
risk premia, (ii) a protracted war in
Ukraine, and (iii) a persistent security crisis in the North-West, South-West, and the
Far North regions. Should such risks materialize, real GDP would grow more modestly, adversely affecting fiscal and external accounts. A sharp rise in global risk
premia following a monetary policy tightening in advanced economies would affectthe economic outlook and debt sustainability. Higher oil and food prices would add
to inflationary and fiscal pressures. Reducing fuel subsidies by gradually increasing
retail fuel prices while protecting the mostvulnerable would be a critical step.
As the country recovers from the various
shocks, the pace of poverty reduction is
expected to accelerate in 2023 and 2024.
The number of extreme poor people isprojected to decline by about 125,000, and
50,000 people respectively in 2023 and2024. The ongoing security crisis will,
however, hamper efforts to reduce poverty in parts of the country.

(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

2019
3.7
4.5
1.8
8.1
5.1
10.5

2020
0.5
3.3
2.3
2.4
-21.0
-5.4

2021
3.6
3.9
3.4
8.2
3.2
9.0

2022f
4.0
4.5
7.6
8.5
3.9
11.5

2023f
4.3
4.8
0.2
8.1
11.5
11.4

2024f
4.6
5.5
0.1
8.4
8.8
10.8

Real GDP growth, at constant factor prices
Agriculture

3.6
2.8

0.5
0.1

3.6
4.1

4.0
4.3

4.3
5.6

4.6
5.6

3.6
3.9

1.3
0.3

4.1
3.2

4.4
3.7

4.5
3.9

4.5
4.4

Inflation (Consumer Price Index)
Current Account Balance (% of GDP)

2.5
-4.4

2.5
-3.7

2.5
-4.0

4.6
-3.9

3.0
-3.7

2.5
-3.4

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-3.3
43.0
-2.4

-3.2
45.8
-2.3

-3.2
47.1
-2.1

-3.0
43.9
-2.0

-3.0
40.8
-2.1

-2.8
37.9
-2.1

22.7
43.7
71.7

22.5
43.4
71.6

22.1
42.9
70.9

21.7
42.4
70.5

20.7
41.3
69.5

20.1
40.7
68.7

0.5
7.0

0.0
6.7

0.2
6.7

0.6
6.9

0.8
7.0

0.9
7.1

Industry
Servicesa,bInternational poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
a/ Calculations based on 2014-ECAM-IV. Actual data: 2014. Nowcast: 2015-2021. Forecasts are from 2022 to 2024.
b/ Projection using neutral distribution (2014) with pass-through = 0.87 (Med (0.87)) based on private consumption per capita in constant LCU.

MPO

15

Oct 22

CENTRALAFRICAN REP.
Table 1

2021

Population, million

4.9GDP, current US$ billion

2.6

GDP per capita, current US$

525.0

International poverty rate ($2.15)

a

61.9
a

80.8

a

92.8

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

Key conditions andchallenges

a

56.2

School enrollment, primary (% gross)

b

102.0

b

53.7

Total GHG emissions (mtCO2e)78.9Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2008), 2017 PPPs.
b/ WDI for School enrollment (2016); Life expectancy(2020).

Economic activity stagnated in 2021 due
to renewed insecurity amid election disputes. The overall fiscal deficit widened in
2021, mainly driven by a decline in government revenues. With growth averaging 2.7 percent over the medium-term,
per capita income is projected to return toits pre-covid-19 pandemic level by 2024.
The absence of donor budget support,
compounded by persistent fuel shortages
and the reversal in security gains are themain risks to the outlook.

Notwithstanding its natural resource endowment, the Central African Republic(CAR) remains one of the most fragile
and poorest countries in the world. Economic activity is skewed towards the
production of goods with limited value
added. The agricultural sector remains
one of the key drivers of economic
growth and accounts for more than 75
percent of total employment.
Beyond considerable human losses, repeated periods of civil conflicts have fueled a poverty trap by shrinking the potential for diversification towards more productive activities (e.g., manufacturing sector). Poverty remains elevated with morethan 7 out of 10 people living below theinternational poverty line (i.e US$ 2.15 perday, 2017 PPP).
Limited revenue mobilization, a weak social protection system, and poor access to
education and health are the major structural challenges. The private sector remains constrained by limited access to financing, although the financial sector iswell capitalized. The humanitarian situation remains concerning, as the country
has one of the highest proportions (45 percent of the population) of critically food-insecure people in the world. The total number of internally displaced people is estimated at 610,265 individuals, with another
737,000 people counted as refugees inneighboring countries.

Recent developments
CAR’s economic activity stagnated in 2021,
mainly due to the protracted effects of
COVID-19 and renewed violence and insecurity amid election disputes. Trade andagricultural production suffered from theforced displacement of labor to safetyzones, particularly in the first quarter of2021, when conflict broke out between thegovernment and armed groups. As trade
resumed on the country’s main road,
Douala-Bangui, due to improved security
throughout the country, economic activity
performed better in the 2021H2. Timberand mining production (mainly gold) also
accelerated in H2 primarily owing to improved security around production andmining sites. Private consumption grew by
2.9 percent in 2021 as the gradual returnof the population to certain localities led
to an increase in domestic demand. However, public investment fell from 11.3 percent of GDP in 2020 to 7.4 percent of GDP
in 2021, as uncertainties about donor budget support prompted the government tofreeze non-priority spending and unwind
its COVID-19 fiscal stimulus package. Despite a rebound in 2022H1 driven by extractive activities, persistent fuel shortages
slowed economic activity in early 2022H2
and contributed to price pressures.
Rising inflation is expected to erode households’ purchasing power and worsen theirliving conditions. As a result, poverty is
projected to remain high, with 70.5 percentof the population living in extreme poverty
in 2022 (i.e US$ 2.15 per day, 2017 PPP).

FIGURE 1 Central African Republic / Real GDP growthand contributions to real GDP growth

FIGURE 2 Central African Republic / Actual and projected
poverty rates and real GDP per capita

Percent, percentage points

Poverty rate (%)

8

120

6

Real GDP per capita (constant LCU)
2500001002000004802150000

0

60

-2

40

100000

-4

50000

20

-6
2016

2017

2018

2019

Exports
Government Consumption
Real GDP growth

2020

2021

2022

2023

2024

0

0
2008 2010 2012 2014 2016 2018 2020 2022 2024

Gross Fixed Investment
Private Consumption

International poverty rate
Upper middle-income pov. rate

Source: Word Bank.

Source: World Bank. Notes: see Table 2.

MPO

16

Oct 22Lower middle-income pov. rate
Real GDP pc

CAR’s monetary policy is managed by the
Bank of Central African States (BEAC).
Monetary conditions have continued to betightened to contain inflationary pressuresand support the external viability of the exchange rate arrangement. Following a 25
basis points increase in November 2021,
the BEAC further increased the policy rateby 50 basis points to 4 percent on March
28, 2022. The BEAC also decreased its
weekly liquidity injections from CFAF 250
billion to CFAF 160 billion in April 2022
and has also committed to continue working towards the effective implementationof the new foreign exchange regulation.
The overall fiscal deficit widened in 2021,
as donor appetite for budget support
waned due to geopolitical tensions andthe lack of transparency of the country's
security expenditures, while domestic
revenues declined from 7.5 percent of
GDP in 2020 to 7.1 percent of GDP in
2021. Despite cuts in non-priority spending, pressures from the expenditures side
were high throughout 2021, forcing thegovernment to rely on bridge financing
on the domestic market. In 2022, cash
flow pressures have remained highnotwithstanding fiscal consolidations efforts, as uncertainty about budget support disbursement remains elevated. To
finance the deficit in 2022, the government has relied on the use of its secondand last SDRs tranches (CFAF 50.5 billion,

an equivalent US$ 76.8 million and 3.2
percent of GDP) but is also consideringborrowing on the domestic market.
Despite a marginal improvement in the
trade balance, delays in the disbursementof official transfers contributed to a widening of the current account deficit in 2021.
In 2022, the non-disbursement of budget
support has continued to weigh on the current account deficit, which is projected towiden further.

Outlook
Per capita income is projected to return toits pre-covid-19 pandemic level by 2024,
provided that security gains continue toboost private sector incentives for longterm investment and the protracted effectsof the war in Ukraine are contained. Under
this assumption, real GDP growth is projected to reach 3.4 percent on average overthe period 2023-24, supported by strong
exports and gross fixed investment (public
and private) from the demand side, andbetter dynamics of the agricultural and service sectors from the supply side.
Inflation is projected to remain above theregional convergence criteria of 3 percent and worsen living conditions. Withlimited fiscal space to support safety net
programs, extreme poverty is projected to

TABLE 2 Central African Republic / Macro poverty outlook indicators

remain high at around 70 percent in 2023
and 2024.
Uncertainties about budget support willcontinue to weigh on the overall fiscal
balance, but the implementation of fiscal
reforms, including the digitization andmigration towards the use of SIMBA
and Automated System for Customs Data
(ASYCDUCA) word will help streamline
public expenditures and leverage domestic resources. Public debt is expected toremain sustainable as the country continues to implement reforms under the
Sustainable Development Finance Policy(SDFP). The current account balance is
projected to improve but remain in
deficit, thanks to rising exports and amarginal increase in net transfers.
Risks to the outlook remain elevated andskewed to the downside. The absence ofdonor budget support, persistent fuelshortages and the reversal in security gains
are the main risks. Shortfalls in budget
support could lead to a “fiscal cliff” withan accumulation of external arrears andthe possible non-payment of public wages.
Persistent fuel shortages, compounded by
the reversal in security gains could undermine trade and economic activity with adverse effects on public finance and prices.
Domestic price pressures may cause thousands of vulnerable households to slip into
extreme poverty and worsen an alreadyalarming food security situation.

(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

2019
3.0
5.1
7.9
-8.0
1.7
4.1

2020
1.0
-3.8
20.6
30.0
-10.5
-0.5

2021
1.0
2.9
-3.8
-15.9
-4.3
-6.8

2022f
1.5
7.1
-14.2
2.6
0.7
14.0

2023f
3.0
0.6
-2.8
1.8
8.3
-3.6

2024f
3.8
1.9
0.5
9.4
3.2
-0.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

3.0
3.0
2.0
3.4

1.0
4.6
0.1
-0.8

1.0
3.2
-0.2
0.0

1.5
2.4
-0.4
1.7

3.0
2.9
0.2
4.2

3.8
3.1
0.7
5.4

Inflation (Consumer Price Index)
Current Account Balance (% of GDP)

2.8
-4.9

0.9
-8.5

4.3
-10.6

6.5
-13.8

6.3
-7.8

2.7
-7.3

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

1.4
47.2
1.8

-3.4
43.4
-3.1

-6.0
47.6
-5.7

-4.4
47.9
-4.0

-0.2
44.7
0.3

-0.9
42.6
-0.3

69.8
85.5
94.8

70.2
85.7
94.9

70.4
85.9
95.0

70.5
85.9
95.0

70.3
85.8
95.0

69.7
85.4
94.8

-2.2
39.3

2.2
39.7

1.2
39.9

1.3
40.0

1.4
40.1

1.3
40.2

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Low (0.7)) based on GDP per capita in constant LCU.
MPO

17

Oct 22CHAD

Key conditions andchallenges

Table 1

2021

Population, million

16.9

GDP, current US$ billion

11.8

GDP per capita, current US$

696.8

International poverty rate ($2.15)

a

30.9
a

64.6

a

89.4

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

a

37.5

School enrollment, primary (% gross)

b

89.2

b

54.5

Total GHG emissions (mtCO2e)111.8

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ WDI for School enrollment (2019); Life expectancy(2020).

Chad’s economy is projected to recover in
2022, with GDP growth reaching 3.1
percent driven by high oil prices. However, with virtually no growth in per capita
GDP, 6 million people will be living in
extreme poverty in 2022. Growth is expected to remain subdued with escalating
food and general insecurity, climatic
shocks, a sensitive political transition anddependency on volatile oil revenues presenting risks to sustained recovery.

Chad's economy has been on a weakgrowth path following the 2014-15 oilprice shock. Notwithstanding the 2018-19
recovery, annual GDP growth contracted
by 1.1 percent on average over the past
six years, which, given high population
growth (3 percent on average), translated
into an average annual decrease in percapita income of 4.1 percent. Growing political and security expenses and poor oilrevenue management have constrained
improvements in basic services and infrastructure delivery. Moreover, Chad’shigh dependency on a highly volatile oilmarket has threatened fiscal consolidationand debt sustainability.
Chad ranked 187th out of 189 countries
on the Human Development Index in2020. Living conditions and access toessential services remain poor due tocyclical insecurity, severe weather conditions, political unrest, institutional instability, weak governance – including oilrevenues management –, poor trade networks, low human capital investment,
and a lack of infrastructure.

Recent developments
Chad's economy is expected to recover in
2022, with GDP growing by 3.1 percent(0.1 percent in per capita terms), following

a 1.2 percent (4.1 percent in per capita
terms) contraction in 2021. This recovery isdriven by high oil prices (averaging $100/
bbl in 2022), as a result of the war in
Ukraine. Despite weak cereal production
after inadequate rainfall distribution andfloods, agriculture (including livestock)
will remain the main non-oil growth driver, contributing 1.3 percentage points(pp). Industry and services contribution
to growth will turn positive by 1 pp and
0.7 pp respectively, thanks to the resumption of economic activities following a period of political instability. Exports value is projected to increase by 45.3 percent due to the increase in oil prices (by44.8 percent), leading to a current account surplus of 0.4 percent of GDP in
2022, from a 6 percent deficit in 2021.
Inflation is projected to increase from 1.0
percent in 2021 to 5.3 percent in 2022, driven by high global prices in food and energy. Food inflation is projected to rise to
13 percent in 2022 due to the combined
effects of high global food prices andweak domestic agricultural production.
Chad's monetary and exchange rate policies are managed by the regional Central
Bank (BEAC), which is tightening monetary conditions to contain inflation andsupport the exchange rate. BEAC raised
its policy rate from 3.5 to 4.0 percent andits marginal lending facility rate from 5.25
to 5.75 percent in March 2022. BEAC also
decreased its weekly liquidity injections
from CFAF 250 billion to CFAF 160 billion in April 2022.
With the 2021 increase in oil prices, the fiscal balance, including grants, is projected
to reach a moderate surplus of 2.8 percent

FIGURE 1 Chad / GDP growth, current account and fiscal
balances

FIGURE 2 Chad / Actual and projected poverty rates andreal GDP per capita

Percent
6

Poverty rate (%)
100

45000049040000080

350000

2

Real GDP per capita (constant LCU)

70

0

60

-2

50

30000025000020000040-4150000

30

-6
-8
2019

2020

2021

2022

2023

2024

20

100000

10

50000

0

0
2011

Fiscal balance (% of GDP)
Current account balance (% of GDP)
Real GDP growth

2013

2015

2017

International poverty rate
Upper middle-income pov. rate

Source: World Bank.
Note: The windfall from high oil prices will be mostly used to service private sector debt, to Glencore.
MPO

Source: World Bank. Notes: see Table 2.

18

Oct 22

2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

of GDP in 2022, due to the one-year lag inthe main component of oil-revenue tax collection. Total public debt will accordingly drop to 44.9 percent of GDP, while thedebt service to revenue ratio will remain
above the high-risk threshold. The Government requested a debt restructuring
under the G20 Common Framework in
2021 to help restore debt sustainability.
The extreme poverty rate (US$2.15/ day
per capita, 2017 PPP) is estimated to remain unchanged between 2021 and 2022,
at 34.3 percent. However, the numberof extreme poor is projected to increase
from 5.8 to 6 million. The rising numberof poor households plus high food inflation will exacerbate food insecurity.
Chad declared a national food emergency in June 2022 as 2.1 million people
are projected to be severely food insecureduring the lean season, from June to September. The situation is worsened by unprecedented floods during this lean season, which has affected over 340,000 people and destroyed 2,700 hectares of crops
and farming land.

Outlook
Under a projected average oil price of $86/
bbl in 2023-24, and assuming ongoing
global recovery in international trade andincreased government investment, theeconomy is expected to grow by an average 3.3 percent in 2023-24 (0.4 percent inper capita terms). Inflation will moderateslightly to 4.8 percent and 3.8 respectively
in 2023 and 2024.
The current account is projected to turnnegative in 2023-24 (4.1 percent of GDP
on average), driven by lower oil prices
and increased imports to support activities in the service sectors. The fiscal balance (including grants) is expected toincrease to 5.3 percent of GDP in 2023,
due to significantly higher oil revenues
in 2023, based on the 2022 oil prices,and more controlled security spending,and then drop to 2.3 percent of GDP
in 2024. Total public debt is projected todrop to 34 percent of GDP by end-2024,

TABLE 2 Chad / Macro poverty outlook indicators

although the debt service to revenue ratio will remain high.
The extreme poverty rate is expected to decline only slightly, by 0.1 ppt between 2023
and 2024, due to the positive GDP per capita
growth, particularly in the agriculture sector where the majority of households earn
their livelihoods. However, with rapid population growth, an additional 150,000 individuals will fall into poverty, and the number of poor is expected to reach 6.3 million.
High food inflation exacerbated by the increase in transportation costs in remote areas, security restrictions negatively impacting household incomes, and low coverageof social protection programs will limit thepace of poverty reduction.
This outlook is subject to high uncertainty
and multiple downside risks, including:dampening oil prices; increased politicalinstability as the political transition enters
its final phase with the preparation and theorganization of elections; intensified security risks; further climate-related shocks;
continuing food security challenges andrelated social discontent.

(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

2019
3.2
1.4
1.7
6.6
6.0
4.0

2020
-1.6
0.5
11.1
-14.7
1.1
1.8

2021
-1.2
1.6
3.7
-4.5
-0.4
5.1

2022e
3.1
1.7
-0.1
6.5
4.9
3.3

2023f
3.3
2.0
-1.2
7.8
5.2
4.2

2024f
3.3
2.5
-3.5
8.1
3.9
3.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

3.3
0.1
7.3
2.5

-1.6
3.9
-0.1
-7.0

-1.2
6.2
-4.6
-4.4

3.1
4.0
3.2
2.1

3.3
3.2
3.3
3.5

3.3
3.0
1.2
5.4

Inflation (Consumer Price Index)
Current Account Balance (% of GDP)

-1.0
-4.9

3.5
-7.8

1.0
-6.0

5.3
0.4

4.8
-2.6

3.8
-5.5

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-0.6
51.1
1.0

1.7
49.9
3.4

-2.2
52.1
-0.6

2.8
44.9
4.3

5.3
38.7
6.5

2.3
34.0
3.3

30.7
64.6
89.4

32.8
66.4
90.2

34.3
67.6
90.8

34.3
67.6
90.8

34.1
67.4
90.8

34.0
67.4
90.7

2.4
2.2

2.8
2.2

2.9
2.1

3.2
2.1

3.3
2.0

3.4
2.0

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Low (0.7)) based on GDP per capita in constant LCU.

MPO

19

Oct 22

COMOROS

Key conditions andchallenges

Table 1

2021

Population, million

0.9GDP, current US$ billion

1.3

GDP per capita, current US$

1444.7

International poverty rate ($2.15)

a

18.6
a

39.5

a

68.6

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

a

45.3

School enrollment, primary (% gross)

b

99.5

b

64.5

Total GHG emissions (mtCO2e)0.7Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2014), 2017 PPPs.
b/ WDI for School enrollment (2018); Life expectancy(2020).

The economy of Comoros has been hard
hit by multiple shocks in recent years, including Cyclone Kenneth, the COVID-19
pandemic, and spillovers from the
Ukraine war. With increasing inflationary pressures, sluggish growth is projected in 2022, and Comoros’ low-income
households will be significantly affected
despite subsidies to contain prices. Fiscal
consolidation over the medium-term is required to ensure macroeconomic stability
as twin fiscal and external deficits areprojected to increase.

A small, remote and fragile island, Comoros’ growth remains hindered by significant structural challenges. Feeble GDP
growth, averaging 2.7 percent between
2001 and 2020, has been mainly driven by
private consumption, fueled by remittances from the sizeable Comorian diaspora. Exports are low and concentrated ina few agricultural commodities, while imports are the source of 70 percent of thefood consumed domestically. Weak government institutions, poor infrastructure,and low human capital are among the factors impeding growth. Comoros' economic
model presents vulnerabilities because thecurrent account deficit is mainly financed
by remittances that support private consumption, and twin fiscal and external
deficits have been growing.
Public finances are unbalanced and dependent on external grants, especially for public investments. Tax revenues are low ataround 8 percent of GDP and cannot support the public expenditures of around 20
percent of GDP. Moreover, the composition of spending is concentrated on thewage bill, which absorbs 53 percent of thedomestic revenues, providing limited
space for social spending. With a deteriorating profile, debt nearly doubled from2014 to 2020, to 22 percent of GDP. A recent large non-concessional loan with ashort maturity has raised the risk of debt
distress in Comoros to high levels.

Against this backdrop, the risks on the outlook for Comoros are tilted to the downside, despite much-awaited recovery from
Cyclone Kenneth in 2019. Moreover, Comoros faces headwinds related to the global rise of food and energy prices and thenormalization of monetary policy worldwide. Domestically, there is a need to increase the implementation of structural reforms that would unleash productivity
and investment-driven growth. Besides
natural disasters that could affect Comoros, the high risk of debt distress limits
fiscal space and requires prudent debt
management that could be challenging because of increased spending pressures.

Recent developments
The Comorian economy is estimated tohave grown by 2.2 percent in 2021, on theback of weaker-than-expected private consumption growth. As a result, the poverty
rate in 2021 remained stagnant at 39.7 percent when measured against the newpoverty line for lower-middle-income
countries of USD 3.65 a day per capita in
PPP terms. The war in Ukraine’s effect on
the ongoing rise in agricultural and energy
prices and the pandemic-driven supply
chain disruptions have negatively affectedprivate consumption.
Inflation, typically low given the currency
peg to the Euro, has surged since 2021,
reaching at least 7.3 percent in 2022H1, because of the war in Ukraine. The policy response has been mixed. On the one hand,
the government has passed on the higher

FIGURE 1 Comoros / Selected macroeconomic balances

FIGURE 2 Comoros / Actual and projected poverty rates
and real GDP per capita

Percent of GDP
35

Poverty rate (%)

Percent of GDP
2

Real GDP per capita (constant LCU)

80

30

0

70

25

-2

60

20

-4

15

-6

10

-8

5

-10

49500049000048500050
40480000

30

0
2018

2019

2020

Debt
Current Account Balance (rhs)2021e 2022f

2023f

470000

10

-12
2017

475000

20

0

2024f

465000
2014

2016

2018

International poverty rate
Upper middle-income pov. rate

Fiscal Balance (rhs)

Source: National authorities and World Bank staff estimates and forecasts.

Source: World Bank. Notes: see Table 2.

MPO

20

Oct 22

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

import costs to domestic fuel and electricity prices, which increased by 44 percent
in June 2022. But on the other handit increased subsidies to the monopolist riceimporter ONICOR (Office National d’Importation de Commercialisation du Riz)and launched a subsidy for bakeries toavoid hikes in the prices of rice and flourbased products. A recent moderation ofprice pressures on selected commodities
is expected to have partly counterbalanced the effects of a stronger dollar on
the import bill.
The twin deficits have widened since 2021.
A higher import bill coupled with lower
remittances and exports brought the current account deficit to 4.8 percent of GDP
in 2021. Similarly, the fiscal deficit increased to 3.7 percent in 2021 due to higher
spending, lower tax revenues, and SOE
dividends. These forces have carried overto the first half of the 2022, despite higher
seasonal remittances from the diaspora.
Credit to the economy increased by 13.1
percent in 2022H1, while non-performing
loans decreased to 16.7 percent.

Outlook
The Comorian economy is projected to
grow slightly by 1.4 percent in 2022 andgather pace in 2023 and 2024, expandingby 3.3 and 3.8 percent, respectively. Higher
prices caused by the war in Ukraine anda decrease in remittances are expected tocontinue weighing on private consumption, which is projected to grow by only
0.5 percentage points in 2022. Government
consumption is expected to increase to 6.1
percent in 2022, from 2.3 percent in 2021,
while public investments are sustained at
9 percent of GDP, given investment needs
and political cycles. Higher imports will increase the current account deficit to 9.4 percent of GDP in 2022; a slight decrease in thecurrent account is foreseen in 2023-2024.
Strong inflationary pressures are expected
to trigger increased government subsidies
to State owned enterprises, and widen thefiscal deficit to 5.4 percent in 2022, from 3.7
percent in 2021.

TABLE 2 Comoros / Macro poverty outlook indicators

The government is not likely to meet its
revenue targets in 2022 as tax revenues are
expected to increase at a slower pace due
to lower consumption growth and SOE
dividends and failure to implement
planned tax reforms. Thus, the fiscal gap
is projected to reach 1.9 percent of GDP
in 2022, against a projection of 0.9 percent
in March 2022. By 2024, the fiscal deficit
is projected to decline to 2.7 percent ofGDP, public debt to increase to 32.6 percent of GDP and the risk of debt distresscould remain high.
Finally, the poverty rate is expected tostagnate around 39.8 percent in 2022 andcontinue along its timid downward trend
to recover its pre-pandemic level of 38.4
percent in 2024. Poverty developments
will depend on the evolution of inflation.
If non-food prices grow twice as fast
as food, poverty is expected to returnto pre-war levels in 2024. In addition,
food insecurity and substitution towards
cheaper alternatives will deepen food intake imbalances, especially among poor
urban households.

(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

2019
1.8
3.8
3.5
-8.4
6.8
5.7

2020
-0.3
3.8
4.1
-14.4
-46.3
-9.3

2021
2.2
3.1
2.3
2.5
30.7
7.6

2022e
1.4
0.5
6.1
15.5
7.1
9.4

2023f
3.3
2.3
-6.2
1.8
19.4
1.7

2024f
3.8
2.9
-7.4
-0.3
14.7
-0.3

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

1.9
0.9
4.0
1.9

-0.8
4.3
-5.6
-2.2

2.2
1.6
2.1
2.6

1.4
0.9
0.9
1.7

3.4
1.8
1.3
4.5

3.8
2.6
1.1
4.9

Inflation (Consumer Price Index)
Current Account Balance (% of GDP)

3.7
-2.4

0.8
-2.0

0.0
-4.8

13.0
-9.4

8.7
-9.1

5.6
-7.4

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-4.3
20.6
-4.1

-1.0
22.0
-0.8

-3.7
24.9
-3.4

-5.4
28.7
-5.0

-4.2
31.9
-3.6

-2.7
32.6
-1.8

18.1
38.5
67.9

18.7
39.7
68.7

18.7
39.7
68.7

18.9
39.8
68.9

18.5
39.2
68.4

18.1
38.4
67.8

3.7
45.6

1.6
45.2

2.1
44.7

0.5
43.6

1.6
43.7

2.8
44.3

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Med (0.87)) based on GDP per capita in constant LCU.

MPO

21

Oct 22DEMOCRATIC
REP. OF CONGO
Table 1

2021

Population, million

92.4

GDP, current US$ billion

58.3

GDP per capita, current US$

631.4

International poverty rate ($2.15)

a

69.7
a

87.7

a

97.4

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

a

42.1

School enrollment, primary (% gross)

b

118.5

b

61.0

Total GHG emissions (mtCO2e)

680.6

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2012), 2017 PPPs.
b/ WDI for School enrollment (2018); Life expectancy(2020).

DRC’s economy is expected to grow by
6.1 percent in 2022. Higher metal prices
are likely to offset higher food and oil
prices and lead to improved terms oftrade and a balanced current account.
However, the fiscal deficit is expected towiden due to increased social and infrastructure spending. Growth prospects,
albeit favorable, remain vulnerable tocommodity price shocks and supply
chain disruptions, which might hamper
poverty reduction.

Key conditions andchallenges
The Democratic Republic of the Congo(DRC), home to the second largest rainforest in the world and vast metal deposits,
has yet to leverage its natural wealth into
economic development. The economy ishighly concentrated in the extraction ofcopper and cobalt, which constitute over
80 percent of exports (largely headed toChina). With its huge agricultural potential
untapped, DRC is a net food importer, increasing vulnerabilities to external and climatic shocks. Political instability, weak institutional capacity, poor governance, andrecurring episodes of violence have prevented DRC from building the foundations of a diversified and resilient economy
capable of generating economic opportunities for a rapidly growing population,
leading to persistent high levels of poverty.
Persistent structural constraints result inan underdeveloped private sector andlarge informal economy.
The fragile political context is fueled by thecomplex dynamics of political coalitions.
Reaching political consensus – mainly
ahead of the 2023 presidential elections and increasing the presence and credibilityof the state, including through improved
governance, are key to maintaining stability and advancing structural reforms thatwill attract investments and create jobs.
The need for the state to deliver more andbetter services to citizens implies that expenditure-led adjustments to revenue

shortfalls or external shocks could jeopardize long-term growth prospects as wellas political stability. Thus, improving domestic revenue mobilization to widen fiscal space is crucial.
Poverty remains widespread in the country, with the bulk of the poor living in
extreme poverty. While there are significant geographical disparities between
provinces, with most poor living along
two densely populated corridors runningfrom West (Kongo Central) to East (HautKatanga), and North (Ituri) to South (Tanganyika), poverty exceeds 50 percent evenin the wealthier provinces. DRC remains
second in Sub-Saharan Africa after Nigeria in terms of the number of extreme
poor despite some improvements in thepast decades.

Recent developments
DRC has maintained a strong growth momentum and is estimated to grow by 6.1
percent in 2022 (2021: 6.2 percent). Mining
sector investments and exports remain the
key drivers of growth, supported by improved mineral prices and higher public
investment. Over the first half of 2022, thevolume of copper and cobalt production
increased by 34.2 and 38.3 percent respectively, y-o-y, boosted by the Kamoa-Kakula copper mine. Growth in non-mining sectors (particularly services) is expected toslightly slow down to 4.1 percent in 2022
(from 2021: 4.5).
The current account is expected to be balanced in 2022 (2021: -1.0 percent), as rising

FIGURE 1 Democratic Republic of Congo / Real GDP
growth and contributions to real GDP growth

FIGURE 2 Democratic Republic of Congo / Actual andprojected poverty rates and real GDP per capita

Percent, percentage points
8

Poverty rate (%)

6

100

4

80

2

60

Real GDP per capita (constant LCU)

120

180000160000140000120000100000
80000

40

0

60000
40000

20

-2

20000

0

-4
2018

2019

Non-Mining

2020

2021

Mining sector

2022

2023

SSA growth*

0
2012

2024

2016

2018

International poverty rate
Upper middle-income pov. rate

GDP

Sources: Democratic Republic of Congo Statistical Authorities and World Bank.
Note: *Sub-Saharan Africa region.
MPO

2014

Source: World Bank. Notes: see Table 2.

22

Oct 22

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

food and fuel import bills are offset bystrong export earnings supported by higher commodity prices and volumes. Foreign
reserves are estimated to reach 8.3 weeks
of imports in 2022 from 6.3 weeks a year
earlier. Inflation is expected to increase to
9.5 percent in 2022 exacerbated by the rising global energy and food prices.
The fiscal deficit is projected to deteriorate to 3.0 percent in 2022 (2021: 1
percent) as improved revenue mobilization cannot fully offset higher capitaland current transfer spending. Revenues
are estimated at 14.4 percent of GDP
in 2022, owing to favorable commodity
prices and digitalization of the revenue
collection process, while expenditures(18.7 percent of GDP) are expected to increase due to wage adjustments and fuel subsidies. The deficit will be financed
through domestic market issuance, external concessional borrowing, and IMF
ECF disbursements, pushing the estimated public debt to 24.7 percent of GDP at
end-2022 (2021: 23.7 percent).
The latest World Bank projections put extreme poverty at 62.3 percent in 2022, a
1.3 percentage points decrease compared

to 2021. This decrease is due to favorable
economic performance, despite the negative effects of the COVID-19 pandemic andthe war in Ukraine.

OutlookGDP growth is projected to increase to 6.6
percent in 2024. The mining sector is expected to decelerate to 9.0 percent in 2024
from 10.1 percent in 2023 with the end of
the Kamoa Kakula expansion, while
growth in non-mining sectors gradually
picks up, reaching 5.4 percent in 2024.
The fiscal deficit may narrow to an estimated 1.7 percent of GDP in 2024, after
widening to 3.1 percent in 2023 owing topresidential elections. The external sector
is expected to deteriorate slightly, reflecting higher growth in imports of capital
goods (given plans for further mine expansions) and deteriorating terms of trade despite falling global oil prices and growth inmineral exports.
Extreme poverty is projected to decreaseby 2.2 percentage points by 2024 given

TABLE 2 Democratic Republic of Congo / Macro poverty outlook indicators

favorable economic prospects, despite lasting negative effects of the pandemic, highpopulation growth, and war in Ukraine.
DRC’s economy remains vulnerable tocommodity price swings and growth performance of major trading partners whichmight be disturbed by geopolitical conflicts and a pandemic resurgence. The economic consequences of the war in Ukraine,
through rising global food costs and higher oil prices, could exert stronger pressure
on fiscal deficit, on inflation and on households’ consumption thus exacerbating
poverty and inequality.
With the agriculture sector employing
over 60 percent of the working age population, vulnerability to climate change
related risks (floods, droughts) is substantial. Finally, continued political uncertainty ahead of planned 2023 presidential elections, might delay reform efforts, worsen fiscal imbalances and generate arrears. Given persistent conflicts inthe East, DRC’s immediate challenge is tostrengthen security and maintain politicaland macroeconomic stability while stepping up ongoing reforms to ensure sustainable 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

2019
4.4
17.3
6.6
6.3
1.4
25.2

2020
1.7
-8.0
9.5
37.8
4.0
15.1

2021
6.2
1.6
11.8
-29.6
24.9
-19.9

2022e
6.1
1.5
21.3
16.0
13.7
14.8

2023f
6.4
2.0
5.8
17.2
7.9
9.6

2024f
6.6
2.2
3.4
14.6
7.5
7.7

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

4.6
3.1
4.1
5.7

2.3
2.5
4.2
0.1

6.2
2.4
7.9
5.6

6.1
2.8
7.8
5.3

6.4
2.9
7.6
6.1

6.6
3.0
7.7
6.6

Inflation (Consumer Price Index)
Current Account Balance (% of GDP)

4.7
-3.4

11.4
-2.3

9.1
-1.0

9.5
0.0

8.0
-0.4

7.0
-0.1

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-2.0
19.5
-1.8

-1.2
22.9
-1.0

-1.0
23.1
-0.9

-3.0
20.2
-2.5

-3.1
19.4
-2.6

-1.7
19.0
-1.3

64.1
84.7
96.2

64.7
84.9
96.3

63.6
84.3
96.1

62.3
83.6
95.9

61.2
83.1
95.7

60.1
82.4
95.4

0.4
1.2

0.0
1.2

0.1
1.2

0.2
1.3

0.2
1.3

0.3
1.3

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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

Oct 22REPUBLIC OFCONGOTable 1

Key conditions andchallenges
2021

Population, million

5.7

GDP, current US$ billion

13.3

GDP per capita, current US$

2357.1

International poverty rate ($2.15)

a

35.4
a

59.1

a

83.5

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

a

48.9

School enrollment, primary (% gross)

b

93.7

b

64.8

Total GHG emissions (mtCO2e)

31.5Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2011), 2017 PPPs.
b/ WDI for School enrollment (2018); Life expectancy(2020).

After contracting by an estimated 2.2 percent in 2021, economic activity in the Republic of Congo (ROC) is gradually picking up. Higher commodity prices stemming from the war in Ukraine are improving ROC's fiscal and external positions,but households and businesses are facing
rising inflation and fuel shortages. Growthis expected to strengthen in 2023-2024.
Uncertainties related to oil prices and production, and spillovers from the war in
Ukraine are key risks to the outlook.

The Congolese economy has been contracting since 2015, triggered by the 2014-16
collapse in oil prices that led to a massive
cut in public spending and investment andthe accumulation of domestic arrears to
private sector firms, impacting private investment. The multi-year economic recession led to a cumulative decline of real
GDP by 27 percent and of GDP per capita
by 37 percent during 2014-2020.
The country’s reliance on volatile oilrevenue and weak governance, reflected
in high levels of non-concessional borrowing, led Congo’s debt to be classified
as “in distress” and unsustainable in2017, as the country became unable tomeet its contractual obligations. Higher
oil prices, improved debt management,
and debt restructuring agreements
helped restore debt sustainability in thesecond half of 2021, but ROC remains
in debt distress.
The prolonged economic recession has reversed previous progress in poverty reduction, with the proportion of the population living below the international extreme poverty line of US$2.15 PPP per
day increasing from 34.9 percent in 2015
to 50.2 percent in 2020. Furthermore, human capital development lags that ofpeer countries.
The impact of the war in Ukraine is exacerbating socio-economic challenges, including food insecurity because of ROC’s highdependence on food imports. Despite being the third largest oil producer in SubSaharan Africa, fuel shortages have become more frequent since the start of thewar in Ukraine as the country heavily relies on imported refined oil. The pandemic
continues to be a risk to ROC’s economic
outlook, particularly since only about 12
percent of the population was fully vaccinated as of August 2022.
Reviving economic growth and diversifying the economy away from oil remain
key challenges. The new National Development Plan for 2022-2024 offers a good
opportunity to transform ROC’s economy
and boost inclusive and sustainable development to reduce the country’s vulnerability to volatile oil prices and unsteady production.

Recent developments
After contracting by 2.2 percent in 2021
owing to the underperformance of theoil sector, economic activity is gradually
picking up in 2022, driven by the non-oil
sector. Non-oil sector growth in 2022H1
was spurred by the removal of COVID-19
restrictions, and clearance of government
domestic arrears which provided liquidity to domestic banks and firms. Despite
higher oil prices and global demand, oil
production further declined in 2022H1(by 4.2 percent y-o-y) due to postponed
investments, maturing oil fields, andtechnical challenges.
Both the fiscal and external positions improved thanks to higher oil prices, and the

FIGURE 1 Republic of Congo / Real GDP growth

FIGURE 2 Republic of Congo / Actual and projected
poverty rates and real GDP per capita

Percent change

Poverty rate (%)

8

100

6

90

4

80

2
0

Real GDP per capita (constant LCU)
1400000
1200000

70

1000000

60

80000050-240600000-430400000-6

20

Oil GDP-8-100Real GDP
2020

2021e

2022f

2023f

0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

-12
2019

20000010

Non-Oil GDP

International poverty rate
Upper middle-income pov. rate

2024f

Source: World Bank.
Note: The growth rate of oil GDP in 2022 is projected to be zero.

Source: World Bank. Notes: see Table 2.

MPO

24

Oct 22Lower middle-income pov. rate
Real GDP pc

budget registered a surplus in 2022H1 (expected to reach 4.8 percent of GDP by
end-2022). In August, ROC revised its 2022
Budget Law to finance the government’s
plan for the food crisis and the higher oil
and gas subsidy bill, which increased from
CFAF 80 billion in the initial law to CFAF
251 billion (2.7 percent of GDP). Higher
export receipts are projected to strengthen
the current account surplus to 18.1 percent
of GDP in 2022.
Improvements in banking system solvency
and liquidity are strengthening financial
sector stability. Bank deposits and credit
to the private sector were up in 2022H1
and non-performing loans have continued
to decline. Monetary conditions have continued to be tightened to contain inflationary pressures and support the external viability of the exchange rate arrangement.
Following a 25-basis point increase in November 2021, the Bank of Central African
States (BEAC) further increased the policy
rate by 50 basis points to 4.0 percent inMarch 2022. The BEAC also decreased its
weekly liquidity injections from CFAF 250
billion to CFAF 160 billion in April 2022.
Socio-economic challenges are worsening,with the poverty rate estimated to have increased from 50.2 percent in 2020 to 52.0
percent in 2021. Existing supply chain disruptions and the effects of the war in

Ukraine are pushing up food prices in
ROC, with food inflation averaging 6.3
percent (y-o-y) in 2022H1, which is likely
to affect the poorer segments of the population more as they typically spend ahigher share of their household budget
on food.

Outlook
ROC’s GDP is expected to grow at 1.9
percent in 2022, driven by the non-oil sector as oil production is projected to remain unchanged. The economy is expected to then rebound, with GDP growth
projected to average 4.1 percent in2023-24. Oil sector growth (expected to average 5.9 percent in 2023-24) would be driven primarily by the resumption of investments by oil companies which will increase oil production. Non-oil sector
growth is expected to average 3.2 percent
in 2023-24 owing to growth in agriculture
and services and the implementation of
structural reforms on the supply side, andcontinued clearance of domestic arrears
and increased social and public investment
spending on the demand side.
Inflation is projected to remain above
BEAC’s 3.0 percent target over the

TABLE 2 Republic of Congo / Macro poverty outlook indicators

medium term. Food inflation is expected
to remain elevated, worsening food insecurity. The poverty rate is expected toreach 52.2 percent in 2022 and decline
slightly to an average of 51.4 percent in2023–24, consistent with projected growth
in GDP per capita.
The fiscal balance is expected to remain
positive at 3.4 percent, on average, in2023–24, fueled by higher oil receipts andimproved non-oil revenue mobilization
resulting from tax administration reforms
such as e-filing and e-payments and thelaunch of taxpayer service centers. Although debt vulnerabilities remain elevated (with a high level of non-concessional debt stock and domestic arrears),
ROC’s debt-to-GDP ratio will decline to76.3 percent by 2024 (from 102.2 percent
at end-2021) due to improved debt management, fiscal discipline, and significant
oil revenues. The current account surplus
will decline in 2023-24 as investments in
new oil fields will lead to an increase inequipment imports.
Downside risks include uncertainties related to the pandemic, oil prices and production, a protracted war in Ukraine and related spillovers (including food price increases and refined oil shortages in ROC),
tighter conditions in regional financial
markets, and adverse weather conditions.

(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

2019
-0.1
1.6
-18.7
-2.3
7.4
3.2

2020
-6.2
-6.9
-33.1
-45.0
-11.1
-36.3

2021e
-2.2
8.5
16.9
9.5
-12.2
2.5

2022f
1.9
8.8
10.1
8.9
0.1
10.1

2023f
3.7
6.7
4.9
9.7
5.0
11.0

2024f
4.5
5.8
5.7
9.3
6.1
10.3

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-0.6
0.2
0.2
-1.8

-5.1
4.5
-3.7
-9.2

-2.2
1.5
-7.9
3.9

1.9
3.0
0.6
3.4

3.7
3.1
4.6
3.0

4.5
3.5
5.9
3.4

Inflation (Consumer Price Index)

2.2

1.4

2.0

3.8

3.7

3.4

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-0.8
3.4

0.9
2.4

10.9
3.8

18.1
3.8

11.8
4.7

7.7
5.4

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

3.4
81.9
8.0

-2.4
113.2
-0.6

1.4
102.2
3.4

4.8
84.0
7.1

4.3
80.6
6.5

2.6
76.3
4.9

46.1
70.4
90.4

50.2
73.3
91.6

52.0
74.5
92.2

52.2
74.7
92.3

51.8
74.2
92.2

51.0
73.8
91.9

3.9
13.7

2.4
14.0

2.5
14.1

3.2
14.4

3.6
14.7

3.9
15.1

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 = 0.87 (Med (0.87)) based on GDP per capita in constant LCU.

MPO

25

Oct 22CÔTE D'IVOIRE
Table 1

2021

Population, million

27.1

GDP, current US$ billion

70.0

GDP per capita, current US$

2589.0International poverty rate ($2.15)

a

11.4
a

39.6

a

75.4

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

a

37.2

School enrollment, primary (% gross)

b

100.5

b

58.1

Total GHG emissions (mtCO2e)52.5Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ Most recent WDI value (2020).

The consequences of the war in Ukraine
are expected to slow the recovery in
2022, to 5.7 percent growth (3.1 percent
per capita), while increasing external
and fiscal financing needs. Inflation
should reach 5.5 percent in 2022 from
4.2 percent in 2021, threatening gains
in poverty reduction. The government
responded with price caps and a wage
bill increase that increased fiscal spending and highlighted the need for domestic revenue mobilization.

Key conditions andchallenges
Côte d’Ivoire has been one of the fastestgrowing economies in SSA for almost a
decade - with real GDP growth averaging
8.2 percent over 2012–19 (5.7 percent in percapita terms). Political stability, soundmacroeconomic policies and new sourcesof growth (in services and industry) havesustained high growth rates. Over 2011-19,
the poverty rate declined from 55 to 39.5
percent, along with inequality, as measured by the Gini coefficient, from 0.38 to
0.35. Sound fiscal policy up to 2019 also enabled counter-cyclical measures to containthe recent external shocks, achieving 2 and 7
percent real GDP growth in 2020 and 2021.
Renewing its objective of doubling GDP
per capita by 2030 in the National Development Plan (NDP) 2021-2025 requires addressing bottlenecks to enable structuraltransformation and sustain inclusive
growth. Productivity growth has remained
flat since 2017, and the pandemic also
slowed progress toward poverty reduction. Leveraging private investment,
greater capital deepening, reducing allocative inefficiencies, improving human capital and governance, increasing resilience toclimate risks are important.
Downside risks predominate in the shortterm. The war in Ukraine increases commodity price volatility, which can depress external balances and energy andfood inflation. Tightening global financial markets as advanced countries raiseinterest rates could increase debt vulnerabilities. Heightened regional insecurity and climate-related factors could also dampen the outlook. In the medium
term, the rollout of the NDP will depend on adequate financing, premisedon greater domestic revenue mobilization and private investments.

Recent developments
In 2021, the economy recovered strongly
aided by fiscal and monetary policy andless disruptive containment measures. Real GDP growth is estimated at 7 percent in
2021 (4 percent in per capita terms), driven by domestic demand, despite inflation
reaching a 10-year high of 4.2 percent at
year-end driven by higher food prices because of adverse weather and COVID-19
supply disruptions. The fiscal deficit declined by 0.5 ppt to 5.1 percent of GDP mostly owing to strong revenue collection (+0.7
percent of GDP) as authorities have maintained high levels of public investment. PPG
debt reached 52.1 percent of GDP.
Against that backdrop, the negative termsof trade shock and deceleration in global
demand from the war in Ukraine will impact economic recovery and increase fiscalpressures in 2022. Quarterly GDP growthreached 6.2 percent (y/y) in Q1. Overthe first half, industrial output grew by
12.4 percent (y/y) led by mining, manufacturing, and energy sectors; but theretail and telecom business indices already suffered from a deceleration in consumption. Inflation continued to increase

FIGURE 1 Côte d'Ivoire / Real GDP growth andcontributions to real GDP growth

FIGURE 2 Côte d'Ivoire / Actual and projected poverty
rates and real GDP per capita

Percent, percentage points
25

Poverty rate (%)
100

1.80

20

90

1.60

15

80

1.40

Real GDP per capita (constant million LCU)

70

10

1.20

60

5

1.00

50

0.80

0

40

-5

30

-10

20

0.40

10

0.20

-15
2000

2005

Gov. cons.
Inventories
Statistical disc.

2010

2015

Exports
Private cons.
GDP

0.60

0

2020

0.00
2008

GFCF
Imports

2010

2012

2014

2016

International poverty rate
Upper middle-income pov. rate

Source: World Bank.

Source: World Bank. Notes: see Table 2.

MPO

26

Oct 22

2018

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

despite measures to contain it, reaching 5.4
percent in July (y/y), with core inflation
at 4.4 percent. Higher import prices also
widened the CAD, exerting external financing pressures. The fiscal stance should
deteriorate, with the deficit expected at 5.7
percent of GDP, due to greater infrastructure spending and interest payments, anda slowdown in revenue as the government
uses the proceeds of the excises on fuelto offset price increases via subsidies. The
overall fiscal package to contain prices
amounted to 0.9 percent of GDP at end-July.
A five-year civil servant wage reform – tomitigate the erosion of purchasing power concluded in August 2022 should increase
the wage bill by 0.2 percent of GDP in 2022.
Monetary and exchange rate policies aremanaged by the BCEAO. Its reserves declined to 5.2 months of imports in June
2022, from 5.5 months in 2021, due to higher energy prices and food imports causedby the war in Ukraine. To counter inflationpressures, the BCEAO raised rates for liquidity calls (2 to 2.5 percent) and the marginal lending window (4 to 4.5 percent) in
June and September 2022.
Extreme poverty incidence measured
against the US$2.15 a day per capita (2017

PPP) international poverty line should decline from 10.8 percent in 2021 to 10.6 percent in 2022, and below its pre-COVID level of 11.2 percent. The expansion of services and industry, which respectively employ 42.7 and 13 percent of the labor force,
contributed to poverty reduction.

OutlookDespite the headwinds, the economy
should be resilient in the short-term andcontinue expanding at a steady pace overthe medium term with growth averaging
6.4 percent over 2022-2024, driven by domestic demand, continued high public investment and increasingly greater private
investments in the context of the NDP
and reforms to improve the business environment. Trade flows with Ukraine andRussia are small and a progressive easingof global commodity prices should support the deceleration of inflation starting
2023. The CAD should narrow but remain higher than pre-COVID levels due
to expected increase in import volumes
and prices.

TABLE 2 Côte d'Ivoire / Macro poverty outlook indicators

The authorities remain committed tosound macroeconomic management andthe fiscal deficit should gradually converge
towards the regional target of 3 percent
by 2025 – despite an expected permanent
wage bill increase of 0.4 percent of GDP
until 2027 -, supporting a gradual decline
in the debt-to-GDP-ratio.
However, financing conditions will remaintight. Tighter monetary policy in advanced
economies will trigger higher financing
costs of external and domestic debt, increasing debt vulnerabilities due torollover risks in the short-term. Sustained
domestic revenue mobilization, efficientpublic spending, prudent borrowing, andactive debt management remain crucial toensure macroeconomic stability.
Poverty reduction should continue despite negative headwinds thanks to mitigation policies that have kept fuel andfood prices lower than in other countries
in the region and expected wage bill increase. In medium term, poverty alleviation should continue, with extreme poverty (US$2.15 2017PPP) expected to fall to
9.99 percent by 2024, benefiting from therecovery and the rollout of the new social
development plan.

(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

2019
6.2
6.0
4.1
5.5
5.7
4.4

2020
2.0
1.9
0.3
12.2
-1.3
8.8

2021
7.0
5.0
1.3
21.3
3.7
12.7

2022e
5.7
3.0
0.8
11.1
2.9
1.7

2023f
6.8
4.9
-0.8
12.3
4.7
5.7

2024f
6.6
4.7
2.6
7.6
8.6
4.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

6.3
5.3
11.5
4.7

2.0
2.7
1.6
1.9

7.0
1.9
6.2
8.7

5.7
0.7
6.7
6.7

6.8
2.8
10.0
6.6

6.6
3.0
10.8
5.8

Inflation (Consumer Price Index)

0.8

2.4

4.2

5.5

3.5

3.0

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-2.3
1.3

-3.2
1.1

-3.8
1.4

-5.6
1.3

-4.8
1.3

-4.1
1.5

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-2.3
38.8
-0.8

-5.6
47.6
-3.7

-5.1
52.1
-3.0

-5.7
53.2
-3.4

-4.8
52.7
-2.3

-3.9
51.3
-1.5

11.2
39.2
74.5

11.2
39.3
74.7

10.8
38.7
73.6

10.6
38.3
72.8

10.3
37.8
71.8

10.0
37.3
70.9

1.5
23.9

0.6
23.8

1.5
24.3

1.1
24.6

1.1
24.8

0.9
24.7

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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

Oct 22EQUATORIALGUINEA
Table 1

Key conditions andchallenges
2021

Population, million

1.4

GDP, current US$ billion

10.7

GDP per capita, current US$

7408.7

School enrollment, primary (% gross)

a

61.8

a

59.1

Total GHG emissions (mtCO2e)

14.2Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ WDI for School enrollment (2015); Life expectancy(2020).

Equatorial Guinea’s real GDP is projected to grow by 3.2 percent in 2022,
mainly owing to a pick-up in hydrocarbon output. Barring new substantial hydrocarbon discoveries and progress in
structural reforms, the economy is projected to enter recession in 2023-24 asoil production in several fields declines.
Further increases in international foodprices and social tensions, further tightening of global financial conditions, reduced oil prices, and a potential fiscal
cliff due to declining oil production represent downside risks to the outlook.

While Equatorial Guinea is classified as an
upper-middle-income country, seven consecutive years of negative growth combined with the COVID-19 pandemic has
curtailed progress in shared prosperity
and poverty reduction, with GDP per capita growth averaging -9.4 percent in2015-2021. Progress in improving humancapital has been slow because of insufficient social spending and poor public service delivery. Public health spending represents only 0.7 percent of GDP, significantly lower than the average of 3.2 percent of GDP for upper-middle-income
countries, and life expectancy at birth is
low at 59 years. The poor business environment and weak governance also weighon private sector development. Moreover,given the country’s heavy dependence onoil, the expected decline in oil production
combined with the social and economic
toll of COVID-19 adds urgency to the government’s objective to diversify away fromthe hydrocarbon industry and change thecurrent growth model.

Recent developments
The economy is estimated to have contracted by 1.6 percent in 2021, due to lower-than-expected hydrocarbon production.
The Bata explosions in March 2021 (withdirect losses and damages estimated at 2.5
percent of 2020 GDP as per International
Monetary Fund (IMF) estimates) and aslowdown in construction due to modest
public investment also weighed on
growth. The revival of the services sector
partly cushioned the slowdown in 2021.
Economic activity rebounded in 2022H1,
underpinned by a pick-up in hydrocarbon
production (15 percent increase from
2021H2 to 2022H1), higher capital spending, and an upturn of the services sector
following the phasing out of pandemic-related restrictive measures.
Stronger hydrocarbon revenues from higher production and prices improved the fiscal position in 2022H1. Fiscal revenues exceeded the budgeted levels by 13 percent
in 2022H1 while the expenditure execution
rate stood at 78 percent as of end-June
2022. The fuel subsidy reform implemented by the authorities in March 2022 is expected to protect the poor by keeping
kerosene prices constant while adjusting
gasoline prices and generate savings ofabout 0.1 percent of GDP in 2022 (IMF estimates). Higher hydrocarbon export earnings, with a 22.6 percent increase in export
volumes from 2021H2 to 2022H1, also
helped improve the trade balance and theexternal position in 2022H1.
Inflation surged to 3.3 percent in July 2022
(from 1.8 percent in 2021), reflecting higher
food and energy prices, which have been
exacerbated by the war in Ukraine. Monetary conditions have continued to betightened to contain inflationary pressures and support the external viability ofthe exchange rate arrangement. The Bankof Central African States (BEAC) further

FIGURE 1 Equatorial Guinea / Public finances

FIGURE 2 Equatorial Guinea / Non-income poverty
indicators

Percent of reference category

Percentage points

50

250

40

EqG relative to regional average
EqG relative to MIC average

200

30
150

20
100

10

50

0

0

-10

Mortality rate, under-5 Maternal mortality ratio
Mortality rate
(per 1,000 live births) (modeled estimate, per attributed to unsafe
100,000 live births) water, unsafe sanitationand lack of hygiene (per100,000 population)

-20
2014

2016
Revenues

2018

2020

Expenditures

2022f

2024f

Fiscal balance

Source: World Bank.

Source: World Bank.

MPO

28

Oct 22

increased the policy rate by 50 basis points
to 4 percent on March 28, 2022. The BEAC
also decreased its weekly liquidity injections from CFAF 250 billion to CFAF 160
billion in April 2022. The regional central
bank has started to implement the new foreign exchange (FX) regulation, including
strengthening FX repatriations, for the extractive sector in January 2022. Moreover,
the COBAC (the regional supervisor) ended temporary forbearance measures inJune 2022, which could lead to a deterioration of asset quality (increases in overdueloans and NPL ratios).
Phone surveys conducted in 2020 and 2021
showed that almost half of the working
age population stopped working for up to
6 months during the COVID crisis, and only 14 percent of students continued theireducation at home. A sharp rise in foodprices, due to the war in Ukraine, has likely added to an already challenging social
situation due to the pandemic. As data to
track poverty remain scarce, the Living
Standard Measurement Survey (expected
in 2023) will be key to benchmarking
poverty incidence.

OutlookAfter seven years of negative growth, real
GDP is projected to grow by 3.2 percent
in 2022, mainly driven by higher hydrocarbon production and revenues. With an
expected gradual decline in hydrocarbon
production and slow progress in structuralreforms, Equatorial Guinea is projected to
re-enter recession in 2023-24. Barring new
substantial discoveries, hydrocarbon production will gradually decline as some of
the country’s largest oil fields are reaching
maturity. Moreover, without significant
progress in strengthening governance,
the banking sector, and business confidence, growth in the service sector will
deteriorate. Consequently, GDP growth isprojected to contract by an average of 3
percent in 2023-24.
The fiscal position is projected to turn into a surplus of 1.3 percent of GDP in
2022 (from a deficit of 1.2 percent of GDP
in 2021) as recent increases in hydrocarbon revenues are expected to more than

TABLE 2 Equatorial Guinea / Macro poverty outlook indicators

offset the increase in fiscal expenditures
including from the Bata reconstruction.
The planned clearance of domestic arrears, using most of the IMF 2021 Special
Drawing Rights allocation, is expected toreduce debt to GDP ratio to 34.5 percent
in 2022, and support private sector confidence and investment. Higher hydrocarbon export earnings are expected to narrow the current account deficit to 0.8 percent of GDP (from a deficit of 2.4 percent of GDP in 2021), before deterioratingover the medium term.
The outlook is subject to major downside
risks. Failure to settle outstanding arrears
as planned could intensify financial sectorrisks; a protracted war in Ukraine could
further increase international food prices
which would increase domestic inflation
and risks of food insecurity, possibly escalating social tensions; further tighteningof global financial conditions could impact
investment flows; reduced oil prices could
undermine fiscal and external stability;
and a potential fiscal cliff due to declininghydrocarbon production could further undermine medium-term 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

2019
-6.0
3.4
-4.5
-55.8
-6.2
-9.0

2020
-4.9
3.4
-5.3
-42.1
-9.0
-7.8

2021
-1.6
1.0
2.3
-18.0
-1.7
2.0

2022f
3.2
4.2
1.8
19.0
4.3
6.5

2023f
-2.6
0.5
-6.7
0.8
-1.4
1.0

2024f
-3.4
0.2
-9.3
0.6
-1.9
0.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-6.0
-5.8
-8.7
-1.2

-5.0
0.4
-6.8
-2.1

-1.6
2.8
-0.6
-3.5

3.2
1.2
4.1
1.8

-2.6
1.4
-2.4
-3.2

-3.4
1.4
-3.4
-3.8

Inflation (Consumer Price Index)

1.2

5.8

1.8

3.8

3.6

3.0

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-1.6
5.3

-10.9
3.9

-2.4
5.9

-0.8
4.4

-1.5
4.2

-2.3
4.3

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

2.0
45.9
2.7

-3.3
52.3
-2.0

-1.2
47.4
0.4

1.3
34.5
2.6

1.4
36.7
2.6

0.7
35.7
2.0

GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

-9.3
31.7

-12.4
26.7

6.2
29.2

-0.7
29.5

-7.1
26.9

-4.3
25.2

Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
Notes: e = estimate, f = forecast.

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29

Oct 22

ERITREA

Key conditions andchallenges

Table 1

2021

Population, million

3.6

GDP, current US$ billion

2.2

GDP per capita, current US$

613.8

School enrollment, primary (% gross)

a

68.4

a

66.7

Total GHG emissions (mtCO2e)7.5Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ WDI for School enrollment (2018); Life expectancy(2020).

Real GDP growth is expected to moderate
to 2.5 percent in 2022, impacted by lower
global growth, and to hover around 2.8
percent over the medium term, consistent
with pre-pandemic growth rates. Eritrea
has begun to reengage with development
partners but remains mostly isolated andvulnerable to various risks, including
food inflation, highly concentrated exports, COVID-19, geopolitical tensions,and climate shocks. Poverty data has notbeen produced in the last decade, and national accounts are limited.

The lifting of UN sanctions in November 2018 marked Eritrea’s emergencefrom a decade of international isolation.
Prolonged conflict has deprived Eritrea,
a fragile state, of vital aid and investment resources. The government responded by pursuing a self-sufficiency
policy where large SOEs dominate theeconomy and outside the mining industry there is a virtually non-existent private sector. The financial sector is small
and underdeveloped, and a few minerals (mainly zinc, gold, and copper) account for over 90 percent of exports,
leaving Eritrea highly exposed to exogenous shocks. Monetary policy is characterized by administrative measures, fiscal dominance, and a fixed exchange
rate regime pegged to the US dollar,
enabled by severe import restrictions
in a context of low foreign exchange
reserves. Productivity in agriculture islow, and the country is among the mostvulnerable and least adapted to climatechange in Sub-Saharan Africa, with frequent natural hazards posing a heavy
burden for the economy and rural livelihoods.
The COVID-19 crisis hit Eritrea amid
a hiatus in its re-engagement with development partners, leaving it without
external funding. In addition, informal
cross-border trade was affected by the
conflict in northern Ethiopia. However,Eritrea’s isolation moderated the magnitude of the initial external shock.
Eritrea has severe data production capacity constraints resulting from theemergency conditions that prevailed in
the country over the past decades. National accounts data are limited to unofficial GDP estimates produced by the
Ministry of Finance and not endorsedby the government, while inflation estimates cover only the capital, Asmara,and full balance of payments accounts
are missing. The last population census in Eritrea occurred over 25 years
ago, and little is known about poverty.Data from 1996/97, covering only
urban areas, suggests that widespreadpoverty reached around 70 percent of
the population.

Recent developments
Real GDP growth rebounded by 2.9 percent in 2021 after contracting by 0.5 percent in 2020 amid the COVID-19 crisis. The recovery was led by improving
external demand and the resumptionof domestic economic activity following
the phasing out of restrictions imposedat the onset of the pandemic. Headline
inflation averaged 6.6 percent in 2021,
fueled by rising international commodity prices and the continued closure of
the Ethiopian border since April 2019.
Rising prices of wheat, corn, fertilizers, and oil resulting from the war in
Ukraine added to economic hardship forthe poor. Eritrea has also been severely

FIGURE 1 Eritrea / Evolution of total public debt

FIGURE 2 Eritrea / Primary and overall fiscal balances

Percent of GDP

Percent of GDP
12

300

10
250

8
6

200

4
2

150

0
100

-2
-4

50

-6
0

-8
2018

2019

Domestic debt

2020

2021
External debt

2022e

2023p

2024p

2018

Total public debt

2019

2020

Overall fiscal balance

Sources: Ministry of Finance, Planning and Economic Development; IMF andWorld Bank staff estimates.
MPO

2021

2022e

2023p

Primary fiscal balance

Sources: Ministry of Finance, Planning and Economic Development; IMF andWorld Bank staff estimates.
30

Oct 22

hit by the recent drought in the Horn ofAfrica, experiencing the fourth consecutive below-average rainfall season sincelate 2020, adding to food insecurity.
Strengthening economic activity and relatively high global metals prices (especially for zinc and gold) supported fiscal revenues in 2021 and a narrowing of
the fiscal deficit to 5.8 percent of GDP
from 6.4 in 2020. The polymetallic Asmara mine was officially inaugurated inJune 2022 and is expected to contributeto exports and revenues in the future.
Public debt is estimated at around 242.7
percent of GDP, of which nearly 80 percent is owed to domestic banks, and thecountry remains in debt distress.
Eritrea’s engagement with the UN has
intensified in recent months. On July 12,
Eritrea presented its first Voluntary National Review report on its progress toward the SDGs focused on SDG3 on
Health and Well-being and SDG13 on
Climate Action, while briefly touching
upon the status of implementation of
the other SDGs.

OutlookReal GDP is expected to grow at 2.5 percent in 2022, a slight deceleration from2021, mainly supported by mineral exports. Over the medium term, growth isprojected to average 2.8 percent, consistent
with pre-pandemic growth rates. Higher
prices of fuel and wheat, the country’s top
import products, will likely keep inflation
elevated at over 7 percent in 2022, exacerbating poverty and food insecurity. The
current account is expected to remain in
surplus, as currently elevated prices ofgold and zinc offset the higher fuel andfood import bill, but should narrow modestly over the medium term as the peak inglobal commodity prices fades. Steady remittances are expected to provide income
support to households over the medium
term. Fiscal consolidation, underpinned byslower growth in government current expenditures and continued growth in revenues in line with economic activity,

TABLE 2 Eritrea / Macro poverty outlook indicators

should help to narrow the fiscal deficit.
Strong growth in nominal GDP should
keep public debt-to-GDP ratios on a declining trend. However, fiscal and domestic debt outcomes and the outlook for public finances remain uncertain given frequent data revisions due to reporting lags
driven by widespread manual processes.
Downside risks are significant. These include continued spillovers to the global
economy and commodity prices from the
Ukraine war and heightened regional
geopolitical tensions. Eritrea’s continued
involvement in the northern Ethiopia conflict could attract renewed internationalsanctions. Further global food price shocks
would negatively impact household consumption, given Eritrea’s dependence on
wheat imports. Additionally, Eritrea iscurrently one of only two countries in theworld that have not yet started vaccinating
their citizens against COVID-19, heightening health risks and economic growthrisks. Finally, severe climate vulnerabilities continue to burden Eritrea and could
worsen in the coming years.

(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

2019
3.8
5.5
39.3
67.5
-5.0
1.4

2020
-0.5
-1.9
16.4
195.8
-5.4
-3.5

2021
2.9
3.0
14.0
17.7
49.7
42.6

2022e
2.5
3.5
5.7
13.0
8.9
12.0

2023f
2.7
4.1
3.4
8.7
4.8
8.1

2024f
2.9
4.5
3.5
16.2
3.1
7.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

3.7
27.0
13.0
-26.0

-0.6
-0.5
-0.7
-0.6

2.9
4.5
1.4
2.0

2.5
1.6
3.7
2.4

2.7
2.5
3.6
1.8

2.9
2.4
3.7
2.9

Inflation (Consumer Price Index)

1.3

5.6

6.6

7.4

6.4

4.1

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

13.1
3.1

14.6
1.4

13.5
1.4

12.3
1.3

10.8
1.2

10.2
1.1

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

9.9
269.5
11.7

-6.4
260.7
-4.9

-5.8
242.7
-4.2

-5.6
234.9
-4.3

-4.9
219.1
-3.7

-4.1
205.1
-2.9

GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

0.8
13.4

4.5
16.2

6.0
20.0

7.8
24.8

10.3
30.9

13.3
38.2

Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
Notes: e = estimate, f = forecast.

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31

Oct 22

ESWATINI

Key conditions andchallenges

Table 1

2021

Population, million
GDP, current US$ billion

4.7

GDP per capita, current US$

4049.6
a

36.1
a

58.0

a

78.1

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

Since the relocation of firms back to South
Africa at the end of apartheid in 1994, private investment has remained low, constrained by heavy state involvement in theeconomy and a generally weak businessenvironment. The government is taking
steps to reduce its footprint in the economy to promote market competition andencourage private investment. The challenges from relying on state-led development include high fiscal deficits, accumulation of expenditure arrears, and thecrowding out of private investment.
Eswatini remains highly dependent on
South Africa, through various channels- including trade, remittances, and Southern
African Customs Union (SACU) revenues.
Overreliance on SACU revenues has led to
substantial fluctuations in public spending
and continues to pose a challenge to managing fiscal resources and the growth potential. Volatile SACU receipts coupled withrigid government expenditure have led topersistent fiscal deficits in the recent past.
Poverty reduction in Eswatini is constrained by limited job opportunities in theprivate sector and relatively low salaries
amid weak labor productivity. Lack of formal job creation results in high unemployment and informality. About 32 percent of
the population is estimated to live below
the US$2.15/day (2017 PPP) international
poverty line, while 55.4 percent of the population is under the lower-middle-income

1.2International poverty rate ($2.15)

a

54.6

School enrollment, primary (% gross)

b

114.5

b

60.7

Total GHG emissions (mtCO2e)

2.8Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2016), 2017 PPPs.
b/ WDI for School enrollment (2019); Life expectancy(2020).

Real GDP growth is projected to slow to
1.1 percent in 2022 from 7.9 percent in
2021, reflecting statistical base effects, theimplementation of government’s threeyear fiscal adjustment program, and theinflationary impacts of the Ukraine war.
Declining SACU revenues and higher
food and fuel import costs are expected topush the current account into a deficit.
These trends will slow per capita GDP
growth and constrain poverty reduction,
which is projected to hover around 54 to
55 percent in the medium term.

FIGURE 1 Eswatini / Inflation and real GDP

Inflation (%)

25
Real GDP
20

Inflation

15

5

Poverty rate (%)

45000

8

90

40000

80

35000

7

70

6

60

5

50

4

40

2019

2020

25000
20000
15000

20

10000

2

10

5000

1

0

0
2009

0
2018

30000

30

0
-5

Real GDP per capita (constant LCU)

100

3

2017

Economic activity picked up in 2022Q1,
with real GDP growing by 4.5 percent
from 1.9 percent in 2021Q4. Growth wasunderpinned by a strong performanceof the primary (mainly animal production and forestry) and secondary sectors(manufacturer of beverages, processingof preserved meat, and preserved fruits).
Agriculture benefited from good rains,while manufacturing benefited from increased foreign demand. On the other
hand, services contracted, reflecting subdued demand due to low domestic disposable incomes and weakening growthof the ICT sector as COVID-19 restrictions, were lifted (leading to reduced useof ICT). Moreover, the impact of
Ukraine war and its related inflationary
impacts is expected to result in a moderation of growth.
Inflationary pressures picked up during
2022Q2, mainly driven by food andtransport costs, and a depreciating local
currency. Annual inflation averaged 4.2
percent in 2022Q2, higher than 3.2 in
2022Q1 and 3.7 in 2021Q2; and increased further in July 2022 to 5.4 percent from 4.6 percent in June 2022.
Transport and food contributed overhalf of the annual inflation—the exchange rate depreciated by 5.9 percent
during 2022H1. In response to the high

9

10

2016

Recent developments

FIGURE 2 Eswatini / Actual and projected poverty rates andreal GDP per capita

Real GDP2015

country poverty line ($3.65/day, 2017 PPP).
Inequality remains high, with a risk of fueling social tension.

2011

2013

2015

2017

International poverty rate
Upper middle-income pov. rate

2021e 2022p

Sources: Ministry of Finance and WB staff estimates.

Source: World Bank. Notes: see Table 2.

MPO

32

Oct 22

2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

inflationary pressures, the Central Bank
tightened the money supply, increasing
the discount/repo rate by a cumulative
100 basis points to 5 percent. Transportand food inflation disproportionately affect the poor, who spend a higher shareof their resources on these items thanhigher-income households.
The authorities remained committed tofiscal adjustment plans during FY2022/
23Q1 despite political pressure to increase wages. The fiscal deficit was contained within the budget limits, as thegovernment implemented expenditurecuts, including public investment, in linewith its three-year fiscal adjustment plan.
The reduction in the fiscal deficit took
place in the context of lower overall revenues amid lower SACU revenues. However, public debt increased as the government accessed loans from the WorldBank and African Development Bank tofinance the budget deficit.
Inflows from newly contracted externalloans kept official gross reserves above 3
months of import cover during 2022H1.
This level of reserves was achieved despite a higher trade deficit during
2022H1 compared to the same period lastyear, as costs of imports increased dueto the Ukraine war. The current accountworsened as a result.

OutlookReal GDP growth is projected to slow to
1.1 percent in 2022 and average 2.7 percent for 2023-2024, reflecting the implementation of the government’s three-year
fiscal adjustment program and inflationary pressures from the Ukraine war. The
fiscal adjustment will dampen growth insectors linked to government operations
such as construction, public administration, wholesale, and trade, while inflationary pressures dampen domestic demand. Annual average inflation is projected to increase to 4.8 in 2022 from 3.7
percent in 2021. Further, the tight monetary policy will discourage borrowing
and constrain economic activity. The risk
of further social unrest creates uncertainty for medium-term private sector investment and growth.
Poverty is projected to remain relatively
stagnant and hover around 54 to 55 percent, based on the lower-middle-income
country poverty line, due to the slow economic recovery in the medium term. The
unemployment rate that rose by 10 percentage points to 33.3 between 2016 and2021, will marginally decline in themedium term.

TABLE 2 Eswatini / Macro poverty outlook indicators

The fiscal deficit is projected to decline in
the medium term as authorities implement
the fiscal adjustment plan. Though SACU
revenues are projected to fall in 2022 dueto the second-round effects of the pandemic, domestic revenues are projected to recover as authorities implement various
revenue measures (fees, VAT, company tax
increase) proposed in the adjustment plan.
Expenditure adjustment includes public
wage containment and lower transfers tostate-owned enterprises. The deficit will
marginally increase in 2022 as expenditure pressures increase to cushion households from rising inflation. In the medium term adherence to the adjustment
program is critical to contain fiscal deficit
within set limit. Inflation will decline in
the medium term as fiscal consolidation
proceeds. Public debt is projected to peakin 2022 and decline from 2023, in linewith the fiscal adjustment plan.
The current account balance is projected toturn into a deficit of 1.7 percent of GDP in
2022—the first time since the 2010/11 fiscal crisis. This trend partly reflects declining SACU revenues and rising imports due
to higher fuel/food costs arising from the
Ukraine war. A current account surplus
is projected from 2023 as SACU revenue
recover and the effects of the COVID-19
crisis dissipate.

(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

2019
2.7
-1.5
-2.0
1.0
16.3
1.5

2020
-1.6
0.5
6.8
-8.2
-2.4
-1.3

2021
7.9
3.3
-8.7
11.4
9.9
14.4

2022e
1.1
2.0
-3.7
9.6
6.0
1.6

2023f
2.6
4.5
-6.4
2.9
3.1
2.5

2024f
2.7
3.2
-1.1
2.7
2.5
2.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

2.8
0.9
5.7
1.2

-1.4
-7.5
-9.7
5.4

7.9
2.5
15.4
4.1

1.1
1.4
3.8
-0.8

2.6
1.6
3.9
1.8

2.7
3.5
2.1
2.9

Inflation (Consumer Price Index)

2.6

3.9

3.7

4.8

4.4

4.3

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

4.7
-2.4

6.5
-0.1

1.3
-0.7

-1.7
-0.8

0.4
-0.8

0.8
-0.7

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-6.5
40.0
-5.3

-4.6
41.6
-2.4

-4.6
42.4
-2.9

-4.9
45.1
-2.0

-1.4
43.1
1.4

0.0
39.9
2.5

34.3
56.6
77.3

35.5
57.7
77.8

32.2
55.4
76.8

31.7
54.8
76.5

31.0
54.1
76.3

30.6
53.6
75.8

5.2
35.9

1.6
36.1

1.4
37.2

1.1
38.1

1.1
38.9

1.2
39.7

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Med (0.87)) based on GDP per capita in constant LCU.

MPO

33

Oct 22ETHIOPIA

Key conditions andchallenges

Table 1

2021

Population, million

117.9

GDP, current US$ billion

114.6

GDP per capita, current US$

972.5

International poverty rate ($2.15)

a

27.0
a

65.0

a

90.9

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

a

35.0

School enrollment, primary (% gross)

b

119.4

b

67.0

Total GHG emissions (mtCO2e)

191.3

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2015), 2017 PPPs.
b/ Most recent WDI value (2020).

Though considerably lower than pre-conflict levels, and despite ongoing conflict,
GDP growth in FY22 was revised modestly
upwards to 3.5 percent from a more resilient agricultural harvest and higher export growth. Nevertheless, the economy isconfronting multiple shocks while eroded
buffers are threatening macroeconomic stability. Poverty and inequality remain elevated, and Ethiopia remains highly vulnerable to disruptions in global food supplies.
The abatement of conflict and a resumption
in market reforms are critical to reviving
growth and accelerating poverty reduction.

Between 2004-20, Ethiopia’s economy was
one of the world’s fastest-growing, withGDP growth averaging 10 percent. State-led
public investments in infrastructure supported high growth and poverty reduction(the poverty rate fell by about 10 percentage
points between 2004-16). However, unevenly shared growth that favored urban andwealthier areas resulted in increasing inequality in recent years. The poverty rate remains high at about 24 percent.
More recently, the limitations of the stateled growth model—a stalled structuraltransformation, a financing overhang fromlarge capital investments, a narrow export
base, and a private sector constrained byburdensome regulations and heavy foreign exchange market distortions—haveslowed growth and left Ethiopia at highrisk of debt distress.
Overlapping shocks from drought, conflict, and the COVID-19 pandemic haveseverely impacted lives and livelihoods.
Some 20 million people require humanitarian assistance due to prolonged
drought in lowland areas and conflict in
the Northern parts of the country. An already acute food insecurity has worsened
further because of global food and energy price shocks and disruptions to grain
supply due to the Russia-Ukraine war.
In response to a weakening economy, thegovernment launched a Homegrown Economic Reform Program in 2019 to boost

FIGURE 1 Ethiopia / Gross foreign exchange reserves

4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Jul-16

Jul-17

Jul-18In million US$

Jul-19Jul-20Recent developments
GDP growth for FY22 was revised slightly upwards to 3.5 percent, despite a fifth
year of drought, ongoing conflict and displacement, and external shocks. Agricultural output was relatively resilient to the
Tigray conflict, falling by a lower-than-expected 1.5 percent during the main meher
season. Export growth also remained
strong at 14 percent in FY22, as higher
coffee prices helped offset Ethiopia’s removal from the African Growth and Opportunity Act in January 2022 and the introduction of more restrictive regulatory
measures on exporters.
In July, inflation remained elevated at
33.5 percent due to higher food prices

FIGURE 2 Ethiopia / Number of poor

Months of imports

Million US$

growth in key sectors (energy, logistics,
and telecoms), increase competition, improve the export climate, and reduce
macroeconomic imbalances. A critical policy priority was a move to a competitive
foreign exchange market—a much-neededreform to boost competitiveness and reduce distortions and input shortages in theeconomy. Despite greater uncertainty,
these reforms are necessary to reignite
growth and accelerate poverty reduction.
Downside risks include renewed conflict,delays in debt relief amid tightening global
financial conditions, and the continuanceof drought in the Horn of Africa that impacts agricultural production—especially
livestock. Depleted FX reserves and fiscal
space limit the country’s capacity to absorb
additional shocks.

in thousands

3.0

120,000

2.5

100,000

2.0

80,0001.5

60,0001.0

40,0000.5

20,0000.0

02010 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Jul-21$2.15/day PPP

In months of imports

Source: National Bank of Ethiopia.

$3.65/day PPP$6.85/day PPP

Sources: Global Poverty Working Group (GPWG) and Macro Poverty Outlook.

MPO

34

Oct 22and petroleum subsidy reforms. High inflation and a slower depreciation of the official exchange rate since late February arecontributing to currency overvaluation
and a widening premium (of about 50 percent) in parallel currency markets.
External vulnerabilities have increased.
Higher fuel, fertilizer, and food importbills offset strong export growth and lower
capital imports, contributing to a wider
trade deficit. Coupled with lower official
aid inflows (that offset continued growth
in remittances and FDI inflows), FX reserves have eroded (estimated at lessthan 1 month of import cover at endFY22). As a result, external debt servicing
risks have heightened and Ethiopia hasrequested debt relief under the G-20
Common Framework.
The fiscal deficit increased to 3.7 percent
of GDP in FY22 (vs. 2.8 percent in FY21).
Increased recurrent spending—largely defense, security, rehabilitation, and relief—offset reductions in capital spending.
Amidst sharply lower external financing,
the fiscal deficit was mainly financed bydomestic borrowing. The government began implementing a phased removal of fuel subsidies in December 2021, whichshould yield savings of about 1 percent of
GDP by 2023.

While some net producers benefited fromrising food prices, the poor, who are net
consumers with limited options for substitution between food items, are negatively affected. For example, the increase inmaize and sorghum prices is expected toreduce welfare by as much as 10 percent
among rural households. The ongoingarmed conflict, drought, and inflation haveseverely impacted food security.

Outlook
Growth is expected to be more robust in
FY23 (5.3 percent), supported by reconstruction efforts and the resumption ofagricultural activity in some of the conflict affected areas. Inflation is expected
to remain high in the short-term due tolooser monetary policy, but then subside
as global energy/food prices ease. Continued export growth (mainly services)and slower import growth from lower
conflict-related spending are expected tonarrow the current account deficit. Given depleted foreign exchange reserve levels and lower official inflows, CAD in
FY23 is expected to be financed largely through relatively robust FDI inflows

TABLE 2 Ethiopia / Macro poverty outlook indicatorsand borrowing by Ethiopian Airlines.
New tax policy measures to boost valueadded, excise, and property taxes should
support revenues and help narrow the
fiscal deficit in FY23. Even with an improving domestic and global outlook, areversion to former high growth levels
will require greater private sector investment and job creation. This will depend
critically on bold policies to remove all
foreign exchange market distortions, accelerate fiscal consolidation through revenue and SOE reforms, and create a levelplaying field for competition and private
sector-led growth.
The poverty trajectory shows stalling inpoverty reduction. The poverty headcount rate is expected to decline slightly(just a 0.08 percentage points decrease)between 2020 and 2021, and the numberof poor people is expected to have increased in 2022 by more than half amillion. The lack of significant gains inpoverty reduction than expected is due
to armed conflict, persistent droughts inlowland regions, the Ukraine war, andhigher inflation. The multiple shocks thecountry is facing could push millions ofpeople into poverty, increase spatial inequalities and threaten the progress inpoverty reduction.

(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

2018/19
9.0
5.1
7.2
15.1
3.0
5.4

2019/20
6.1
5.0
0.6
5.6
3.4
-1.9

2020/21
6.3
3.0
12.2
7.6
5.5
2.0

2021/22e
3.5
2.1
15.8
2.1
6.4
5.1

2022/23f
5.3
3.5
3.4
7.1
7.4
3.6

2023/24f
6.1
3.6
7.6
8.1
7.5
4.8

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

9.0
3.8
11.5
12.0

6.1
4.3
9.6
5.2

6.3
5.5
7.3
6.3

3.5
1.8
5.5
3.4

5.3
3.5
6.5
5.9

6.1
4.0
8.0
6.3

Inflation (Consumer Price Index)
Current Account Balance (% of GDP)

12.5
-5.1

19.9
-4.1

20.2
-2.7

33.7
-4.1

25.6
-3.5

16.9
-2.6

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-2.5
57.3
-2.0

-2.8
56.5
-2.4

-2.8
56.6
-2.2

-3.7
55.6
-3.1

-3.1
55.4
-2.4

-2.8
53.0
-2.1

24.9
61.5
89.2

24.6
61.0
88.9

24.2
60.5
88.6

24.2
60.3
88.6

23.9
60.0
88.4

23.6
59.4
88.1

1.3
15.3

1.6
14.8

2.7
14.7

2.3
14.0

2.3
13.5

2.5
13.2

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
a/ Calculations based on 2010-HICES and 2015-HICES. Actual data: 2015. Nowcast: 2016-2021. Forecasts are from 2022 to 2024.
b/ Projection using annualized elasticity (2010-2015) with pass-through = 0.87 based on GDP per capita in constant LCU.
Note: Growth projections reflect limited available information, and are subject to revision as better data becomes available.

MPO

35

Oct 22GABONKey conditions andchallenges

Table 1

2021

Population, million

2.3

GDP, current US$ billion

19.5

GDP per capita, current US$

8558.8International poverty rate ($2.15)

a

2.5
a

8.1

a

31.2

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

a

38.0

School enrollment, primary (% gross)

b

139.9

b

66.7

Total GHG emissions (mtCO2e)

20.4Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2017), 2017 PPPs.
b/ WDI for School enrollment (2011); Life expectancy(2020).

Gabon’s economy is gradually recovering
despite being impacted by the war in
Ukraine. Food and fuel prices have been
partially contained by subsidies but inflation is increasingly impacting households. Supported by high oil prices, thefiscal balance is expected to turn to a surplus in 2022. Increased subsidies, however, would limit the opportunities createdby higher commodity prices for rebuilding
external and fiscal buffers. While poverty
would slightly decrease over the medium
term, rising living costs may increasehousehold vulnerability.

Thanks to efforts to reduce emissions andpreserve its vast rainforest, Gabon is a net
carbon absorber and a leader in net zero
emission initiatives. It has a rich ecosystemwith extensive endowments of fertile land,
coastal riches and fisheries. However, despite its economic potential, the country is
struggling to translate resource wealth into
sustainable and inclusive growth.
Structural reforms are needed to reduce
long-term vulnerability to external priceshocks and raise living conditions. Key areas for reform include removing barriersfor entrepreneurs, diversifying exports,
strengthening social safety protection, andimproving human capital outcomes. Despite significant investments in the construction of roads and other infrastructure,
Gabon still faces a critical infrastructure
gap, representing a key barrier to private
sector-led growth. With a small but young
and fast-growing population, Gabon faces
the challenge of investing in human development to meet labor market needs andmove from a resource-based growth model to one centered on human capital.
Efforts to improve governance and fiscal
policy, especially those leading to increased public financial management efficiency, higher transparency in natural resource management, and rationalized tax
expenditures, would create the fiscal spaceneeded to invest in sustainable development and poverty reduction.

FIGURE 1 Gabon / Real GDP growth, fiscal balance, andpublic debt
Percent

Public debt, % of GDP (lhs)Real GDP growth, % change (rhs)
Fiscal balance, % of GDP (rhs)

80

60

40

Gabon’s GDP grew by 1.5 percent in 2021,
thanks to booming services, manganese,and forestry sectors. The recovery picked up
in 2022Q1, driven by a rebound in oil production following the lifting of OPEC+ quotas. On the demand side, growth has been
driven by exports and private investment.
Higher commodity prices lowered the fiscal deficit to 1.8 percent of GDP in 2021.
A revised 2022 budget law was adopted
by Parliament, reflecting higher oil priceand public spending. Preliminary data for
2022Q1 indicate an increase in revenues
and current spending, compared to thesame period in 2021. The additional revenue is being used to pay for subsidies andrebuild deposits at the Bank of Central
African States (BEAC). A decrease in thedebt-to-GDP ratio was recorded in 2021.
Gabon’s debt continues to accumulate outstanding arrears but remains sustainable.
Thanks to higher commodity prices, thecurrent account deficit narrowed to 5.2
percent of GDP in 2021 with sharply higher exports in 2022Q1 (y-o-y). Imports also
increased but to a lesser extent, improving
the external balance in 2022Q1.
Higher global prices bumped up headline
inflation to 4.3 percent y-o-y at end-June
2022. Monetary policy has been tightened tocontain inflationary pressures and support
the exchange rate peg. Following a 25 basis
points increase in November 2021, theBEAC further increased the policy rate by 50
basis points to 4 percent on March 28, 2022.
It also decreased its weekly liquidity

FIGURE 2 Gabon / Actual and projected poverty rates andreal GDP per capita

Percent

100

Recent developments

Poverty rate (%)

Real GDP per capita (constant million LCU)

8

60

2.90

6

50

2.80

4

40

2.70

2

30

2.60

0

20

2.50

-2

10

2.40

-4

0

20
2.30
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

0

-6
2010

2012

2014

2016

2018

2020

2022e

International poverty rate
Upper middle-income pov. rate

2024f

Sources: Official government data and World Bank calculations. Notes: e = estimate, f = forecast.
MPO

Source: World Bank. Notes: see Table 2.

36

Oct 22Lower middle-income pov. rate
Real GDP pc

injections from CFAF 250 billion to CFAF 160
billion in April 2022. The asset quality of thebanking system is reportedly stable, reflecting the impact of temporary forbearance
measures implemented by COBAC (the regional supervisor) up to June 2022.
Despite the ongoing recovery, the
COVID-19 crisis is being deeply felt. It hasplunged thousands into poverty and foodinsecurity, with the poverty rate standingat 33.9 percent in 2021. The war in Ukraine
is further pushing the population into distress, most notably through higher prices.
While food and energy subsidies are stillin place, continuous price increases are increasingly impacting vulnerable households but also the middle class. For the
more than 85 percent of households that
consume bread, rice, and vegetable oil as
the main staple foods, for which the global
supply chain has been disrupted, price increases could severely impact poverty.

Outlook
Growth is projected to reach 2.7 percent
in 2022 and 2.9 percent on average in

2023-2024, driven by good performancesin the oil, mining and wood sectors.
However, growth could be compromised
if the authorities’ commitment to fiscal
consolidation, structural reforms, andeconomic diversification fails to materialize. Also, delays in negotiations with anoperator have led to a temporary stoppage of an oil field and could result ina lower oil production in 2022. The shareof households living on less than US$6.85
per day is expected to slightly decline to
32.9 percent in 2024, still above the prepandemic poverty rate.
While decreasing, commodity prices
would remain high and are expected tocontinue improving the fiscal balance,turning it into a surplus of 1.2 percent of
GDP in 2022. Despite the authorities’ commitment to fiscal consolidation and rationalize non-priority expenditure, increased
subsidies would contribute to higher
spending. Containing subsidies may provechallenging in a context of growing household vulnerability due to high global foodand energy prices. Yet, the fiscal balanceis expected to increase gradually over the
medium term, and public debt is projected
to decline as a share of GDP.

TABLE 2 Gabon / Macro poverty outlook indicators

The current account deficit is projected towiden gradually in the medium term
mainly due to lower oil and manganese exports in the context of a slowdown in global recovery. Meanwhile, imports are expected to increase in view of government spending ahead of the upcoming electoral period. Albeit gradually
reducing, FDI inflows are expected toremain high.
Policy hesitancy in the lead up to the2023 presidential elections could delay diversification efforts, jeopardizing growth. Weaker Chinese demand
and re-introduction of OPEC+ quotas
represent risks to Gabon’s outlook.
Tightening global financing conditions could also add to fiscal pressures. A protracted war in Ukraine
could further disrupt international
trade and sustain high food prices.
Outbreaks of new COVID-19 variants
could compromise economic recovery, given the slow vaccination
progress. Upside risks include improved fiscal and external balances
resulting from higher-than-expectedinternational oil prices.

(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

2019
3.9
0.9
6.1
21.5
14.0
21.5

2020
-1.8
-2.0
5.5
-16.7
10.1
-16.7

2021
1.5
-1.4
3.2
9.2
-1.0
31.9

2022f
2.7
-0.1
1.0
9.2
6.0
8.3

2023f
3.0
0.9
2.2
2.2
6.3
3.3

2024f
2.9
1.2
2.4
3.6
5.5
4.3

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

4.2
7.9
6.8
2.3

-1.9
5.9
-2.2
-2.8

2.9
10.2
3.1
1.6

2.7
4.8
3.0
2.2

3.0
3.9
3.1
2.7

2.9
4.0
3.3
2.5

Inflation (Consumer Price Index)

1.0

1.6

1.1

3.5

3.2

2.5

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-0.9
9.0

-6.0
8.4

-5.2
7.5

0.9
6.0

-1.8
5.0

-2.9
3.8

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

1.4
59.8
3.6

-2.1
77.4
1.2

-1.8
65.8
0.9

1.2
58.3
3.8

2.5
58.8
5.3

2.7
56.0
5.3

2.5
8.2
31.3

2.9
9.4
33.6

3.0
9.6
33.9

3.0
9.5
33.8

2.9
9.3
33.4

2.8
9.1
32.9

4.1
15.6

1.3
14.3

2.2
13.9

-0.2
13.5

-0.3
13.0

-0.5
12.2

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 = 1 (High (1)) based on GDP per capita in constant LCU.

MPO

37

Oct 22

THE GAMBIA
Table 1

Key conditions andchallenges
2021

Population, million

2.5GDP, current US$ billion

2.0

GDP per capita, current US$

805.7

International poverty rate ($2.15)

a

13.4
a

44.6

a

81.2

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

a

35.9

School enrollment, primary (% gross)

b

103.5

b

62.4

Total GHG emissions (mtCO2e)

3.2Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2015), 2017 PPPs.
b/ Most recent WDI value (2020).

Real GDP is estimated to decelerate to 3.5
percent in 2022, from 4.3 percent in
2021, owing to the spillover effects of thewar in Ukraine. Downside risks stemfrom a protracted war, including recession in advanced economies, disruption in
the supply chains, fiscal slippages and fallin remittances inflows The pace of poverty
reduction is expected to remain slow, reflecting weak per capita GDP growth andhigher food prices.

The Gambia faces a multidimensionalfragility trap, as low economic diversification, over-reliance on low-productivity agriculture and tourism – which reflects a limited job-creating private sector– compound limited economic opportunities for women, environmental degradation, and vulnerability to climate change.
Private sector development remains hindered by an unconducive business climate, persistent governance weaknesses,
dominance of SOEs, and low and volatile
public and private investments. These
factors lead to low capital accumulation,
weak productivity, and limited structuraltransformation of the economy and contribute to higher poverty rates and curtail
human capital development. High population growth, low access to services,and food insecurity compound humandevelopment challenges. The country has
made progress in macroeconomic stabilization, but more progress is needed toachieve deeper reforms. A 2019 debt restructuring helped exit debt distress inearly 2020, but The Gambia remains athigh risk of debt distress and the expiration of the debt deferral will increasedebt service costs from 2025.
These weaknesses have been exacerbatedby the COVID-19 outbreak and war in
Ukraine, which have increased economic
vulnerabilities, mainly via higher foodand energy commodity prices, with lower

economic growth and larger fiscal and external deficits. Inflation reached doubledigits in 2022 for the first time in two
decades, driven by food and energy prices,while The Gambia has limited fiscal andmonetary policy buffers to mitigate the impact on the poor. Data from the 2020
household survey showed that poor
households spent 65 percent of their income on food – over 10 percentage points
higher than non-poor households – andthe food price spike in April 2022, reaching
15.5 percent, thus exposing the poor to therisk of sliding deeper into poverty.

Recent developments
Growth is projected at 3.5 percent (0.6
percent per capita) in 2022, from 4.3 percent (1.3 percent per capita) in 2021, as
higher commodity prices and supply disruptions weigh on the economy. The deceleration is driven by agriculture andindustry, due to high commodity andfertilizer prices, supply disruptions,flooding, and weak remittances. Services
are expected to accelerate, driven bybanking, albeit with a slow recovery
in tourism due to the rising cost ofliving in partner countries. Driven by
food and transportation, inflation accelerated to 12.3 percent in July 2022. Higher import prices were met with increased
subsidies for fuel, fertilizer, and grains,resulting in larger fiscal and external
deficits. Without subsidies, prices would
have been at least two times higher foroil and fertilizers.

FIGURE 1 The Gambia / Fiscal balance and public debt

FIGURE 2 The Gambia / Actual and projected poverty rates
and real GDP per capita

Percent of GDP

Poverty rate (%)

Percent of GDP
2

90

Real GDP per capita (constant LCU)

100

29000

90

80
70
60
-2

70

27000

60

26000

50

50
40

28000

80

0

-4

40

25000

30

24000

20

30

23000

10

20

-6
2019

2020

2021

Public external debt
Overall fiscal balance (rhs)

2022f

2023f

0

2024f

22000
2010

2012

2014

2016

2018

International poverty rate
Upper middle-income pov. rate

Public domestic debt
Primary fiscal balance (rhs)

Sources: The Gambian authorities and World Bank estimates.

Source: World Bank. Notes: see Table 2.

MPO

38

Oct 22

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

Revenues were lower than expected due
to lower tax on international trade andgrants, leading to a downward revisionof public expenditures. With increased
grants, the fiscal deficit is projected to
decline, although remaining high at 3.7
percent of GDP in 2022 (from 4.6 percent
in 2021.) Public debt (both domestic andexternal) is expected to decline to 79 percent of GDP in 2022 from 83.8 percent in
2021. Nevertheless, the Gambia remains
at high risk of debt distress.
With rising import prices and fallingtransfers, the current account deficit isexpected to widen to 11.8 percent of
GDP in 2022, from 8.8 percent in 2021.
Monetary policy was tightened by raising the policy rate by 1 percentage pointin May and September 2022 respectively,
to 12 percent, to curb inflation.
Using the international poverty line of$2.15 (in 2017 PPPs), poverty is expected
to marginally decline from 11.07 percent
in 2021 to 10.90 percent in 2022. The
slower pace of poverty reduction ispartly due to the fallout from the war
in Ukraine.

OutlookAs the effects of the conflict in Ukraine
fade away, growth is projected to average
4.7 percent (1.8 percent per capita) in
2023-24, supported by increased activity
in all sectors. Services and agriculture are
expected to continue to grow, assuming
respectively higher tourist inflows, as advanced economies recover, and favorable
rainfalls. Public infrastructure programs
and stronger remittances to support private investment in construction will sustain growth in industry. Inflation is projected to gradually slowdown and average
7.8 percent in 2023-24, as global food prices
start to ease. Private and public consumption, and investment are projected to remain high in the medium term, given
economic recovery and public infrastructure programs. The fiscal deficit is projected to narrow and average 2.4 percent
of GDP in 2023-24, supported by decreasing current spending and subsidies,
improved expenditure monitoring and

TABLE 2 The Gambia / Macro poverty outlook indicators

revenue administration, as part ofplanned fiscal consolidation efforts. Public debt is projected to remain on a downward trend at around 72 percent of GDP in
the medium term, supported by fiscal consolidation. The CAD is projected to decline
while remaining high, averaging 10 percent of GDP in 2023-24, as the expected recovery in exports will be outpaced by import growth, driven by economic recovery
and strong domestic demand.
Rising food prices will limit the abilityof vulnerable households to increase
their already weak incomes. Ongoing reforms such as the expansion of cashtransfer programs are expected to cushion the negative distributional effects ofinflation, although these effects are intensified by low per capita growth. Extreme poverty incidence is expected tocontinue declining, falling to 10 percent
by 2024, as the effect of external shocks
fades. However, the recent floods of Julyand August 2022 are likely to undermine
the pace of poverty reduction – and highlight the vulnerability of the poor tosuch climatic shocks.

(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

2019
6.2
4.0
14.6
13.0
-6.3
-0.2

2020
0.6
-1.2
31.3
61.0
-49.9
12.2

2021
4.3
3.5
-7.9
27.1
4.4
19.7

2022e
3.5
3.3
2.8
22.8
10.0
22.0

2023f
4.0
4.0
3.9
26.3
12.7
26.1

2024f
5.5
4.1
3.7
11.9
12.0
10.8

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

6.2
-0.5
14.8
6.2

0.6
11.0
8.2
-5.0

4.3
4.7
10.4
2.0

3.5
2.0
7.0
2.9

4.0
2.8
6.8
3.3

5.5
3.2
7.0
5.8

Inflation (Consumer Price Index)
Current Account Balance (% of GDP)

7.1
-6.1

5.9
-3.8

7.4
-8.8

11.6
-11.8

9.0
-10.3

6.5
-9.8

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-2.5
83.0
0.6

-2.2
85.9
1.0

-4.6
83.8
-1.6

-3.7
79.4
-1.1

-2.6
75.8
-0.4

-2.1
70.2
0.1

10.8
40.0
77.6

11.7
41.2
78.7

11.1
40.5
78.1

10.9
40.2
77.8

10.6
39.5
77.4

10.0
37.9
76.5

7.7
20.2

6.0
20.1

4.0
20.4

3.2
21.0

3.1
21.7

3.0
22.3

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Med (0.87)) based on GDP per capita in constant LCU.

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39

Oct 22

GHANAKey conditions andchallenges

Table 1

2021

Population, million

31.7

GDP, current US$ billion

76.5

GDP per capita, current US$

2411.5International poverty rate ($2.15)

a

25.3
a

48.9

a

78.5

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

a

43.5

School enrollment, primary (% gross)

b

103.4

b

64.3

Total GHG emissions (mtCO2e)

15.2Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2016), 2017 PPPs.
b/ Most recent WDI value (2020).

Following a rebound in 2021, growth has
moderated in 2022 and macro fundamentals have deteriorated, with inflation
reaching its highest level in 18 years,
forex reserves and the value of the cedi
falling sharply, and Ghana losing accessto the Eurobond market. As a result, thegrowth momentum has slowed further,debt sustainability metrics have worsened
considerably, and inflation has pushed
many Ghanaians into poverty.

Over 2010-19, GDP growth fluctuated between 2.7 and 6.5 percent, reflecting the
economy’s dependence on natural resources and exposure to external shocks.
Macroeconomic management was likewise
uneven, triggering regular fiscal crises. The
economy is not sufficiently diversified:gold, cocoa, and oil exports accounted formore than 82 percent of all goods exports
over 2019–2021, with a limited contribution of manufacturing. Meanwhile,
Ghana’s growth has not created sufficientjob opportunities for the growing and increasingly young population, and labor
has continued to move out of agriculture
but mostly toward low value-added services, and some manufacturing.
The COVID-19 pandemic interrupted
Ghana’s strong growth trend and amplified the preexisting fiscal risks. While
Ghana weathered the COVID-19 shock relatively well – growth slowed in 2020 but
remained positive – significant macroeconomic imbalances resulted from highly accommodating fiscal policy.
Ghana’s mounting debt stock and related
financing needs are cause for concern withpublic debt-to-GDP consistently in excess
of 70 percent since 2020. Fiscal consolidation has been slower than expected and thecountry has lost market access, with rating
agencies repeatedly downgrading its sovereign debt. To meet its financing needs
the Government has turned to expensive

domestic borrowing which has increased
debt vulnerability as well as the banking
sector’s exposure to sovereign risk, putpressure on domestic interest rates, andcrowded-out private sector borrowers.

Recent developments
In the first quarter of 2022, GDP grew by
3.3 percent, year-on-year, down from 3.6
percent growth over the same period in
2021. Non-oil growth slowed down significantly (from 5.3 to 3.7 percent), with agriculture and services underperforming. On
the demand side, growth was dragged
down by high inflation, high interest rates
and strict public expenditure controls, asrevenues underperformed.
Fiscal pressures have remained high. Overthe first half of 2022, the fiscal deficit
reached 5.6 percent of GDP, well above theGovernment’s 3.9 percent target. Revenues
underperformed, as the flagship e-levy
faced delays and major implementation
challenges. As of end-June 2022, public
debt reached 66.5 percent of GDP (which
is projected to reach over 80 percent at theend of 2022) and interest payments
amounted to 54.4 percent of revenues overthe first half of the year. The authorities
have begun discussions with the IMF on a
possible program.
Inflation rose to 31.7 percent y-o-y (an18-year high) in July 2022. The impact ofsoaring global commodity prices (Ghana
imports 40 percent of its fertilizers from
Russia) has been compounded by the depreciation of the cedi which has lost more

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

FIGURE 2 Ghana / Actual and projected poverty rates andreal GDP per capita

Percent, percentage points
25

Poverty rate (%)

20

90

15

80

10

70

5

60

0

50

-5

40

-10

30

-15

20

-20

10
2019

2020

Gov. cons.
Inventories
Statistical disc.

Real GDP per capita (constant LCU)

100

2021

2022

Exports
Private cons.
GDP

2023

2024

6000
5000
4000
3000
2000
1000

0

0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

GFCF
Imports

Sources: Statistical Service and World Bank.

International poverty rate

Lower middle-income pov. rate

Upper middle-income pov. rate

Real GDP pc

Source: World Bank. Notes: see Table 2.

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40

Oct 22

than 35 percent against the US dollar yearto-date in 2022. The Government and the
Bank of Ghana (BoG) have sought todampen inflationary expectations by cutting discretionary expenditures and raising the monetary policy rate (MPR) to 22
percent and banks’ primary reserve requirements from 12 to 15 percent.
The performance of the banking sector has
been mixed. While the banks are well capitalized, non-performing loans remained
high at 14.1 percent in June 2022, compared to 17 percent in June 2021. Also, inthe first half of 2022 credit to the private
sector grew very slowly (at 3 percent).
Although the trade balance was in surplus as of end-June 2022, thanks to highoil and gold receipts, the overall current
account recorded a deficit (1.5 percent ofGDP) due to investment income outflows
and net services account payments. With
FDI inflows also taking a dip, the stockof gross international reserves declined
by US$2 billion in the first half of 2022,
to 3.4 months of imports.
Currency depreciation and high inflation
have driven up the cost of living, putting
considerable strain on household budgets
and particularly for the poor who devote
more than half of their budget to food.
Farmers have been affected by increases
in the prices of fertilizer and other inputs. Poverty reduction is expected tohave slowed and the “international
poverty” rate is estimated at 20.5 percent
in 2022 which is 0.5 percentage points
lower than in 2021.

Outlook
Growth is expected to slow to 3.5 percent
in 2022; and to decelerate further in 2023 as
macroeconomic instability and corrective
policy measures dampen aggregate demand. High inflation and elevated interest
rates will keep private consumption andinvestment growth below pre-pandemic
levels. With exports held back below prepandemic levels by supply constraints,
growth is expected to slow further to 2.7
percent in 2023 and remain muted in 2024,
before recovering to potential over the
medium term. On the supply side, agriculture growth will remain modest because of high input prices and a diseaseaffecting cocoa trees, industrial output
growth should slow as oil and gas production continues to face technical difficulties, and services growth will be impacted by the erosion in the purchasing
power of consumers.
Reflecting low revenue and mounting interest payments, the fiscal deficit will remain high in 2022 (7.9 percent of GDP) andTABLE 2 Ghana / Macro poverty outlook indicators

beyond. Indeed, improvements are projected to take place gradually with contributions from revenues and expenditures,notably on focused on tackling tax exemptions and containing energy sector implicit
subsidies. Public debt should stabilize
around 100 percent of GDP in the mediumterm, before starting to come down.
The main risks to the outlook include delays in the conclusion of an agreementwith the IMF and an intensification ofmacroeconomic vulnerabilities (such asadditional contingent liabilities in the energy and financial sectors, and un-anchoring of inflationary expectations).
Debt sustainability could be threatenedby insufficient access to financing, insufficient fiscal adjustment, large interest
rate increases, and further currency deprecation. Sizable domestic debt rollover
needs will put pressure on the alreadyelevated domestic interest rates.
International poverty incidence is projected to decrease only marginally, from20.5 to 20 percent by 2024, consistent
with the muted growth outlook. In the
shorter term, poverty is expected to increase slightly, notably because of therecent increase in electricity and water
tariffs. This increase, while necessary,comes on the heels of rising food prices
and does not address the regressive nature of the subsidies.

(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

2019
6.5
13.8
5.4
-10.0
12.7
15.9

2020
0.5
-1.0
10.1
1.8
-50.7
-54.5

2021
5.4
0.8
82.1
5.8
69.1
113.8

2022f
3.5
4.4
-14.8
26.1
10.4
20.0

2023f
2.7
5.0
-7.5
19.2
11.4
23.8

2024f
3.5
4.6
2.9
24.0
11.1
25.8

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

6.5
4.7
6.4
7.6

0.8
7.3
-2.5
0.7

5.3
8.4
-0.8
9.4

3.4
2.2
3.8
3.8

2.7
2.2
2.4
3.2

3.6
3.2
3.7
3.6

Inflation (Consumer Price Index)

7.9

10.4

10.0

28.6

22.5

14.4

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-2.7
0.7

-3.2
1.6

-3.7
2.0

-5.8
0.4

-4.5
2.0

-5.2
2.3

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-7.2
61.2
-1.6

-14.7
74.4
-8.4

-11.4
76.6
-4.1

-7.9
104.6
-0.6

-9.2
99.7
-0.9

-9.0
101.8
-0.2

21.4
42.4
73.5

21.9
43.2
74.2

21.0
41.8
73.0

20.5
41.1
72.4

20.4
40.8
72.1

20.0
40.3
71.7

16.5
150.7

23.6
139.7

-3.8
141.9

0.9
134.9

2.3
127.9

1.4
120.2

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Med (0.87)) based on GDP per capita in constant LCU.
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Oct 22

GUINEA

Key conditions andchallenges

Table 1

2021

Population, million

13.5

GDP, current US$ billion

16.2

GDP per capita, current US$

1198.6

International poverty rate ($2.15)

a

13.8
a

46.6

a

86.8

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

a

29.6

School enrollment, primary (% gross)

b

100.8

b

62.0

Total GHG emissions (mtCO2e)43.4Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ Most recent WDI value (2020).

Mining and the continued post-pandemic
recovery are expected to boost growth to
4.6 percent in 2022, with limited impacts
from Ukraine conflict. The fiscal deficit isexpected to widen to around 2.5 percent
of GDP, reflecting higher capital spending while public debt would decline to37.1 percent of GDP. Mining-related FDI
is expected to sustain growth. Downside
risks include a prolonged political transition and delayed structural reforms.

Growth averaged 6.2 percent during
2017-21 (3.3 percent per capita), buoyed by
the mining sector (bauxite, gold) and low
fiscal deficits (2.5 percent). Weak miningsector linkages to the rest of the economy,
including through employment, mean economic growth has limited impacts onpoverty reduction and shared prosperity.
The national poverty rate declined from48.5 percent in 2014 to 43.7 percent in 2018/19, equivalent to a growth elasticity ofpoverty of 0.47. However, the annualized
consumption growth of the bottom 40
percent of the population was negative,
suggesting that economic growth duringthat period was not pro-poor; and about
32 percent of the population suffered deprivations in education, health, and access to basic infrastructure in 2018. Basedon COVID-19 surveys, about 35 percentof the population experienced severe foodinsecurity in 2021.
Guinea has exports dominated by few
products (e.g., bauxite and gold) and concentrated in few markets, hence is exposed
to commodity price volatility. The mining
boom and high inflation affect competitiveness of other sectors through an appreciating local currency, hampering economic diversification. Guinea has low levels ofhuman capital, weak institutional capacity, and widespread gender gaps in education, earnings, agricultural productivity,and political representation. Governance

FIGURE 1 Guinea / Debt, fiscal deficit, inflation

Recent developments
Growth accelerates to 4.6 percent in 2022
(1.9 percent per capita) due to higher mining growth (bauxite, gold) and continued
recovery of the non-mining sector. Operations of Rusal, a Russian conglomerate that
accounts for 7 percent of Guinea’s bauxite
exports, have not been significantly disrupted by global sanctions. Inflation is projected to accelerate slightly, from 12.6 percent in 2021 to 12.8 percent in 2022, due tohigher food prices and supply disruptions(both domestic and external), disproportionally affecting the poorest and threatening food security. The external price pressures are partially offset by appreciationof the Guinean franc, the government’s repayment of central bank advances earlier
in the year, and the non-reliance on central
bank financing.

FIGURE 2 Guinea / Actual and projected poverty rates andreal GDP per capita
Percent

Percent
45

challenges are substantial. Other constraints include weak tax revenues, an underdeveloped financial sector, and large
infrastructure gaps.
Recent progress with digitalizing economic and government transactions expanded
mobile financial accounts and helped sustain economic activity during the pandemic; yet further digital expansion is neededin addition to structural reforms to boost
diversification and inclusive growth.
Guinea is at moderate risk of external debt
distress with limited space to absorb
shocks, with the government committed tomaintain prudent borrowing that maximizes concessional financing.

Poverty rate (%)

1340

Real GDP per capita (constant million LCU)

100

7.00

90

11

6.00

80

35
9

30

70

5.00

60

4.00

25

7

20

5

40

3.00

3

30

2.00

50

15
10

20
1

5
0

0

-1
2019

2020

Debt % of GDP (lhs)20212022 eFiscal defcit (rhs)2023 f

1.00

10

0.00
2007 2009 2011 2013 2015 2017 2019 2021 2023

2024 f

International poverty rate
Upper middle-income pov. rate

Inflation (CPI, rhs)

Source: World Bank.

Source: World Bank. Notes: see Table 2.

MPO

42

Oct 22Lower middle-income pov. rate
Real GDP pc

The overall fiscal deficit (including
grants) will widen to 2.5 percent of GDP
in 2022, as capital expenditures resume
on delayed infrastructure projects. Tax
revenues should increase by 0.8 percentage points, to 13.2 percent of GDP, due
to better tax administration and mining
tax collection. Subsidies (electricity andpetrol) remain high due to low electricity
tariffs and higher hydropower generation, though lessened by the increase inpetrol pump prices mid-year. The debtto-GDP ratio is set to decrease from 45.5
percent of GDP in 2021, to 37.1 percent
in 2022, reflecting repayment of domestic
bonds and securitized debts.
The current account balance flips from asurplus of 3.7 percent GDP in 2021, to a
deficit of 4.8 percent in 2022, due to asmaller trade surplus. Mining-related FDI,
the main source of external financing, isprojected to increase from 3.9 percent of
GDP in 2021 to 9.0 percent in 2022. Estimated international reserves decline
slightly in 2022 while the currency appreciated in nominal terms.
Based on GDP growth projections, extreme
poverty incidence (percent of the population living below the international poverty
line of US$2.15 per capita per day, 2017

PPP) is estimated to decrease by 0.7 percentage points between 2021 and 2022.
However, some nonpoor vulnerable populations who are close to the national poverty line (5,006,362 GNF per capita per year
in 2018/19) are likely being pushed intopoverty due to rising food prices. Indeed,
the national poverty rate is estimated toincrease by 1.4 percentage points between
2021 and 2022, disproportionately affecting rural populations who spend over 60
percent of their total expenditure on food
(54 percent for the urban population).

OutlookMining-related FDI will continue to drive
growth. As services and non-mining recover, growth is projected to accelerate to
5.5 percent on average in 2023–2024. Commensurately, extreme poverty is projected
to decline by 0.7 percentage points annually in 2023-2024 though this will require
redistribution mechanisms from the mining sector to vulnerable populations andinclusive growth in services. Investments
in energy and transport could support construction growth. Better provisioning of

TABLE 2 Guinea / Macro poverty outlook indicators

fertilizer stocks could improve agricultural
productivity, but higher fertilizer prices
may dampen earnings. Poor transportation infrastructure quality is likely to keep
driving up food prices, reducing household food purchasing power, and, consequently, undermining poverty reduction.
The fiscal deficit initially falls as tax reforms bear fruit in 2023, then increases as
mining-related investment growth persists
into 2024. Inflation is expected to remain
high, yet decline gradually to 11.3 percent during 2023-2024. Uncertainties
around the political transition could slow
implementation of reforms to strengthen
governance and financial performance ofthe public electricity utility, potentiallyreducing private investment and slowing
social spending.
The current account deficit is projected todeteriorate to about 7.5 percent of GDP in
2023-2024, reflecting a modest trade surplus that is outweighed by net outflows
for non-factor services and transfers. The
trade surplus is expected to persist due tostrong mining exports that will outweighhigher imports for infrastructure and foodcosts. FDI inflows could also increase, reflecting planned new mining projects, andsupport financing requirements.

(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

2019
5.6
5.4
-6.3
-8.4
-0.6
-9.5

2020
4.9
3.5
42.9
-8.4
33.5
39.4

2021
3.9
5.5
-1.3
-15.8
14.0
7.2

2022e
4.6
4.1
9.7
44.4
3.1
11.9

2023f
5.3
5.0
16.2
28.6
18.3
25.2

2024f
5.6
4.7
12.1
34.9
13.6
20.3

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

6.5
7.6
7.2
5.5

4.9
-1.6
18.5
-2.7

3.9
5.4
4.2
3.0

4.6
5.1
4.5
4.5

5.3
5.0
5.7
5.0

5.6
5.0
5.9
5.5

Inflation (Consumer Price Index)

9.5

10.6

12.6

12.8

12.3

10.3

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-10.8
9.1

-13.6
10.7

3.7
3.9

-4.8
9.0

-6.3
11.4

-8.8
10.1

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-0.7
33.9
0.0

-3.2
42.4
-2.3

-1.8
45.5
-0.7

-2.5
37.1
-1.3

-2.3
38.1
-1.2

-3.2
40.7
-2.2

13.2
45.1
85.9

12.6
44.2
85.1

12.3
43.7
84.8

11.9
43.0
84.3

11.2
41.6
83.5

10.5
40.4
82.7

4.4
9.7

2.4
10.0

4.4
10.1

4.0
10.2

3.9
10.4

3.8
10.7

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Low (0.7)) based on GDP per capita in constant LCU.

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Oct 22

GUINEA-BISSAU
Table 1

2021

Population, million

2.0GDP, current US$ billion

1.7

GDP per capita, current US$

855.1

International poverty rate ($2.15)

a

21.7
a

56.8

a

87.2

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

a

34.8

School enrollment, primary (% gross)

b

118.7

b

58.6

Total GHG emissions (mtCO2e)

4.3Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ WDI for School enrollment (2010); Life expectancy(2020).

The Ukraine war has compounded inflationary pressures and is harming growth,causing the pace of poverty decline toslow. Election costs will increase debt
while the removal of irregular government workers will help fiscal consolidation. Medium-term growth will improveas infrastructure investments come online. The outlook is subject to downside
risks from continued inflationary pressure, shocks to international cashew
prices, political instability from legislative elections, and climatic shocks.

Key conditions andchallenges
Exports of raw cashew nuts, which account for 90 percent of merchandise exports, drive economic performance.
Cashew production is dispersed amongsmallholder farmers, whose income supports overall economic activity. Poverty remains widespread, with high levels of inequality and increasing rural-urban disparities, while human development indicators remain among the lowest in theworld, and low access to basic services
contribute to exclusion and marginalization. Despite a gradual post-pandemic economic recovery, rising prices from the war
in Ukraine are a concern, especially for thepoor who spend nearly 60 percent of income on food, exposing them to the risk of
sliding deeper into poverty.
Guinea-Bissau lacks the enabling environment for private sector-led growth due topoor infrastructure, low levels of humancapital, and poor public services. This situation is compounded by strong elite competition for rents and weak public administration. The investment climate is notconducive to business activity as firms
and households struggle to obtain accessto finance, and the functioning of markets
is undermined by the absence of public
investments in fundamental economic
services, and public goods. Infrastructure
is in a poor state, but there have been recent mostly donor financed investments
to improve this.

Political economy factors limit the transparency of the SOE sector in Guinea-Bissau. This is especially the case with thenational electricity and water utility company (EAGB), which accrued substantial
public debt through government guaranteed letters of credit, worth 0.7 percent of
GDP to cover arrears. These are activatedon a three-month basis. A lack of transparency makes identifying contingent liabilities difficult, which increases the fiscal
risks in a country with very little debt absorption capacity for additional shocks.
High non-performing loans continue tomake the banking sector another possible
contingent liability.

Recent developments
Economic activity is projected to slow to
3.5 percent in 2022 (1.5 percent in per capita terms) from 5 percent in 2021. On the demand side, this is driven by inflation that
may average 7.5 percent in 2022, as aspillover from the Ukraine war, reducing
private consumption. On the supply side,
the cashew campaign is marred by problems with shipping and fuel shortages affecting domestic haulage. As of August
2022, cashew exports were 39 percent ofexports in August 2021.
An unexpected fall in cashew prices towards the end of the campaign with substantial quantities in Bissau still to be exported, as well as an increase in oil andfood import prices, means the current account deficit (CAD) will increase from 4.5
percent in 2021, to 6.5 percent in 2022. The

FIGURE 1 Guinea-Bissau / Evolution of main economic
indicators

FIGURE 2 Guinea-Bissau / Actual and projected poverty
rates and real GDP per capita

Percent
8

Poverty rate (%)

Percent
4

6

70

0

-2

60

-2

-4

50

-4

42000040000040-6-644000080

0246000090

24Real GDP per capita (constant LCU)

100

380000

30

-8

-8

20

-10

-10

10

2015 2016 2017 2018 2019e 2020e 2021p 2022p 2023p 2024p

36000003400002010

GDP growth
Primary fiscal balance
Current account balance (%of GDP, rhs)
(rhs)

2012

2014

2016

2018

International poverty rate
Upper middle-income pov. rate

Source: World Bank.

Source: World Bank. Notes: see Table 2.

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44

Oct 22

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

fiscal deficit is expected to fall from 5.7
percent to 4.5 percent, driven by the removal of irregular government workers.
Guarantees to EAGB and December elections, to be financed by borrowing, will
increase debt to 81 percent of GDP despite an expected increase in budgetary
support from donors.
Monetary and exchange rate policies aremanaged by the Central Bank of West
African States (BCEAO). Its reserves declined to 5.2 months of imports in June
2022, from 5.5 months in 2021, due to higher energy prices and food imports causedby the Ukraine crisis. To counter inflationpressures, the BCEAO raised rates for liquidity calls (2 percent to 2.5 percent) andthe marginal lending window (4 percent to
4.5 percent) in June and September 2022.
Using the international poverty line of $2.15(2017 PPPs), poverty is projected to decline
from 19.9 percent in 2021 to 19.2 percent in
2022. This 0.7pp decline, compared to a
1.2pp decline between 2020 and 2021, corresponds to over 4,000 fewer people inpoverty, compared to over 14,000 fewer
between 2020 and 2021. The decline in thepace of poverty reduction is driven by the
fallout from the war in Ukraine.

OutlookReal GDP growth is projected to be 4.5 percent in the medium-term from high forecasted cashew production and prices, andas road and energy infrastructure investments come online. Inflation will continue
to be high, but will converge towards 3
percent in 2024, as the spillover from the
Ukraine war eases. The outlook is subject
to substantial downside risks stemmingfrom political instability, climate shocks,
uncertainty surrounding EAGB and nonperforming loans in the financial sector.
The CAD will fall to 5 percent of GDP in
2023 and 4.6 by 2024, as inflationary pressure eases and cashew exports increase.
External financing needs will continue to

TABLE 2 Guinea-Bissau / Macro poverty outlook indicators

be met by concessional loans and grants
in 2023. The authorities are committed tomedium-term fiscal consolidation, which
includes enhanced management of fiscal
risks, notably from SOEs, revenue mobilization and control of the wage bill. The
primary deficit is projected to decline to 1.8
percent by 2024, with the public debt-toGDP ratio expected to fall to 75 percent, as
energy projects come online and partiallymitigate EAGB arrears.
Rising food prices will limit the ability ofvulnerable households to increase their real incomes, especially agricultural households who are amongst the country’s poorest. An increase in formal remittances of
36 percent on average between Januaryand June 2022, compared to the same period in 2021, and price controls on basic food items (rice, sugar and wheat
flour) are likely to mitigate spillover effects from the war on household wellbeing. Consequently, the poverty rate is
expected to continue gradually falling toreach 17 percent in 2024.

(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

2019
4.5
1.4
16.6
33.8
8.7
14.1

2020
1.5
-1.0
9.0
7.3
-2.5
-1.0

2021
5.0
3.0
-0.4
20.7
5.3
5.9

2022e
3.5
1.0
5.1
17.8
5.5
7.2

2023f
4.5
2.5
8.2
11.2
6.0
6.4

2024f
4.5
2.5
10.7
7.5
7.0
6.2

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

4.5
5.8
4.2
3.5

1.5
-0.2
-0.2
3.5

5.0
4.4
3.5
5.9

3.5
4.6
3.6
2.6

4.5
5.1
4.4
4.0

4.5
5.1
4.4
4.0

Inflation (Consumer Price Index)
Current Account Balance (% of GDP)

0.3

1.5

3.3

7.5

5.0

3.0

-8.5

-2.7

-3.2

-6.5

-5.0

-4.6

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-3.9
64.0
-2.8

-9.6
76.5
-8.0

-5.7
78.5
-4.1

-4.5
80.4
-3.1

-4.3
78.4
-2.2

-3.9
76.0
-1.8

20.6
55.6
86.9

21.1
56.2
87.0

19.9
54.7
86.5

19.2
54.1
86.3

18.4
53.0
85.8

17.0
51.7
84.9

0.7
7.9

1.0
8.0

1.2
8.2

1.2
8.4

1.3
8.6

1.1
8.9

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Med (0.87)) based on GDP per capita in constant LCU.

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45

Oct 22KENYAKey conditions andchallenges

Table 1

2021

Population, million
GDP, current US$ billion

110.6

GDP per capita, current US$

2011.7

International poverty rate ($2.15)

a

29.4
a

59.6

a

85.7

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

Kenya’s pre-pandemic growth was robust,
averaging 4.8 percent (2015 – 2019) and has
staged a strong recovery from the pandemic. Per capita real GDP increased by about
one-third in the decade prior to the pandemic, contributing to the reduction inpoverty (using $2.15 a day poverty line)from 36.7 percent in 2005 to 26.5 percent
in 2019 (Figure 2). Although, vast differences across counties persist, the gap between the richest and the poorest populations remains high. Further, the economy
has not been generating enough good jobs,
with only about 30 percent of the workforce in non-agricultural wage jobs. In addition, Kenya is likely to see its largest everyouth cohorts joining the workforce overthe next decade, adding about one million
new workers per year. This could generatea demographic dividend for Kenya andboost living standards, but only if there
are enough high-quality jobs and earning
opportunities. A narrow export base andweak regulatory and business conditions
have hindered trade and investment
growth. Kenya’s economy relies on rainfed
agriculture and is vulnerable to climatechange and extreme weather events.
Meeting Kenya’s jobs and growth challenge
requires a shift away from the economy’s recent reliance on debt-financed public investment and towards more private investment
to sustainably generate jobs and income
growth. This structural transformation

55.0

a

40.8

School enrollment, primary (% gross)

b

103.2

b

67.0

Total GHG emissions (mtCO2e)

85.3Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent official value (2015), 2017 PPPs.
b/ WDI for School enrollment (2016); Life expectancy(2020).

Kenya’s growth is projected to moderate
to 5.5 percent in 2022 due to global supply constraints following the war in
Ukraine and poor agricultural performance. The poverty rate is projected to return to its pre-pandemic trend, however,the prolonged drought in the north-east
and increase in cost of living has caused
hardship in affected areas. Policies including climate-smart agriculture are key toreduce vulnerability to climate change
and increase productivity.

would require eliminating economic distortions (including those which arise froman uneven playing field between the private sector and a large and inefficient SOE
sector), strengthening regulatory and business environment (including by tacklingcorruption and excessive red tape), andimproving access to finance (including by
reducing government’s domestic borrowing requirements). Adopting climatesmart agriculture is key to building resilience to climate change vulnerabilities.
Further, ensuring increased access to better
quality and more productive jobs, alongside job creation, will also help prevent potential increases in inequality.

Recent developments
Kenya’s strong rebound from the pandemic in 2021 continued in Q1-2022, with real
GDP growing by 7.5 percent in 2021 (Figure 1) and 6.8 percent in Q1-2022, driven
by broad-based increases in services andindustry. This was supported by a pickup
in private sector credit, lower COVID-19
infections, high commodity prices, a recovery in tourism, and steady public investment. Agricultural output, however, contracted due to inadequate rains. Economic
activity has weakened since Q2-2022 due
to adverse impacts of the war in Ukraine,continued drought conditions, and a dropin business confidence.
Shocks from global commodity markets
and the regional drought pushed up domestic prices in 2022, leading to tighteningof monetary policy. Inflation rose to

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

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

Percent, percentage points
8

Poverty rate (%)

6

Real private consumption per capita (constant LCU)

100

16000090

1400008012000070
4260100000

50

80000

40

60000

30

40000

20

0

20000

10
0

-2
2020
Agriculture

2021
Industry

2022

2023
Services02005 2007 2009 2011 2013 2015 2017 2019 2021 2023

2024International poverty rate
Upper middle-income pov. rate

Real GDP growth

Sources: World Bank and Kenya National Bureau of Statistics.

Source: World Bank. Notes: see Table 2.

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46

Oct 22Lower middle-income pov. rate
Real priv. cons. pc

8.5 percent in August 2022, the highest
since June 2017 and above the CBK upperbound target of 7.5 percent, even as priceincreases were partially muted by government subsidies on fuel, electricity andmaize. To contain inflation, CBK raised thepolicy rate by 50 basis points to 7.5 percent
in May 2022. High frequency monitoringof households shows a rise in food insecurity, most severely in rural areas, and overhalf of households reduced their food consumption in June 2022.
Further, most households reported an increase in prices of essential food items andover half of rural households reported being unable to access a core staple food suchas beans or maize.
The government reduced the budget
deficit in FY22 through revenue measuresand expenditure moderation. Revenue increased to 17.4 percent of GDP in FY22
from 15.6 percent in FY21, reflecting a reduction of tax expenditures through harmonization of exemptions, and improvements in tax administration. While fiscalpressures increased from drought response and fuel subsidy, government reduced development spending by rationalizing the public investment program,containing the FY22 deficit at 6.2 percent ofGDP, below its target of 8.2 percent.

OutlookReal GDP is projected to grow by 5.2 percent on average in 2023–24, above the prepandemic average of 4.8 percent. The baseline assumes continued commitment to themulti-year fiscal consolidation by the incoming government and a return to favorable weather. Inflationary pressures are expected to remain elevated in H2-2022 due
to ongoing domestic drought conditions,depreciation of the Kenya shilling, andsecond-round effects of higher fuel andelectricity prices but will decline in 2023
partly due to adequate rains boosting
agricultural performance.
Real per capita incomes are expected togrow, and the decline in poverty is expected to resume its pre-pandemic trend, declining by under a percentage point eachyear. The $2.15 poverty rate is expected
to fall from 26.7 percent in 2021 to 25.8
percent in 2022, below its pre-crisis level of 26.5 percent (2019). However, rural

TABLE 2 Kenya / Macro poverty outlook indicators

areas may experience a decline in welfare,should the drought persist.
The government expects to reduce the fiscal
deficit to 4.4 percent of GDP in FY23/24,
mainly through higher revenue collection.
A smooth government transition and theplanned fiscal consolidation are expected toboost investor confidence and reduce government’s domestic borrowing needs, allowing banks to increase lending for private
sector investment. Progress on fiscal consolidation will be essential to achieve a
durable, private sector-led recovery and torestore fiscal space for pro-poor spending
and investment in human capital. Phasingout the untargeted fuel subsidy will create
fiscal space for productive public spending.
There remain significant downside risks.
Fiscal slippages including due to fertilizer
and fuel subsidies could undermine medium-term fiscal consolidation and crowdout private sector credit. Unexpectedly
prolonged recession in Europe could undercut ongoing recovery in exports andtourism. On the upside, a cooling of
geopolitical tensions and stronger economic growth in China would boost global
growth prospects and have positive
spillovers for Kenya.

(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

2019
5.2
5.0
5.6
4.5
-3.2
1.8

2020
-0.3
-2.5
3.0
2.5
-8.8
-9.2

2021
7.5
6.2
5.7
10.9
12.9
18.9

2022e
5.5
5.2
6.6
7.0
6.2
6.8

2023f
5.0
5.0
5.2
7.5
7.4
8.3

2024f
5.3
5.1
5.0
8.1
7.8
8.3

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

5.4
2.7
4.0
6.7

0.4
4.6
3.3
-1.8

7.1
-0.2
7.2
9.5

5.5
1.3
3.5
7.4

5.0
3.8
3.6
5.8

5.3
4.2
4.3
5.9

Inflation (Consumer Price Index)

5.2

5.3

6.1

7.3

6.4

5.5

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-5.2
0.9

-4.8
0.5

-5.5
0.2

-6.0
0.6

-5.5
0.8

-5.0
0.9

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-7.5
59.6
-3.3

-7.8
66.0
-3.9

-8.2
67.9
-3.5

-7.2
67.8
-2.3

-5.2
66.2
-0.3

-4.2
63.5
0.4

26.5
57.5
85.0

27.8
58.5
85.3

26.7
57.6
85.0

25.9
57.0
84.8

25.1
56.4
84.6

24.4
55.8
84.4

20.2
33.2

8.7
31.6

6.9
31.8

3.4
31.9

3.3
32.1

4.0
32.4

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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.

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Oct 22

LESOTHO

Key conditions andchallenges

Table 1

2021

Population, million

2.2

GDP, current US$ billion

2.3

GDP per capita, current US$

1084.9International poverty rate ($2.15)

a

32.4
a

54.6

a

81.0

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

a

44.9

School enrollment, primary (% gross)

b

120.9

b

54.8

Total GHG emissions (mtCO2e)

2.5Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2017), 2017 PPPs.
b/ WDI for School enrollment (2017); Life expectancy(2020).

Following a prolonged recession during
2019-2020 and low growth in 2021,
Lesotho’s economy is expected to recoverand grow by 2.6 percent in 2022. The outlook is subject to downside risks stemmingfrom political instability, inflationary pressures exacerbated by the Ukraine war, notably for food and fuel, new COVID-19
variants, and climate shocks. Poverty is expected to remain around 35 percent, using
the international poverty line. Unemployment levels remain elevated.

Lesotho’s economy is struggling. RealGDP contracted by an average 0.7 percent
annually between 2017 and 2019 before the
sharp contraction of 8.4 percent in 2020
due to the COVID-19 pandemic. Despitesome recovery to 1.3 percent growth in
2021, uncertainties surrounding politicalstability, fiscal outlook and the future of
the COVID-19 pandemic continue to pose
downside risks to growth.
Recent governments have been unstable,characterized by weak coalitions and frequent cabinet reshuffles. This has delayed
reform implementation. National elections
are scheduled for October 7, 2022. SACU
revenues, which accounted for about halfof government revenues and grants in
2020, are declining, while government expenditures are rising. Consequently, thefiscal deficit in 2022 should further widen
from the 4.5 percent of GDP registered in
2021. As at September 8 2022, 45.2 percentof the population had been fully vaccinated against COVID-19, and this is one of
the highest vaccination rates in the region.
High food and fuel prices due to the war in
Ukraine, combined with weak consumer
demand, have been slowing recovery fromthe pandemic. Elevated inflationary pressures are expected to entailn more aggressive monetary policy responses, which
negatively affect economic growth.
Even before the pandemic, Lesotho grappled with high poverty and unemployment.

The unemployment rate was 22.5 percent(strict definition), and 38.3 percent in 2019(expanded definition – including discouraged job seekers). About 36 percent of the
population lives on less than US$2.15/person/day (using the new 2017 PPP) and inequality is high by global standards withthe gini coefficient at 44.9 (2017 data).
Food insecurity is rising – 521,000 people are affected in 2022/23 compared with
470,000 in 2021/22 – due to increased foodprices, decreased income from livestock
products, and job losses. Remittancesfrom migrant workers (about 22 percent
of GDP in 2019) - a crucial safety net in
Lesotho - is yet to recover to pre-pandemic levels, exacerbating the food insecurity
and poverty situation.

Recent developments
Economic recovery is expected to pick up
momentum, underpinned by the recovery in sectors like construction, mining,
manufacturing, business services, andpublic administration, which recorded
double-digit growth rates in the fourth
quarter of 2021. Exports of diamonds
and textiles have recovered attributable
to global economic recovery. GDP is projected to grow by 2.6 percent in 2022.
The fiscal stance is expected to deteriorate with the deficit rising to 7.7 percent
of GDP in 2022 as government expenditure remains elevated.
The annual inflation rate, which averaged
6.0 percent in 2021, has accelerated to 9.8
percent in July 2022, driven by higher food

FIGURE 1 Lesotho / Real GDP growth at factor costs andcontributions to real GDP growth

FIGURE 2 Lesotho / Actual and projected poverty rates andreal GDP per capita

Percent
10

Poverty rate (%)

Real GDP per capita (constant LCU)

90

10600

80

10400

70

10200

60

10000

50

9800

-10

40

9600

-15

30

9400

20

9200

10

9000

5
0
-5

-20
-25
2019

2020
Agriculture
Services

2021

2022

2023

0

2024

8800
2017

2019

2021

International poverty rate
Upper middle-income pov. rate

Industry
Real GDP Growth

Sources: WDI and staff estimates.

Source: World Bank. Notes: see Table 2.

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48

Oct 22

2023
Lower middle-income pov. rate
Real GDP pc

and energy prices. To contain inflationarypressures, the Central Bank of Lesotho(CBL) increased the policy rate five times(between November 2021 and July 2022)
from 3.50 to 5.50 percent (cumulative 200
basis points) per annum. The current account deficit is expected to double in 2022 to
7.4 percent of GDP, primarily due to higher
prices and volumes of imports of goods andservices, relative to exports.
Given the limited recovery, poverty levels are estimated to have remained at
36 percent in 2021. Other factors – suchas rising food and energy, prices andslow labor market recovery fromCOVID-19-related lockdown measures –limit poverty reduction. The government
has introduced a M30 million (approximately US$2 million) monthly fuel subsidy from July to December 2022 tocushion motorists and commuters fromthe high costs of energy prices. The
fuel subsidy has reduced and fixed theprices of petroleum products until December 2022. Recurring climatic hazards
that adversely affect Lesotho’s agricultural

sector's performance exacerbate the challenge, increasing food insecurity, particularly among the rural population. Government is also supporting the sector in
the form of 80 percent and 70 percent government subsidies on seeds
and fertilizers respectively.

OutlookReal GDP is projected to grow by
2.3 percent in 2023, with an acceleration to 2.9 percent by 2024 as activity in the Lesotho Highlands Water Phase-II Project peaks. The services sector is also expected to drive growth, and this will benefit frompositive spillovers from the construction sub-sector. Agriculture is expected to continue to register positive
growth on account of envisaged good
harvests for crops. The diamond industry is also expected to recover in acontext of higher international prices.

TABLE 2 Lesotho / Macro poverty outlook indicators

The annual inflation rate is expected to remain elevated, as it is projected to average
7.0 percent in the medium-term. The fiscal
position is projected to improve over the
medium term as the deficit is expected to fall to 4.8 percent and 3.1 percent
in 2023 and 2024 respectively. Tax revenues are expected to improve, boosted
by the recently introduced revenue-mobilization measures, including the enactment of tobacco and alcohol products
levy. The public debt-to-GDP ratio is expected to decline from 62.0 percent of
GDP in 2021 and stabilize at 56.4 percent of GDP in the medium-term largely
attributed to higher nominal GDP.
Poverty rates are expected to trend
downwards over the medium term, but
remain higher than in 2019 as increases
on food and energy prices as well as a
fragile economic environment constrain
budgets and livelihoods of lower income
households. The US$2.15/person/day (in2017 PPP terms) poverty rate is projected to fall slightly to 35.2 percent in 2022
and reach 34.1 percent by 2024.

(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

2019
0.9
2.6
7.8
-16.2
-13.3
-1.4

2020
-8.4
4.8
19.7
-49.2
-17.5
-0.5

2021
1.3
-2.0
-5.3
-4.0
38.1
15.0

2022e
2.6
3.6
-0.5
41.3
1.6
6.8

2023f
2.3
3.6
-1.1
50.1
2.2
10.3

2024f
2.9
3.6
-1.5
39.6
2.2
10.3

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

0.9
0.8
-5.9
3.5

-8.4
8.3
-12.0
-8.6

1.3
2.3
7.5
-0.9

2.6
2.4
4.8
1.9

2.3
2.4
5.0
1.3

2.9
2.4
5.0
2.1

Inflation (Consumer Price Index)

5.2

5.0

6.0

7.5

7.0

6.5

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-2.9
1.5

-1.4
1.3

-3.7
1.1

-7.4
1.1

-4.3
1.2

-6.9
1.3

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-8.8
48.2
-7.7

-0.8
50.7
0.1

-4.5
62.0
-3.5

-7.7
57.1
-6.8

-4.8
56.0
-4.0

-3.1
56.0
-2.4

32.7
54.9
81.1

36.0
58.6
83.8

35.8
58.5
83.7

35.2
58.0
83.4

34.8
57.6
83.1

34.1
56.6
82.3

0.0
30.5

-2.6
28.4

0.8
27.7

1.6
27.6

1.6
27.7

1.6
27.9

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Med (0.87)) based on GDP per capita in constant LCU.

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Oct 22

LIBERIA

Key conditions andchallenges

Table 1

2021

Population, million

5.2

GDP, current US$ billion

3.5

GDP per capita, current US$

677.4

International poverty rate ($2.15)

a

27.6
a

60.6

a

88.9

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

a

35.3

School enrollment, primary (% gross)

b

85.1

b

64.4

Total GHG emissions (mtCO2e)

16.4

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2016), 2017 PPPs.
b/ WDI for School enrollment (2017); Life expectancy(2020).

After contracting by 3.0 percent in 2020
due to the COVID-19 pandemic, Liberia
experienced a strong economic recovery in
2021. Growth recovered to 5.0 percent but
is expected to slow to 3.7 percent in 2022,
reflecting increased global uncertainties
and commodity price shocks. Despite rising global prices, inflation in Liberia has
been moderate since 2021. The macroeconomic outlook is promising for the medium
term, subject to downside risks and uncertainties associated with the war in Ukraine
and the 2023 elections.

Liberia faces core constraints to development that include low levels of human andphysical capital, as well as overall low productivity and economic efficiency. The
country’s narrow revenue base hinders its
capacity to boost spending, and its highly
concentrated export structure—consisting
primarily of mining and agricultural products—makes it vulnerable to commodity
price fluctuations.
Growth is uneven and boom-bust cycles
complicate economic management. Afterthe civil war, the economy grew steadily,at 7.4 percent on average, from 2004 to
2013. This period of sustained growth
was followed by successive exogenous
shocks: the Ebola outbreak, the collapse
in iron ore and rubber prices, the economic impact of the drawdown of United
Nations peacekeeping forces, and the
COVID-19 pandemic. Consequently, theeconomy contracted by 0.4 percent on average from 2014 to 2020. As a result,the country’s international poverty rateis estimated to have increased to 33.2
percent by 2020, wiping out much of
the gains made post-conflict when poverty decreased from 53.4 to 25.9 percent
between 2007 and 2014. Non-monetary
poverty indicators also lag the rest of
the region and continued unequal accessto productive assets, infrastructure, andmarkets mean regional and gender disparities in the country are exacerbated.

The main macroeconomic policy challenges include securing fiscal space toboost public investment while maintaining
debt sustainability, enhancing the businessenvironment and enabling greater accessto credit, and facilitating the resolution of
non-performing loans.

Recent developments
After contracting by 3.0 percent in 2020 due
to the COVID-19 pandemic, growth recovered to 5.0 percent in 2021. The rebound was
driven by improved external demand, higher prices for Liberia’s main exports, and theresumption of normal domestic activity.
However, growth slowed in the first half of2022, even if mining and construction continued to perform well. In agriculture, rubber and cocoa production dipped by 13.5
percent and 27 percent, year-on-year, respectively. In industry, the production ofiron ore, gold, and cement increased, reflecting firmer international prices and an uptick
in construction activity. However, services
growth fell, as reflected in the decline in beverages and electricity production.
Despite higher global fuel and food prices,
inflation remained contained in 2021 (7.9
percent) and during the first half of 2022
(7.1 percent). By July 2022, inflation had
moderated further to 6.5 percent thanks to
the Central Bank of Liberia’s (CBL) restrictive monetary policy, supported by thenominal appreciation of the Liberian dollar. Indeed, the CBL maintained the policy
rate well above inflation, currently at 15
percent, down from 20 percent in August

FIGURE 1 Liberia / Real GDP growth and sectoral
contributions to real GDP growth

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

Percent, percentage points

Poverty rate (%)

6120

Real private consumption per capita (constant LCU)
250

5

100

4
3

200

80
150

2

60

1

100

0

40

-1
-2

50

20

-3

0

-4
2019
Agriculture

2020

2021e
Industry2022f
Services2023f

02007 2009 2011 2013 2015 2017 2019 2021 2023

2024f

Real GDP growth

Sources: Liberian authorities, IMF, and World Bank staff.

International poverty rate

Lower middle-income pov. Rate

Upper middle-income pov. Rate

Real priv. cons. pc

Source: World Bank. Notes: see Table 2.

MPO

50

Oct 22

2021. While non-food inflation remainedin double digits, largely driven by energy
prices, food inflation (including alcoholand beverages) decelerated. Despite thecontained food inflation, poverty is expected to have increased to 34.6 percent mostly
due to negative growth in private consumption per capita.
Liberia’s fiscal position improved in 2021,
thanks to domestic revenue gains andspending consolidation. The gains in revenue were led by taxes on incomes andprofits and international trade while efforts to contain the wage bill continued.
During the first seven months of 2022, thegovernment has kept its expenditures
within the limits of revenue collected. As
of July 31, 2022, the fiscal deficit was 0.2
percent of GDP (on a cash basis). Public
debt declined from 55.0 percent of GDP in2020 to 52.7 percent in 2021.
The current account deficit widened in 2021,
mainly driven by trade dynamics. The phasing out of trade restrictions in 2021 resulted
in imports rising faster than exports. However, in the first half of 2022, the value of exports increased by 26.5 percent, year on year,
well above the 8.6 percent increase in the value of imports thanks to a significant increasein gold prices. By end-June 2022, the grossexternal reserves stood at US$607 million(4.0 months of imports).

Outlook
Growth is expected to slow to 3.7 percent in 2022 but average 5.2 percent over2023-24. The deceleration in 2022 reflects
increased global uncertainties and commodity price shocks. Over the mediumterm growth is expected to be driven by
expansion in the mining sector (underpinned by still high commodity prices
and the expansion of a major mining
project), agriculture and manufacturing,and recovery in services. Agriculture andmanufacturing, the main drivers of diversification, are expected to play a pivotal role in making growth more broadbased, inclusive, and sustainable, thanks
to structural reforms, including in key
enabling sectors (such as energy, trade,transportation, and financial services).
Improvements in the domestic food supply, cheaper electricity, reduced trade
costs, and better public services are expected to boost the country’s competitiveness and contribute to more robust
economic growth.
Despite the recovery, private consumption has lagged GDP growth and poverty
is projected increase to 34.6 percent by
end-2022 before decreasing slightly to

TABLE 2 Liberia / Macro poverty outlook indicators

33.8 by 2024, 2.7 percentage points above
the rate prior to the pandemic.
Macroeconomic fundamentals are expected to remain healthy. Inflation is projected to remain low and stable, averaging
7.2 percent per year in 2022-24. As longas inflation is maintained stable, Liberianhouseholds will retain their purchasing
power and it is projected that by 2023
poverty rates will slightly decrease. The
fiscal deficit is projected to widen to 4.4
percent in 2022 but improve in the medium term with reforms aimed at improving domestic resource mobilization andconsolidating expenditures. The current
account is projected to narrow to 15.8
percent of GDP in 2022 and reach 15.0
percent by 2024, thanks to the recovery
in mining and agriculture. Gross external
reserves are projected at US$691 million(4.0 months of imports) in 2022, downslightly from US$700 million (4.2 monthsof imports) in 2021.
The outlook is subject to significant downside risk and uncertainties. The lingering effects of the war in Ukraine and the 2023 elections could pose significant risks to the outlook. The 2023 elections could trigger spending pressures on the budget, widening fiscal
deficits, and as well cause businesses to postpone business decisions, thereby hindering
economic recovery and 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

2019
-2.5
-2.8
4.0
-7.8
1.6
0.4

2020
-3.0
-1.9
-11.6
-7.3
1.2
8.1

2021
5.0
1.2
-3.7
29.8
15.4
1.3

2022f
3.7
1.5
-1.2
8.9
2.0
2.9

2023f
4.7
3.0
-9.2
11.1
2.7
3.1

2024f
5.7
3.0
-2.5
10.8
3.0
3.2

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-2.4
0.2
1.0
-5.7

-3.0
2.4
0.2
-8.8

5.0
1.9
16.3
3.6

3.7
3.0
7.1
2.8

4.7
4.8
4.3
4.8

5.7
5.2
5.8
6.1

Inflation (Consumer Price Index)
Current Account Balance (% of GDP)

27.0
-20.5

17.4
-16.3

7.9
-17.6

7.8
-15.5

8.7
-15.3

5.2
-15.0

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-5.6
48.5
-5.0

-3.7
55.0
-2.5

-2.9
52.7
-1.9

-4.4
51.4
-2.7

-3.3
51.4
-1.7

-3.4
53.8
-1.7

31.1
64.7
90.8

33.2
66.7
91.6

33.9
67.5
91.8

34.6
68.2
92.1

34.1
67.8
92.0

33.8
67.2
91.7

2.2
6.7

0.6
6.8

3.0
6.6

3.0
6.4

3.0
6.2

2.9
6.0

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 = 0.7 (Low (0.7)) based on private consumption per capita in constant LCU.

MPO

51

Oct 22MADAGASCAR
Table 1

Key conditions andchallenges

2021

Population, million

28.4

GDP, current US$ billion

14.5

GDP per capita, current US$

509.1

International poverty rate ($2.15)

a

80.7
a

92.4

a

98.2

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

a

42.6

School enrollment, primary (% gross)

b

134.1

b

67.4

Total GHG emissions (mtCO2e)

39.2Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2012), 2017 PPPs.
b/ WDI for School enrollment (2019); Life expectancy(2020).

After rebounding by 4.4 percent in 2021,
real GDP growth is projected to slow to
2.6 percent this year, dragged by natural
hazards and the effects of the Ukraine
war. Growth would average 4.4 percent
in 2023-24, boosted by a mining sector
recovery. Significant risks include dwindling fiscal space amid policy support tocontain inflation, new waves of
COVID-19, and implementation delays ofcritical reforms to restore macroeconomic
stability and promote inclusive growth.
Poverty is projected to exceed 80 percent.

Development prospects in Madagascar
continue to be hampered by the country’s
low growth potential and exposure tofrequent, deep, and persistent shocks.
Policy uncertainty and low levels of investment in physical and human capital
have led to low productivity growth andslow economic transformation and job
creation. Furthermore, social and economic outcomes have been affected bymultiple climate shocks including locusts,
cyclones, and droughts.
The COVID-19 shock reversed more thana decade of modest gains in poverty reduction. The pandemic hit Madagascar
when the economy had not yet sufficiently recovered from prolonged political unrest during 2009-12, triggering one of the
deepest recessions in Madagascar’s history, with GDP contracting by 7.1 percent
in 2020. Economic activity had started torecover in 2021 but was interrupted in
2022 by new waves of COVID-19, a series of climate shocks, and higher inflation of food and fuel stemming from the
Ukraine war. As a result, the poverty rate
is now projected to remain slightly above
80 percent over the next couple of years,
compared with an average of 42 percent
for the rest of Sub-Saharan Africa.
Beyond the need to scale up the responseto recent shocks including through improving budget execution of social spending, accelerating growth and reducing

poverty will require urgent reforms supporting private investment, connectivity
infrastructures and access to basic services, all of which require deep governance and institutional reforms.

Recent developments
GDP growth rebounded by 4.4 percent
in 2021, equaling its pre-pandemic rate
in 2019 and higher than the 3.5 percent
growth achieved in 2013-19 after the
return to constitutional order. Growth
was driven by a recovery in the industrial and services sectors, namely mining (taking advantage of high nickel
prices), construction and public works,
and telecommunication, banking, andbusiness services. Sluggish growth in
the agriculture sector, which employs
two-thirds of the labor force, reflected
several years of weak crop production
due to the impact of natural disasters(locusts, cyclones, and droughts), exacerbated by deteriorating infrastructure.
Preliminary estimated damages in agriculture during Q1 2022 amount to
US$660 million (4.8 percent of GDP),
with nearly half of it attributable to theloss of crops and agricultural assets. Net
exports and private consumption dominated growth on the demand side.
Inflation reached 6.9 percent (headline) in
June 2022, up from 5.9 percent during
the same period last year, partly fueledby the effects of the war in Ukraine on
domestic prices and compounded by cyclones and drought.

FIGURE 1 Madagascar / Real GDP growth and contributions
to real GDP growth

FIGURE 2 Madagascar / Actual and projected poverty rates
and real GDP per capita

Percent

Poverty rate (%)

30

105

20

100

10

Real GDP per capita (constant LCU)
88000086000084000095

82000090

8000000

78000085-1076000080

740000-2075720000

-30

70
2000

2004

Gov. cons.
Inventories
Statistical disc.

2008

2012
Exports
Private cons.
GDP

2016

2020

2024

70000068000065

6600002005 2007 2009 2011 2013 2015 2017 2019 2021 2023

GFCF
Imports

International poverty rate
Upper middle-income pov. rate

Sources: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment.
MPO

Sources: World Bank. Notes: see Table 2.

52

Oct 22Lower middle-income pov. rate
Real GDP pc

The budget deficit narrowed to 2.8 percent
of GDP in 2021 from 6.1 percent in 2020,
mainly supported by low budget execution rates. Foreign-financed investment
was far lower than expected (under 50 percent), and the government substantially
underperformed relative to overly optimistic tax revenue previsions amid delayed disbursement of current grants in
2021 and some base effects from 2020. In
2020 and 2021, access to emergency lending allowed the government to increase
public spending. However, in 2022 fiscal
performance is likely to be challenged by
the recent government policies to offset the
impact of higher inflation. For example,
public sector wages and the minimum private sector wage were recently raised. Other fiscal measures to mitigate the impact
of inflation include the temporary cappingof the domestic price of selected first necessity products (e.g., rice, edible oil, sugar, flour, gas), and subsidies on rice and cement imports. The central bank of Madagascar (BFM) raised borrowing costs forthe second consecutive quarter following
the August hike of its benchmark interest
rate by 90 basis points to 8.9 percent.
The poverty rate is projected to remainhigh at 81.6 percent in 2022. About 37
percent of households in the south, a region heavily affected by droughts, arefacing acute food insecurity, with many

households being forced to sell assets andaccumulate debt to feed themselves, or
migrate in search for food.

Outlook
Growth is projected to decelerate to 2.6
percent in 2022, before accelerating toaround 4.4 percent in 2023-24 boosted bya mining sector recovery buoyed by higher
commodity prices (mainly nickel). The deceleration in 2022 mainly reflects the adverse impact of the war in Ukraine on theeconomic prospects of Madagascar’s main
trading partners, resulting in weaker export demand, deteriorating terms of trade,and slower recovery of tourist arrivals despite the government’s easing of entry procedures and requirements. In addition,
lower public investment is expected todrag growth in 2022 as about 230 construction companies have been facing significant payment arrears from the Road Fund,which disincentivizes further participationin public contracts. The ensuing degrading
quality of roads will adversely impact thetransport and tourism industries. Moreover, frequent power outages have resulted in a rise in insecurity, affecting households and small and medium firms. Moreover, the 2022 agricultural sector output

TABLE 2 Madagascar / Macro poverty outlook indicators

will suffer as four major tropical storms hit
Madagascar during Q1.
Considering the slow economic recovery
projected in 2023-24, poverty measured at
the international poverty line ($2.15 PPP) is
expected to remain above 80 percent as rising food and fuel prices erode household
purchasing power.
Risks are significant. Growth could further
decelerate if the war in Ukraine leads topersistently higher energy prices, a weakereconomy in Madagascar’s main trade partners, and tighter global liquidity. Structural reforms to reduce trade and transport
costs and facilitate foreign investment anddomestic entrepreneurship would help lay
the foundation for more competitive andresilient growth in the medium term.
However, the window of opportunity for
their materialization may be narrowing
considering the forthcoming elections
scheduled for next year. Moreover, witha COVID-19 vaccination rate among thelowest in the world (4.5 percent of the targeted population), Madagascar’s growthprospect may not materialize if anotherwave of the pandemic hits. Finally, once
the recovery is more entrenched, Madagascar should shift towards fiscal consolidation to secure external and public debt
sustainability, including unwinding recent
fiscal measures to mitigate the impact of elevated prices on firms and households.

(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

2019
4.4
3.0
0.0
12.8
10.9
4.6

2020
-7.1
2.2
24.3
-10.3
-36.6
-16.6

2021
4.4
1.9
15.5
3.0
11.6
7.4

2022e
2.6
1.9
6.3
0.6
4.5
4.5

2023f
4.2
3.4
2.5
9.8
4.0
5.4

2024f
4.6
3.6
3.7
9.2
5.4
6.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

5.1
5.9
6.8
4.2

-9.4
-1.4
-29.5
-6.9

4.7
1.5
13.2
4.3

2.6
1.8
5.0
2.4

4.2
2.8
5.6
4.5

4.6
2.8
5.9
5.1

Inflation (Consumer Price Index)
Current Account Balance (% of GDP)

5.6
-2.3

4.2
-5.5

6.2
-4.9

8.0
-5.3

8.1
-5.3

6.4
-5.2

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-1.6
38.7
-1.0

-6.1
49.6
-5.4

-2.8
53.8
-2.2

-3.5
55.2
-2.8

-4.5
62.2
-3.6

-5.1
69.4
-4.4

79.4
91.8
98.0

81.9
93.1
98.4

81.5
92.9
98.3

81.6
92.9
98.3

81.2
92.7
98.2

80.7
92.4
98.2

0.3
13.4

-1.8
13.4

0.4
13.5

0.3
13.4

1.4
13.9

1.7
14.6

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
a/ Calculations based on 2012-ENSOMD. Actual data: 2012. Nowcast: 2013-2021. Forecasts are from 2022 to 2024.
b/ Projection using neutral distribution (2012) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU.

MPO

53

Oct 22

MALAWI

Key conditions andchallenges

Table 1

2021

Population, million

19.6

GDP, current US$ billion

12.3

GDP per capita, current US$

627.0

International poverty rate ($2.15)

a

70.1
a

89.1

a

97.3

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

a

38.5

School enrollment, primary (% gross)

b

144.8

b

64.7

Total GHG emissions (mtCO2e)

20.0Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2019), 2017 PPPs.
b/ WDI for School enrollment (2019); Life expectancy(2020).

The economy is projected to show subdued growth in 2022 owing to weakened
agricultural performance, electricity supply disruptions, and high global commodity prices emanating from the impacts of the Russia-Ukraine war. Public
debt reached unsustainable levels in
2021 and is now being restructured.
Vulnerability to global and domesticrisks remains substantial. Poverty levels
are persistently high due to low agricultural yields and exacerbated by elevatedinflation, especially food.

Malawi’s economy continues to rely on
subsistence rainfed agriculture, which limits its growth potential, increases its susceptibility to weather shocks, and createsfood insecurity. The main export crop, tobacco, is projected to decline in the medium term, further constraining availabilityof foreign exchange. The Malawi Kwacha
remains weakened following a 25 percent
devaluation in May and continued pressure on the exchange rate. The devaluation
briefly closed the spread between the official and parallel exchange rate, but this has
widened again.
Weak macro-fiscal management has contributed to recurring and rising fiscal
deficits, which have been largely fundedby high-cost domestic borrowing. Efforts
to address limited foreign exchange with
non-concessional short-term swaps amidst
liquidity challenges have also contributed
to increased debt. Consequently, public
debt is unstainable under current policies
and without restructuring is expected tocontinue rising sharply. This reduces fiscal
space for development spending andcrowds out private sector investment.
The Russia-Ukraine war continues to impact the Malawian economy. Rising global
oil prices have contributed to the domestic
price of fuel more than doubling since February 2022. Prices of other commodities
are also rising, exerting additional pressures on already elevated prices.

Electricity supply has been erratic, owing
to underinvestment over recent years andthe sustained impacts of Tropical Cyclone
Ana, which damaged the Kapichira hydroelectric power plant – a key source ofpower. High fuel prices and the need formany companies to operate generators isincreasing production costs, in turn constraining output.
Due to recurrent weather shocks and low
GDP per capita growth, the share of the
population below the international $2.15
poverty line increased from 68 percent in2010 to 70 percent in 2019. During the last
decade, the national poverty rate, i.e., theshare of the population living on $1.20 per
day has stalled at approximately 50 percent.

Recent developments
Supported by the strong performance of
the agriculture sector, Malawi’s economic
growth increased to 2.8 percent in 2021,
from 0.9 percent in 2020. Economic activity picked up slightly, contributing toa mild recovery in the industry and services sectors. Nevertheless, the lack of
GDP per capita growth kept the share ofpeople living with less than $2.15/day at
70.6 percent in 2021.
Owing to price increases for imports because of supply side constraints on the
global market, the current account deficit
worsened to 12 percent of GDP in 2021.
Growth in export commodities remained
weak, while imports increased in 2021 driven by increased fertilizer imports to support the Affordable Input Program (AIP).

FIGURE 1 Malawi / Fiscal deficit and public debt

FIGURE 2 Malawi / Actual and projected poverty rates andreal GDP per capita

Percent of GDP
12

Poverty rate (%)

Percent of GDP
80
70

10

Real GDP per capita (constant LCU)

120

390000100

38000060
8
637000080503600006040350000
30

4

40

20
2

34000020330000

10

0

0

0
2010

2012

2014

2016

Fiscal Deficit (lhs)

2018

2020

2022

320000
2010

2024

2012

2014

2016

2018

International poverty rate
Upper middle-income pov. rate

Public Debt (rhs)

Sources: Ministry of Finance, Economic Planning and Development, World Bank.

MPO

Source: World Bank. Notes: see table 2.

54

Oct 22

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

Gross reserves declined to 0.3 months import cover by June 2022, despite a boost
from the IMF’s Special Drawing Rights(SDR) allocation in August 2021.
Poor performance in revenue, largely
driven by low disbursement of grants,
compounded by fiscal pressures fromthe pandemic and government expansionary policies, including the implementation of the AIP, contributed to
the fiscal deficit widening to 8.8 percent
of GDP in FY2022. Expenditure increases were further driven by increases in
the wage bill, debt servicing and social
benefits. Performance of development
spending was weak and continues to beundermined by high recurrent expenditure demands.
Headline inflation picked up to 24.6 percent in July 2022, driven by a constrained
domestic food supply following a disappointing agricultural season. Consequently, prices of food commodities are rising,compounded by elevated global prices forgrains and cooking oil. Food inflation hasreached 32.5 percent, its highest point
since March 2013. Rising global commodity prices have further contributed to rising domestic prices, including for fueland gas. The 25 percent devaluation of
the Malawi Kwacha against the US Dollar
in May 2022 has exerted additional inflationary pressure.

Outlook
Economic growth is projected to decline to
1.5 percent in 2022 driven by lower than
anticipated performance in agriculture
and erratic electricity supply. Exposure tonatural disasters and shocks could further
constrain economic activity.
Gross official reserves are low and performance in the coming season of major
export commodities, including tobacco, isprojected to be lower than in 2021/22. Reduced import capacity is inducing supply distortions in the domestic market,
exerting additional pressure on inflation.
In addition, global commodity prices arestill projected to be elevated over the
medium term.
The FY2023 fiscal deficit is expected towiden to 10.0 percent of GDP without significant reforms. Despite ongoing
consolidation efforts, expenditure will

TABLE 2 Malawi / Macro poverty outlook indicators

likely further rise owing to increased
recurrent spending from elevated commodity prices. Public debt, already athigh and unsustainable levels is projected to increase further due to highfiscal deficits. Non-concessional external
debt incurred to support foreign currency reserves is currently being restructured but remains a concern.
Poor performance of exports, amidst elevated global prices for most key commodities, will result in a further weakened external sector and a high current accountdeficit. A more liberalized exchange rate
regime should help improve the trade balance in the medium term, but limited diversification and declining global demand
for tobacco will contribute to a sustained
current account deficit.
The lack of sustained economic growthalong with the continuous inflationarypressures and recurrent weather shocks
will make it more difficult for the country
to find a way to reduce poverty. The
share of people living with less than
$2.15 per day is projected to remain 71
percent in 2022 and 2023. However, more
external shocks may result in further increasing poverty rates.

(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

2019
5.4
5.4
5.4
5.4
5.4
5.4

2020
0.8
0.8
0.8
0.8
0.8
0.8

2021
2.8
2.6
-1.1
0.1
2.7
0.4

2022e
1.5
1.5
-2.9
6.2
1.4
2.2

2023f
3.0
3.5
-2.0
4.2
3.1
3.4

2024f
3.4
3.4
8.2
1.6
3.7
3.8

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

6.0
5.9
7.7
5.5

0.8
3.4
1.2
-0.5

2.8
5.2
1.9
2.0

1.5
-2.3
1.0
3.3

3.0
1.7
3.7
3.3

3.4
3.1
3.8
3.5

Inflation (Consumer Price Index)

9.4

8.6

9.3

22.5

20.5

16.6

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-13.8
0.3

-11.7
0.6

-12.0
0.8

-12.9
0.8

-13.1
0.9

-13.2
1.1

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-4.4
45.3
-1.5

-6.4
52.8
-3.3

-7.1
53.5
-3.3

-8.8
58.6
-3.9

-10.0
61.9
-4.1

-9.9
66.8
-4.1

70.1
89.1
97.3

70.7
89.4
97.4

70.7
89.4
97.4

71.2
89.5
97.4

71.1
89.5
97.4

70.7
89.4
97.4

2.3
7.0

1.7
7.1

1.6
7.1

1.5
7.0

1.6
6.9

1.5
6.9

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Low (0.7)) based on GDP per capita in constant LCU.

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55

Oct 22MALI

Key conditions andchallenges

Table 1

2021

Population, million

20.9

GDP, current US$ billion

19.1

GDP per capita, current US$

917.7

International poverty rate ($2.15)

a

14.8
a

47.5

a

80.5

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

a

36.1

School enrollment, primary (% gross)

b

75.6

b

59.7

Total GHG emissions (mtCO2e)46.7

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ WDI for School enrollment (2018); Life expectancy(2020).

Insecurity and political instability limited economic growth to 3.1 percent in
2021, leaving per capita income unchanged. The recovery expected in 2022
has been dampened by regional economic
sanctions, which lasted for six months,
combined with rising food price inflation, driven by low cereal production
and higher global prices. Consequently,
the poverty rate will increase slightly in
2022. The medium-term outlook is subject to significant downside risks fromthe political transition, insecurity, andclimate-related shocks.

Mali’s economy remains under-diversified
and dominated by agriculture and low-productivity services. Manufacturing absorbs
little employment and is concentrated inagro-industries and cotton ginning, reflectinglowlevelsofcapital.Exportsaredominated by gold and cotton, exposing the economy
to commodity-price and climatic shocks.
GDP growth per capita stagnated during
the last decade limiting progress in poverty
reduction while human development indicators show mixed results.
Political instability, weak governance, andtheabsenceofthestateinremoteareasremain
the main bottlenecks for inclusive growth.
This is exacerbated by persistent insecurity,
which has expanded to central and southern
regions, increasingly disrupting agriculture
and service delivery. On January 9, 2022,
ECOWAS and WAEMU imposed sanctions,
including a trade embargo and the freezingof government assets in the region’s Central
Banks, in response to the authorities’ decision to delay elections that were scheduledfor February 2022. SanctionswereliftedonJuly 3, 2022, after the transitional government
adoptedatimetableleadingtoelectionsin2024.

Recent developments
Real GDP grew by 3.1 percent in 2021, 0.1
percent in per capita terms, but economic

activity slowed in the first quarter of 2022
due to the sanctions. Construction andmanufacturing contracted sharply, whilesome services showed resilience. GDP
growth is expected to remain positive in
2022, at 1.8 percent (but negative 0.9 percent in per capita terms), despite the
ECOWAS sanctions and persistent insecurity, reflecting a modest recovery in foodproduction and service sector resilience.
Food inflation picked up in 2021, following a drop in domestic cereal production in 2021, and continued to accelerate in 2022, averaging 12.3 percent yo-y over the period January-June 2022
(H1) as global prices rose. Inflation in thetransport sector increased by 10.9 percent
y-o-y, driven by price increases in fuels
and lubricants, which reflected the steep
rise in global energy prices.
The current account deficit (CAD)widened in 2021, to 10 percent of GDP, andwill remain high in 2022 due to elevatedoil prices. Merchandise exports (-6 percent
y-o-y) and imports (-21 percent y-o-y) declined significantly in H1-2022 due to the
ECOWAS trade embargo but are expectedto partially recover in the second half of2022 after the removal of sanctions.
Monetary and exchange rate policies aremanaged by the Central Bank of West
African States (BCEAO). Its reserves declined to 5.2 months of imports in June
2022, from 5.5 months in 2021, due to higher energy prices and food imports causedby the Ukraine crisis. To counter inflationpressures, the BCEAO raised rates for liquidity calls (2 percent to 2.5 percent) andthe marginal lending window (4 percent to
4.5 percent) in June and September 2022.

FIGURE 1 Mali / GDP growth, current account and fiscal
balances

FIGURE 2 Mali / Actual and projected poverty rates and real
GDP per capita

Percent
6

Poverty rate (%)

Real GDP per capita (constant LCU)

120

300000100

250000802000006015000040

100000

20

50000

4
2
0
-2
-4
-6
-8
-10
2019

2020

2021

2022

2023

2024

0

0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Current account balance (% of GDP)
Fiscal balance (% of GDP)GDP growth (%)

International poverty rate
Upper middle-income pov. rate

Sources: Malian government and the World Bank.

Source: World Bank. Notes: see Table 2.

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56

Oct 22Lower middle-income pov. rate
Real GDP pc

The fiscal deficit remained elevated, at 5
percent of GDP in 2021, and public debt
rose to 52 percent of GDP. Fiscal revenues
contracted sharply in H1-2022 (-12.1 percent y-o-y) due to the sanctions. In contrast, wages and security spending increased, despite limited access to the regional debt market. This was possible
through a reduction in public investment
and exceptional private sector financing.
The fiscal deficit is projected to stabilize at
5 percent of GDP in 2022 with both lower tax revenues and total public spending
relative to 2021. Financing is expected tobe mainly covered by domestic debt on theregional market. Public debt will increase
to 55.9 percent of GDP by end 2022.
The extreme poverty rate ($2.15/day 2017
PPP), estimated at 15.6 percent in 2021, isprojected to increase slightly, to 15.8 percent in 2022. Rainfall deficits in several localities and insecurity that disrupted fieldwork reduced agricultural output. The
subsequent deterioration in incomes is further increasing the exposure of poor

households to food insecurity in the centerand north. There were an estimated 1.3
million food insecure people in Q4 2021.
From January to June 2022, about 1.5 million Malians (77 percent of those targeted)benefited from food assistance. At thesame time, population displacement continues, particularly in the border areas
with Burkina Faso and Niger. At the end of
April 2022, there were over 370 thousand
registered displaced persons.

Outlook
Growth is expected to recover gradually, averaging 4 percent over 2023-24,
supported by a continued recovery offood production and services, including
hospitality. Annual inflation will accelerate in 2022 to 8 percent before normalizing towards the regional target of
2 percent by 2025. The CAD will gradually narrow as trade flows normalize

TABLE 2 Mali / Macro poverty outlook indicators

to reach 6.6 percent of GDP by 2024.
The fiscal deficit will gradually decline
and converge to the ceiling of 3 percent
by 2025, while public debt will first increase before stabilizing around 55 percent by 2024.
The extreme poverty rate is expected to
decline, by 1.4 percentage point to 14.4
percent over the same period with thenumber of poor projected to slowly decrease by an average of 50,000 people
per year.
The outlook is subject to multiple downside risks. Despite the lifting of sanctions, further delays in the electoral
timetable could trigger round(s) of economic sanctions. Other domestic risks
relate to intensified insecurity, lower appetite for Mali’s treasuries on the regional market, and climatic shocks. The
war in Ukraine, and additional monetary
tightening in the eurozone represent additional risks through elevated food andenergy prices, and debt refinancing costson the regional market.

(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

2019
4.8
3.8
4.0
6.3
2.3
5.9

2020
-1.2
1.9
4.5
-1.2
0.5
-2.9

2021
3.1
3.0
5.8
4.8
-1.0
14.1

2022e
1.8
2.0
7.1
-10.4
2.6
-2.5

2023f
4.0
3.0
4.1
7.4
5.0
4.0

2024f
4.0
3.0
2.1
8.9
5.0
4.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

4.5
4.0
3.7
5.2

-1.1
-4.8
-0.1
1.4

3.0
1.4
1.0
5.1

1.8
2.0
3.0
1.2

4.0
5.0
6.0
2.4

4.0
5.0
4.0
3.2

Inflation (Consumer Price Index)

-2.9

0.5

4.0

8.0

4.0

2.5

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-7.5
5.0

-2.2
3.1

-10.0
5.5

-7.9
4.4

-7.1
3.2

-6.6
3.1

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-1.7
40.7
-0.7

-5.4
47.3
-4.2

-5.0
51.9
-3.6

-5.0
55.9
-3.5

-4.7
55.8
-2.9

-4.0
55.3
-2.1

14.2
47.1
80.2

15.6
48.8
81.2

15.6
48.8
81.2

15.8
49.0
81.3

15.1
47.9
80.8

14.4
47.2
80.3

4.4
14.9

2.4
14.7

3.2
15.6

3.5
16.1

4.2
16.9

4.5
17.7

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 = 0.7 (Low (0.7)) based on GDP per capita in constant LCU.

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57

Oct 22MAURITANIA
Table 1

Key conditions andchallenges
2021

Population, million

4.8GDP, current US$ billion

10.0

GDP per capita, current US$

2091.9International poverty rate ($2.15)

a

6.5
a

26.2

a

66.8

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

a

32.6

School enrollment, primary (% gross)

b

100.4

b

65.1

Total GHG emissions (mtCO2e)

14.0Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2014), 2017 PPPs.
b/ WDI for School enrollment (2019); Life expectancy(2020).

After rebounding to 2.4 percent in 2021,
growth will remain constrained in 2022,
at 4 percent, as inflation, monetary tightening, and a global economic slowdown
weigh on domestic and external demand.
Poverty is expected to remain stable, amid
higher food insecurity and inflation,
while external and fiscal balances deteriorate. Growth is projected to pick up in themedium-term as gas production starts.

Mauritania’s wealth of natural resources
has elevated it to the ranks of a lower-middle income country. However, most of its
population continues to depend on agriculture and livestock for their livelihood,and social indicators continue to be among
the lowest in the world. The narrow basisof economic growth has failed to stimulate job creation, while the low labor
force participation rate, particularly
among women, has limited opportunities
for the country to reap the benefits of an
emerging demographic dividend.
Macroeconomic stability improved before
the Covid-19 pandemic, benefiting fromfavorable terms of trade and reforms to
improve fiscal sustainability. The pandemic delayed the implementation of
structural reforms, and the economy remains undiversified and reliant on theextractives sector. The macroeconomic
outlook is subject to various risks. The
protracted Ukraine crisis is having additional negative spillovers on real, fiscal
and external sectors. Sustained high oil
and food prices, combined with volatilecommodity export prices pose additionalrisks that could further slowdown economic activity and increase food insecurity. Regional insecurity in the Sahel isanother source of risk. Mauritania is also
exposed to recurring cycles of droughtsthat impact agricultural output andhousehold income.

Poverty remains high with significant spatial disparities. The last household survey
estimated the national poverty rate at 31.8
percent in 2019 with much lower levels inurban areas and coastal regions (17 percent
and 18 percent respectively) than in ruraland inland regions (46 percent and 38 percent respectively). With a low humancapital index and a high vulnerability
rate, respectively estimated at 0.38 and
44 percent, poverty is more likely to betransmitted intergenerationally.

Recent developments
Economic activity continued a positive trajectory in H1-2022. Industrial production
grew strongly supported by higher production of extractives. Services activity rebounded, with air and maritime transports
nearing their pre-pandemic levels. Inflation continued to increase, driven by highfood prices, reaching 10.6 percent in July
2022. Though international food prices
have started to fall, the decision in July
2022 to pass through global fuel prices atthe pump, by 30 percent, could result insustained inflationary pressures.
High inflation has affected household living conditions, especially in urban areas,
where imports make up a large shareof household food consumption. Higher
food prices are expected to be mitigated by a slight improvement in economic
activity, leading to a stable poverty rateof 25.9 percent in 2021 and 2022 ($US3.65 per day poverty line (2017 PPP)).
Food insecurity will likely continue to

FIGURE 1 Mauritania / Evolution of main macroeconomic
indicators

FIGURE 2 Mauritania / Actual and projected poverty rates
and real GDP per capita

Percent
8

Poverty rate (%)

Percent
0-2

6Real GDP per capita (constant LCU)

80

60000

70

58000

60

56000

-4

4

-6

2
0

-8

50

-10

40

-12

30

-14

-2

-16

-4

-18
2015 2016 2017 2018 2019 2020 2021e 2022p 2023p 2024p

54000
52000
50000
48000

20

46000

10

44000

0

42000
2008 2010 2012 2014 2016 2018 2020 2022 2024

GDP growth (%)
Primary fiscal balance (% of GDP)
Current account balance (% of GDP, rhs)

International poverty rate
Upper middle-income pov. rate

Sources: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices.
MPO

Source: World Bank. Notes: See Table 2.

58

Oct 22Lower middle-income pov. rate
Real GDP pc

threaten poor households in the remainder of 2022, as the recent increase in fuel prices will further impact staple foodprices. The decision of the Central Bankin August 2022 to increase the policy ratefrom 5 to 7 percent is yet to slow down
inflation by limiting credit growth, which
increased by 25 percent in H1-2022, exceeding its pre-pandemic level.
The fiscal balance remained in surplus
in 2021, (2.2 percent of GDP) thanks toan increase in tax and mining revenues,
and underspending on social programs.
The fiscal surplus and growth reduced
the debt-to-GDP ratio from 55.8 percent
of GDP in 2020, to 51.7 percent in 2021.
Lower revenue and higher energy subsidies eroded the fiscal surplus in H1-2022(0.11 percent of GDP, compared to 3.8
percent of GDP in H1-2021).
The current account deficit (CAD) is
widening in 2022, after reaching 8.1 percent of GDP in 2021. In H1-2022, the tradebalance deteriorated, driven by an increasein food and energy imports, which wasslightly offset by higher exports of gold as
production increased.

Outlook
The ongoing Ukraine conflict, inflationarypressures, the economic slowdown in Europe and China, and increasing global uncertainty will continue to negatively affectMauritania’s economic outlook. Economic
activity is expected to grow by 4 percent
in 2022 (1.3 percent in per capita terms).
Government spending is expected to compensate for the deceleration of private consumption in 2022 along with a rebound ingold production and services, but monetary policy tightening is required to subdue inflationary pressures. Notwithstanding high uncertainty, growth is projected
to be sustained over the medium term,with the opening of new mines, gas production starting in 2024 and the scale upof public investment. Average inflation is

TABLE 2 Mauritania / Macro poverty outlook indicators

expected to reach 8.9 percent in 2022, driven by high food and energy prices, but
to gradually fall to 4.5 percent by 2024.
Poverty is expected to decline slightly in
2023 and 2024 (to 25.4 percent), in line witheconomic activity and lower inflation.
The CAD is projected to widen to 13.8 percent of GDP in 2022, due to higher importprices, lower export prices and decelerating demand from the main trading partners (China and Europe). It is expected to
improve to 5.8 percent of GDP in 2024, as
gas exports offset lower prices for other exports. FDI related to the extractive industry should finance the current account.
Fiscal pressures will increase significantly in
2022, due to higher energy subsidies andtransfers to mitigate social effects, as the2021 surplus is projected to turn into a deficitof 3.8 percent of GDP. As the government
gradually phases out energy subsidies, andwith the beginning of gas production, thefiscal deficit is projected to narrow to 1.7 percent of GDP in 2024, putting the debt-toGDP ratio back on a downward trend.

(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

2019
5.3
2.7
1.0
23.5
16.7
11.9

2020
-0.9
2.7
9.2
4.4
-8.6
2.1

2021
2.4
2.7
26.1
39.2
-11.7
25.1

2022e
4.0
1.9
16.7
4.2
3.1
5.0

2023f
5.1
2.3
3.5
4.6
4.6
2.3

2024f
7.9
2.7
3.0
6.4
8.9
2.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

6.1
7.4
6.0
5.5

-0.1
-2.6
2.5
-0.3

0.8
-3.6
-6.6
6.4

4.0
-1.0
4.1
6.0

5.1
1.1
5.8
6.3

7.9
1.2
12.0
8.6

Inflation (Consumer Price Index)

2.3

2.4

3.6

8.9

7.1

4.5

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-10.3
-11.0

-6.9
-11.0

-8.1
-10.6

-13.8
-8.7

-9.9
-4.8

-5.8
-3.6

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

2.0
55.7
2.9

2.2
55.8
3.1

2.2
51.7
2.9

-3.8
52.0
-2.7

-3.2
51.5
-2.1

-1.7
50.4
-0.5

6.2
25.7
65.5

6.3
25.9
66.0

6.3
25.9
66.0

6.3
25.9
65.8

6.2
25.7
65.5

6.1
25.4
64.7

4.0
30.4

3.4
31.1

2.8
31.3

2.9
31.6

3.0
32.1

3.4
32.7

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
a/ Projection using point to point elasticity at regional level with pass-through = 0.7 based on GDP per capita in constant LCU.
b/ Actual data: 2014. Nowcast: 2015-2021. Forecasts are from 2022 to 2024.

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59

Oct 22MAURITIUS

Key conditions andchallenges

Table 1

2021

Population, million

1.3

GDP, current US$ billion

11.5

GDP per capita, current US$

9096.5
a

1.8

a

13.5

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

a

36.8

School enrollment, primary (% gross)

b

98.4

b

74.2

Total GHG emissions (mtCO2e)6.5Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2017), 2017 PPPs.
b/ WDI for School enrollment (2021); Life expectancy(2020).

After a muted recovery in 2021, real
GDP is projected to grow 5.8 percent in
2022. Headwinds from the war in
Ukraine hit Mauritius hard throughhigher inflation, lower tourism activity,
and a deterioration of the current account. With higher fiscal pressures, improving fiscal discipline, including
through pension reform, and avoiding thereliance on quasi-fiscal operations, are key
policy priorities. COVID-19 reversed recent gains in poverty reduction and female labor force participation.

Mauritius’ development trajectory was becoming more fragile even before the pandemic hit in 2020, causing a contractionof 14.6 percent of GDP. Interrelated structural challenges during the last decade led
to persistent fiscal deficits and a growing
public debt-to-GDP ratio. Weaknesses
stem from stagnating private investment,
loss of export competitiveness, skill shortages coexisting with high structural unemployment, rising inequality, and mountingpressure on public finances from high andincreasing social security spending driven
by an aging population. Mauritius successfully handled the COVID-19 health emergency, and the extensive state support deployed during COVID-19 effectively protected livelihoods. Yet, it came at a highcost for the country’s public finances.
Public debt spiked despite a Rs55 billion(12.3 percent of GDP) non-refundable
transfer to the government from the Bankof Mauritius (BoM) in FY2020/21, and aprevious Rs18 billion transfer (3.5 percent of GDP) under the FY2019/20 budget. Those transfers blurred the separation of monetary and fiscal policies. The
newly created Mauritius Investment Corporation (MIC), owned by the BoM, increased contingent liabilities, and further
threatens the efficacy of anti-inflationary
policies. Headwinds from the war in
Ukraine caused renewed inflationarypressures, current account deterioration,

faster rupee depreciation, and slower
growth. While recent one-off quasi-fiscal
operations have helped reduce the level of
public debt, the soundness of the fiscal policy framework has been eroded by the reliance on unconventional measures. Policy
priorities thus include sustained fiscal consolidation and better alignment between
monetary and fiscal policies.
Promoting greater labor market opportunities is a priority to achieve inclusive growth,
especially jobs for the youth and womenwith low educational attainments. Over50,000 youth aged 16 to 29 are neither studying nor working, of which about 1 out of 3
has obtained at most a certificate of primaryeducation. Only 1 in 2 women participatesin the labor market (1 in 3 women among
those with low educational attainment).
The impact of COVID-19 has reversed recent gains in women’s labor force participation, as women were significantly more likely to be laid off during the pandemic.

Recent developments
GDP rebounded by 3.6 percent in 2021,
aided by widespread COVID-19 vaccination covering 90 percent of the eligible
population by end-June 2022. Most sectors
are back to pre-pandemic levels, but a 35
percent output gap remains in tourism,
further hit by headwinds from the war in
Ukraine. Since the reopening of borders in
October 2021, tourism arrivals have improved substantially, reaching 557,245
over January-August 2022, up from 6,966
during the same period the previous year.

FIGURE 1 Mauritius / General government balance anddebt

FIGURE 2 Mauritius / Actual and projected poverty rates
and real GDP per capita

Percent of GDP
2
0
-2
-4
-6
-8
-10
-12
-14
-16
-18
-20
2012/13

Poverty rate (%)

2015/162018/19

General government balance (lhs)
General government debt (rhs)2021/22e

Percent of GDP
110
100
90
80
70
60
50
40
30
20
10
0
2024/25f

450000400000203500003000001525000020000010150000100000

5

50000
0

0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
Lower middle-income pov. rate
Real GDP pc

Primary balance (lhs)

Sources: Statistics Mauritius, World Bank staff estimates.

Sources: World Bank. Notes: see Table 2.

MPO

Real GDP per capita (constant LCU)

25

60

Oct 22Upper middle-income pov. rate

Annual headline inflation rose to 4 percent in 2021 from 2.5 percent in 2020, driven by higher freight, energy, and foodprices. Inflationary pressures increased
following the Ukraine war, with annual
inflation reaching 8.8 percent in August
2022, the highest in over a decade. To
tame inflation, the BoM raised the Key
Repo Rate 15 bps to 2 percent on March
9, its first hike since June 2011, and 25 basis points to 2.25 percent on June 3.
The fiscal deficit fell to 9.2 percent of GDP
in FY21/22, on the back of GDP recovery
and the progressive unwinding of
COVID-19 support measures. Proceedsfrom the sale of shares of Airport Holdings
Ltd to MIC in December 2021 for Rs13 billion (2.7 percent of GDP) helped reduce
public debt, which stood at 95.9 percent asa share of GDP.
In 2021, Moody’s downgraded Mauritius’credit rating from its longstanding Baa1
level to Baa2. In July 2022, Moody’s once
again downgraded Mauritius’ to Baa3, albeit with an upgrade on the outlook fromnegative to stable. The latest downgrade
was based on Moody’s assessment that the

government’s reliance on unconventionaland one-off measures to respond to the adverse economic and fiscal effects of the
COVID-19 pandemic, has eroded the quality and effectiveness of institutions andpolicy-making. This, in turn, hampers
Mauritius’s resiliency and capacity to absorb future shocks.
Poverty (Upper-MIC threshold of $6.85 a
day 2017 PPP) fell from 19 to 11 percent
between 2012 and 2019. However, given
the dramatic contraction of GDP in 2020,
poverty is projected to have increased byover 5 percentage points, and fall below 14
percent in 2022.

Outlook
GDP is expected to grow by 5.8 percent
in 2022 and 5.5 in 2023, supported by thecontinued recovery of tourism, and decelerate to its long-term trend over the
medium-term. The current account deficit
is expected to remain stable at 13.2 percent of GDP in 2022, with higher import

TABLE 2 Mauritius / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services

costs delaying its recovery, which will
happen gradually over the medium term,
assuming sustained tourism recovery andstrengthened export competitiveness. The
fiscal deficit should moderate to 7.4 percent of GDP in FY2022/23 as the economic recovery accelerates and more
COVID-19 support measures are lifted.
As a result, public debt to GDP would
gradually decrease over the medium
term, assuming continued recovery andgradual fiscal consolidation.
Significant downside risks remain. Further
COVID-19 waves, high fuel prices and low
global growth may continue to weighdown tourism, while heightened geopolitical tensions and supply chain disruptions
may continue fueling global inflation. Asinterest rates in leading economies rise, therupee may depreciate further, fueling inflation. Strengthening the institutionalframework and creating fiscal space
through pension reform and other measures supporting fiscal discipline will be
key to maintaining debt sustainability,
thereby strengthening the macroeconomic
foundations for inclusive growth.

(annual percent change unless indicated otherwise)

a

2019
2.8
3.2
1.9
4.9
-4.0
2.4

2020
-14.6
-15.3
-1.0
-25.8
-27.7
-29.2

2021
3.6
3.0
-3.0
13.9
11.5
7.9

2022e
5.8
2.6
3.2
1.1
22.8
12.5

2023f
5.5
2.3
2.1
1.4
20.8
13.0

2024f
4.2
2.0
1.6
0.8
17.3
12.4

2.9
4.2
2.3
3.1

-14.4
-1.9
-19.2
-13.6

3.6
7.2
10.2
1.8

5.8
2.9
2.7
6.7

5.5
3.0
3.1
6.2

4.2
1.7
2.1
4.8

Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)

0.5

2.5

4.0

10.2

6.1

5.6

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-5.0
24.6

-9.3
-111.7

-13.2
31.2

-13.2
31.0

-9.3
31.9

-7.8
32.3

-10.5
75.6
-7.9

-19.1
96.4
-16.3

-9.2
95.9
-6.6

-7.4
93.5
-4.9

-7.0
91.8
-4.8

-5.6
89.4
-3.4

1.5
11.4

2.3
16.5

2.1
15.3

1.8
13.6

1.6
12.0

1.3
10.6

1.6
62.0

-12.0
63.0

7.4
62.0

5.4
62.9

5.7
63.5

3.6
63.7

b

Fiscal Balance (% of GDP)b
Debt (% of GDP)b
Primary Balance (% of GDP)c,dLower middle-income poverty rate ($3.65 in 2017 PPP)c,dUpper 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Med (0.87)) based on GDP per capita in constant LCU.

MPO

61

Oct 22MOZAMBIQUE
Table 1

Key conditions andchallenges

2021

Population, million

32.2

GDP, current US$ billion

15.8

GDP per capita, current US$

490.7

International poverty rate ($2.15)

a

64.6

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

a

83.1

a

54.0

School enrollment, primary (% gross)

b

118.4

b

61.4

Total GHG emissions (mtCO2e)108.7

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2014), 2017 PPPs.
b/ Most recent WDI value (2020).

Following a contraction in 2020, theeconomy saw moderate growth of 2.3 percent in 2021, reflecting a rebound in aggregate demand. Growth is projected toaverage 5.6 percent during 2022-2024,
driven by the start of LNG exports andhigh commodity prices. Poverty is projected to decline from 64.2 to 61.7 percent
through 2022-2024. However, theUkraine war has exacerbated inflation,
triggering social unrest and fiscal pressures given spending on targeted subsidies to mitigate the rising cost of living.

Mozambique has seen slow growth, limited structural transformation and widespread poverty. Growth plunged from 8
percent in 1993–2015 to 3 percent in
2016–2019, owing to multiple shocks, including the hidden debt crisis, insurgency, and tropical cyclones. The pandemic exacerbated the slowdown. Poverty reduction and job creation have beenslow given the economy’s dual focus on
low-productivity subsistence agriculture
and capital-intensive megaprojects withlimited economic linkages. Low investments in human capital and infrastructure continue to inhibit productivity andinclusive growth. About 64.2 percent of
the population remains poor in 2022,
nearly half of which live in the northern
provinces. Inequality is high, aggravatingfragility and conflict. The private sector’s
potential for job creation and economictransformation is hampered by a challenging business environment, weak governance, and high credit cost. Nonetheless, the country’s economic prospects are
positive, reflecting the start of LNG exports and high commodity prices. However, the Ukraine war exacerbates downside risks, including weak global growth,potential social protests, and additional
spending pressures to mitigate the increased cost of living.
Mozambique needs to accelerate its economic recovery and make growth more

inclusive. Policy priorities include accelerating structural reforms to ensure macroeconomic stability, improve governance,
boost competitiveness to attract private
investment and strengthen resilience toshocks. Making growth more inclusive requires promoting human capital, agricultural productivity, and inter-sectoral linkages. However, Mozambique faces considerable fiscal constraints, namely large
wage bill and debt service costs, and limited access to global financial markets.
Further, fiscal revenues will only become
significant after 2030 when LNG projects
complete cost recovery. Therefore, in the
short- to medium-term, Mozambiqueneeds to generate fiscal space and reduce
the public debt burden by improving
spending efficiency and domestic revenue
mobilization, minimizing SOEs fiscal risks
and reducing commercial debt issuance.

Recent developments
The economy is recovering from a prolonged slowdown, with real GDP growthat 2.3 percent in 2021. Growth reached 4.4
percent in June 2022 (year-on-year)—afour-year high—driven by strong agricultural growth, underpinned by investments
in productivity and recovery across all other sectors. High commodity demand andprices and increased coal production boosted extractives. The resumption of mobility
supported consumption, fostering services
and manufacturing growth in the first halfof 2022 (year-on-year). Information fromthe Purchasing Managers' Index (PMI)

FIGURE 1 Mozambique / Real GDP growth and sectoral
contributions to real GDP growth

FIGURE 2 Mozambique / Actual and projected poverty
rates and real GDP per capita

Percent, percentage points
10

Poverty rate (%)
95

24000

8

90

23000

85

22000

80

21000

75

20000

2

70

19000

0

65

18000

60

17000

55

16000

6
4

-2
-4
2014

2016

Agriculture
Services

2018

2020e

Extractives
Tax

2022f

50

2024f

15000
2008 2010 2012 2014 2016 2018 2020 2022 2024

Manufacturing
GDP

International poverty rate
Real GDP pc

Source: World Bank. Notes: see Table 2.

Source: World Bank. Notes: see Table 2

MPO

Real GDP per capita (constant LCU)62

Oct 22Lower middle-income pov. rateshows that employment levels among
Mozambican companies have steadily increased in the first half of 2022.
Despite the monetary tightening (policy
rate increased from 10.3 to 15.3 percent between 2021 and 2022), inflation reached a
4-year high at 11.8 percent in July (yearon-year), driven by higher food, fuel, andtransportation costs. The contractionary
monetary stance hampers credit growth,
limiting output and job creation, with negative implications for the poor.
Despite persistent spending pressures, theoverall fiscal deficit declined from 5.4 to
5.0 percent of GDP between 2020 and 2021,
reflecting a positive revenue performance,
contained capital expenditure and debt
service —the latter partly due to the debt
service deferral initiative. Currency appreciation supported a drop in total public
debt from 120 to 106.4 percent of GDP between 2020 and 2021. Mozambique is athigh risk of debt distress, with debt assessed to be sustainable in a forward-looking sense. Fiscal performance deteriorated
in the first half of 2022 due to lower grants
disbursement. The overall fiscal deficit increased by 33 percent to US$180million,
leading to increased domestic financing.
The import of the Coral LNG offshore platform in the first quarter of 2022, and costly

imports, increased trade and current account deficits (CAD). The platform is fully
financed by project financing. The CAD
reached US$ 5.4bn (30 percent of GDP) in
the first quarter, compared to US$ 927 million (7 percent of GDP) during the same
period in 2021. Excluding the one-off LNGrelated import, the CAD declined to
US$907 million due to a hike in coal andaluminum exports. Owing to higher fuelimports, international reserves fell from
US$3.3bn to US$3 billion, between December 2021 and June 2022.

Outlook
Growth is projected at 3.7 percent in
2022 and is expected to accelerate in
the medium term, reaching 8 percent in
2024, reflecting agricultural growth, favorable commodity prices, start of LNG
exports, and Totalenergies-led LNG project resumption from 2023. Continued
demand recovery will support services
and manufacturing growth. Inflation will
likely hit double digits in 2022 before
stabilizing around 8 percent between
2023 and 2024, as international fuelprices ease. However, domestic prices,

TABLE 2 Mozambique / Macro poverty outlook indicators

particularly of food, will remain high,affecting the purchasing power of thepoor, who on average, spend a larger
share of their budget on food. The poverty rate is expected to remain high, averaging 63.1 percent in 2022-2024.
Fiscal pressures will remain significant,but the overall fiscal deficit is projected
to decline, averaging 3.8 percent of GDP
in 2022-2024 (below 5.0 percent in 2021).
Stable revenue (at 25 percent of GDP),
increased grants, and a relatively lower
wage bill—due to the ongoing reform—will offset the debt service, security and humanitarian spending pressures,and spending on targeted subsidies toprotect vulnerable households from inflation. The resumption of budget support
will minimize financing needs.
The CAD will accelerate, averaging 42.1
percent of GDP in 2022-2024, reflecting
LNG developments and high fuel and foodimport prices. Imports pressures will be
partially offset by higher export volumes,
driven by high demand and gas, aluminum, and coal prices. The CAD financing is expected from FDI, and debt (including IMF support). International reserves
are projected to remain comfortable at$3.3bn over the medium-term, about 4
months of non-megaproject imports.

(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

2019
2.3
3.1
3.6
-0.6
-9.5
-1.5

2020
-1.2
-2.1
-19.3
60.1
-15.0
-0.4

2021
2.3
18.2
-5.8
36.1
24.1
40.7

2022e
3.7
11.0
11.7
-16.8
9.6
2.1

2023f
5.0
1.5
-14.6
11.0
15.1
3.5

2024f
8.0
10.4
-4.3
-1.8
6.4
2.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

1.8
1.3
-0.4
2.9

-1.9
3.1
-5.8
-2.7

2.3
4.2
1.7
1.6

3.7
3.3
3.5
4.0

5.0
2.5
10.7
4.1

8.0
7.9
13.5
5.7

Inflation (Consumer Price Index)

2.8

3.1

5.7

11.3

8.6

8.2

-19.6
14.4

-25.7
16.7

-23.2
32.4

-46.6
21.7

-39.7
20.0

-40.0
17.8

-0.5
107.5
2.7

-5.4
120.0
-2.2

-5.0
106.4
-2.3

-3.9
102.6
-0.4

-4.2
101.4
-1.1

-3.4
100.0
-0.1

62.8
82.0

64.3
82.9

64.5
83.0

64.2
82.8

63.4
82.4

61.7
81.3

-4.0
7.9

0.7
8.3

1.1
8.8

-0.3
8.0

0.6
7.8

2.6
9.0

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)a

Primary Balance (% of GDP)ab,cInternational poverty rate ($2.15 in 2017 PPP)b,cLower middle-income poverty rate ($3.65 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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

Oct 22NAMIBIA

Key conditions andchallenges

Table 1

2021

Population, million

2.6

GDP, current US$ billion

12.3

GDP per capita, current US$

4761.8International poverty rate ($2.15)

a

15.6
a

33.3

a

57.3

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

a

59.1

School enrollment, primary (% gross)

b

124.2

b

64.0

Total GHG emissions (mtCO2e)20.8Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2015), 2017 PPPs.
b/ WDI for School enrollment (2018); Life expectancy(2020).

Namibia’s economy continues to recover
given favorable prospects for the mining
sector and waning effects of the pandemic.
Spillovers from the war in Ukraine haveraised socio-economic challenges, withhigher import costs resulting in elevatedinflation. As the economy recovers, protecting fiscal sustainability remains crucial given weaker SACU inflows. With aslow economic recovery, the projected upper middle-income poverty rate remains
high at 62.4 percent.

Leading up to 2015, Namibia’s economy
experienced strong growth, averaging
nearly 5 percent annually, fueled by investment and enabled by prudent economic management. Growth stagnated from2016 onwards and three of the last five
years have been marked by recession, witha sharp contraction in 2020 amid the
COVID-19 crisis. Before the pandemic, thegrowth slowdown was on the back of severe drought, lower commodity prices, reduced public investment, weaker growthin neighboring countries and persisting
structural rigidities. Public investment hashistorically been an important driver ofgrowth, but elevated debt levels constrain
fiscal space. Therefore, future growth will
rely on leveraging greater investment andparticipation from the private sector. This
shift in growth model is particularly critical to achieve socio-economic progress asenvisioned in the Harambee Prosperity
Plan II (2021-2025).
Global and regional developments willremain important drivers of Namibia’s
economic performance as well as fiscal
and external positions, as the country ishighly reliant on commodity exports andSouthern African Customs Union (SACU)
transfers. The twin shocks of the pandemic and spillovers from Russia’s war
in Ukraine have negatively affected socio-economic progress and raised foodinsecurity risks. Output remains below

pre-pandemic levels and consumer inflation has reached multi-year highs in 2022,
hitting hard on the most vulnerable.
Unemployment has remained elevated in
the subdued economic recovery, amplified
by skills mismatches. This exacerbates
Namibia’s high level of inequality (Gini index at 59.1 in 2015) and means poverty isrelatively high for the country’s level ofdevelopment. Risks related to climate, thestate of the pandemic and the protracted
effects of the war in Ukraine are importantin the domestic outlook.

Recent developments
Namibia’s economic recovery continued in
the first half of 2022 but has been uneven,with several sectors lagging. Real GDP
growth increased to 5.3 percent YoY in Q1,
supported by stronger activity in the mining, manufacturing and financial services
sectors. Momentum in the mining sector
was sustained into the second quarter as
diamond production was further boosted
by Debmarine’s new diamond recovery
vessel, the Benguela Gem, which was inaugurated in March. Diamond production
was 50 percent higher in H1-2022. Beyond
the positive developments in the mining
sector, the effects of the pandemic on economic activity have significantly waned.
All remaining COVID-19-related restrictions were removed in July 2022. However,with a slow economic recovery of only 0.8
percent in per capita terms in 2021, the upper middle-income poverty rate is estimated to remain high at about 63 percent

FIGURE 1 Namibia / Fiscal and external balances

FIGURE 2 Namibia / Actual and projected poverty rates andreal GDP per capita

Percent of GDP
4

Poverty rate (%)
80

70000

2

70

60000

Real GDP per capita (constant LCU)

60

50000

0
50
-2

40

-4

30

30000
20000

20

-6
-8

40000

0

Current account balance
2018

2019

0
2009

-10
2017

10000

10

Fiscal balance

2020

2021

2011

2013

2015

2017

International poverty rate
Upper middle-income pov. rate

2022f

Sources: Central Bank, World Bank staff estimates.

Source: World Bank. Notes: see Table 2.

MPO

64

Oct 22

2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

while employment is estimated to remain
below pre-pandemic levels.
External vulnerabilities have elevated. The
current account (CA) deficit soared to 15.8
percent of GDP in Q1-2022, which is similar to the deficit registered in Q3-2021 andlarger than the deficit of 8.1 percent of
GDP in Q4-2021. The widening in the
deficit over the quarter was driven by
weaker exports, higher mineral fuel imports and lower receipts from the SACU
pool. The war-induced acceleration in import prices kept the CA balance underpressure in Q2.
Given pressures on global oil and foodprices, annual inflation increased to 7.3
percent in August, the highest rate in over
five years. The Bank of Namibia has responded by hiking its policy rate by a cumulative 175 basis points since February.
Authorities have implemented efforts to
support fiscal consolidation, including
containing expansion of the wage bill anddivestiture from SOEs, but lower SACU receipts remain a challenge. The budget
deficit is estimated to have remained wide
at 8.7 percent of GDP in 2021.

OutlookGDP growth is projected at 2.8 percent in
2022 and is expected to average around 2
percent in the outer years. The economic
performance in 2022 will be largely supported by the exceptional increase in diamond production and the waning effectsof the pandemic. Diamond output is expected to be at least a third higher in 2022,
boosted by the new recovery vessel. In addition, the improved pandemic situation is
expected to support the ongoing recoveryof sectors which were hardest hit by the
pandemic, including tourism. Consumer
spending growth was robust in Q1 but will
likely be impacted by increased price pressures and resultant cautious spending.
Amid higher inflation, monetary policy
tightening is expected to continue, driven
by the exchange rate peg with the Rand.
Risks to the growth outlook are significant,mainly related to the effects of the Ukraine
war, the pandemic situation, and a faster
deceleration in global growth.

TABLE 2 Namibia / Macro poverty outlook indicators

Namibia’s twin deficits are expected toremain high in 2022, given the elevatedcost of imports and subdued SACU receipts. The current account deficit is projected to remain over 9 percent of GDP,
somewhat mitigated by a better export
performance. In the fiscal accounts, lower
SACU receipts are expected to be partly
offset by the revenue boost from new diamond production. The fiscal deficit isprojected to be above target at 7.8 percent
of GDP in 2022, partly as higher interest costs slow the pace of consolidation,and public debt (including guarantees) is
projected to rise close to 80 percent of
GDP. Amid revenue constraints, maintaining fiscal discipline while preservingsocial spending remains important to stabilize the debt trajectory, reduce fiscal
risks and prevent a further worsening inpoverty. Weak per capita GDP growth,elevated unemployment, and slow job
creation pose challenges to the extent ofpoverty reduction that can be achieved.
The upper-middle-income poverty rate is
expected to remain near 62 percent in themedium run.

(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

2019
-0.8
-0.1
1.5
-9.5
-8.7
-4.0

2020
-8.0
-11.3
0.4
-19.2
-17.3
-18.0

2021
2.7
12.6
1.7
4.0
-2.3
15.6

2022e
2.8
3.9
-0.8
5.1
9.8
7.1

2023f
2.0
2.8
-0.3
4.4
6.2
4.9

2024f
1.9
3.0
0.7
4.9
3.3
4.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-0.2
-3.1
-2.1
1.0

-6.6
6.3
-12.9
-5.3

1.8
2.0
1.4
1.9

2.8
1.5
5.7
1.7

2.0
2.0
2.4
1.8

1.9
2.0
2.1
1.8

Inflation (Consumer Price Index)

3.7

2.2

3.6

6.2

5.1

4.5

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-1.8
-1.5

2.8
-2.0

-9.6
4.3

-9.4
1.7

-6.6
1.7

-5.2
1.9

Fiscal Balance (% of GDP)

-5.2
62.4
-1.4

-8.2
70.0
-3.7

-8.7
73.5
-4.2

-7.8
78.9
-2.6

-6.6
80.4
-1.4

-5.8
81.8
-0.8

17.3
35.7
59.7

20.3
38.9
62.8

20.2
38.6
62.6

19.9
38.3
62.4

19.8
38.2
62.4

19.8
38.1
62.3

-4.3
18.5

-1.5
18.0

-0.6
18.2

0.5
18.3

2.5
18.5

3.0
18.5

a

Debt (% of GDP)
Primary Balance (% of GDP)b,cInternational poverty rate ($2.15 in 2017 PPP)b,cLower middle-income poverty rate ($3.65 in 2017 PPP)b,cUpper 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
a/ Refers to Public and Publicly Guaranteed debtb/ Calculations based on 2015-NHIES. Actual data: 2015. Nowcast: 2016-2021. Forecasts are from 2022 to 2024.
c/ Projection using neutral distribution (2015) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU.

MPO

65

Oct 22NIGERKey conditions andchallenges

Table 1

2021

Population, million

25.1

GDP, current US$ billion

14.9

GDP per capita, current US$

593.5

International poverty rate ($2.15)

a

50.6
a

81.1

a

95.0

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

a

37.3

School enrollment, primary (% gross)

b

66.4

b

62.8

Total GHG emissions (mtCO2e)47.5Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ WDI for School enrollment (2019); Life expectancy(2020).

Due to climate-related shocks and worsening insecurity, real GDP growth decelerated to 1.4 percent in 2021 (2.3 percent
contraction in GDP per capita) and theextreme poverty rate reached 51.1 percent. The economy is expected to grow by
5 percent in 2022 as agricultural production normalizes, and to accelerate as large
oil revenues come onstream in 2024.
Growth and the rate of poverty reduction
are subject to significant downside risks
and strengthening of targeted programs.

Niger’s economy is highly dependent on
agriculture and remains vulnerable to external shocks, especially climate-related
shocks. This is reflected in a robust but
volatile growth trajectory that ranged between 2.4 percent and 10.5 percent from2011 to 2019. As growth has been associated with limited improvements in productivity and with high population growth(averaging 3.9 percent over 2010-19) per
capita GDP remains at US$593.5 in 2021,
towards the bottom of the world’s income
distribution. Over 50 percent of the population lives in extreme poverty, aggravatedby gender disparities.
After the 2020 COVID-19 pandemic andglobal economic downturn, the country
has continued to be shaken by natural disasters, a worsening security situation, andindirectly by the war in Ukraine. Deteriorating regional security has been affecting
important agricultural areas, and addressing insecurity is key to improving economic performance, public finances, service delivery and access to markets.
Comprehensive institutional and economic reforms, to increase overall productivity especially in agriculture, areneeded to support a more resilient andinclusive development trajectory. Reforms should strengthen economic governance, including ensuring that the rents
from the petroleum sector are invested
to support inclusive growth, promoting

financial inclusion, adopting digital technologies, and broadening access to education and training to support job creation.
Accelerating crisis preparedness throughclimate adaptation investments, alongwith strengthening the disaster risk management framework and social safety nets,
are also key to increase resilience to climate change as 75 percent of the workforce
is still in subsistence agriculture.

Recent developments
As a result of poor rainfall and an increase
in security incidents in rural areas, agricultural production declined in 2021 (-5 percent) leading to 1.4 percent GDP growth(-2.3 percent in per capita terms). Private
consumption’s contribution to growth declined from 3.1 percentage points (pp) in
2020 to -1.2 pp in 2021, while gross fixed
investments contribution turned positivein 2021 to 2.8 pp. The share of Nigeriens
living below the international poverty line
(US$2.15/day per capita, 2017 PPP), is expected to have increased by 1.2 percentage
points to 51.1 percent in 2021, an increaseof 0.8 million in the number of extreme
poor, reaching 12.8 million people.
Growth is projected to recover to 5 percent
of GDP (1.2 percent in per capita terms)
in 2022, as agriculture production normalizes following an average rainy season. On
the demand side, public and private investment will benefit from large-scale infrastructure projects, while higher foodprices may weigh on private consumption.
The current account deficit is projected to

FIGURE 1 Niger / GDP growth, current account and fiscal
balances

FIGURE 2 Niger / Actual and projected poverty rates andreal GDP per capita

Percent

Poverty rate (%)

15

120

10

100

Real GDP per capita (constant LCU)
400000350000300000580250000

0
-5

60

-10

40

200000150000100000

-15

20

50000

-20
2019

2020

2021

2022

2023

2024

0

0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

Current account balance (% of GDP)
Fiscal balance (% of GDP)GDP growth (%)

International poverty rate
Upper middle-income pov. rate

Sources: INSN and World Bank staff estimates.

Source: World Bank. Notes: see Table 2.

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66

Oct 22Lower middle-income pov. rate
Real GDP pc

further widen to 14.9 percent of GDP, amid
extractive projects-related imports andhigher food imports.
Inflation reached 5.2 percent in the firsthalf of the 2022. Monetary and exchange
rate policies are managed by the Central
Bank of West African States (BCEAO). Its
reserves declined to 5.2 months of imports in June 2022, from 5.5 months in
2021, due to higher energy prices andfood imports caused by the Ukraine crisis. To counter inflation pressures, theBCEAO raised rates for liquidity calls (2percent to 2.5 percent) and the marginal
lending window (4 percent to 4.5 percent)in June and September 2022.
The fiscal deficit will increase to 6.7 percent of GDP in 2022, above the budgeted
level of 5.4 percent of GDP, to accommodate additional spending to address foodscarcity, implement an emergency plan tosupport agriculture and livestock, and to
start construction of new schools. As a result of the widening fiscal deficit and the
CFAF depreciation vis-à-vis the US dollar,
public and publicly-guaranteed debt will
increase to 54.8 percent of GDP by the endof 2022 - an increase of 15 percentage
points since 2019.
The extreme poverty rate is expected to decline to 50.4 percent in 2022 as growth, particularly in agriculture, recovers. However, export bans on some staple foods fromneighboring countries, agricultural production deficits recorded in several areas(Tahoua and Tilaberi) and ongoing insecurity is negatively impacting the supply of
cereals, putting 4.4 million people (18 percent of the population) at risk of food insecurity in 2022.

Outlook
Growth is expected to gain traction in 2023
(7.1 percent, equivalent to 3.2 percent inper capita terms) and surpass 10 percent in
2024 on the back of the start of large-scale
oil production and exports. Inflation will
moderate to 4 percent and 3 respectively
in 2023 and 2024 as food prices normalize.
An ambitious fiscal adjustment supported
by an IMF program aims to bring the fiscal

TABLE 2 Niger / Macro poverty outlook indicators

deficit down to around 3 percent in 2024
through a series of measures to improve
the structurally low level of domestic revenues. This would put the debt-to-GDP ratio onto a declining path.
The poverty headcount rate is projected to
decline in line with higher non-oil growthand lower inflation in 2023 and 2024. However, despite projected GDP growth being
above Niger’s population growth rate of
3.8 percent, the absolute number of poor
will remain roughly constant between 2021
and 2024 and progress will depend on
progress with the aforementioned reforms.
This outlook is subject to a high degree of
uncertainty and multiple downside risks
including intensified climate change-related shocks, security risks, tighter global financial conditions, food security challenges, delays in oil production expansion
and social discontent from high inflation.
The war in Ukraine, and additional monetary tightening in the eurozone represent
additional risks through elevated food andenergy prices, and debt refinancing costson the regional market.

(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

2019
5.9
4.3
7.0
12.5
1.1
6.2

2020
3.6
7.7
5.0
-3.4
-6.3
2.7

2021
1.4
-0.2
9.8
7.7
6.7
6.9

2022e
5.0
3.0
2.1
9.5
2.0
5.0

2023f
7.1
5.3
10.0
4.5
29.1
9.8

2024f
10.1
5.8
12.5
2.5
40.8
7.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

6.1
3.4
9.0
7.0

4.2
7.7
1.9
2.1

1.0
-5.1
4.1
5.4

5.1
5.0
6.4
4.4

7.1
6.5
12.0
4.8

10.1
7.0
26.0
3.0

Inflation (Consumer Price Index)

-2.5

2.8

2.9

5.3

4.0

3.0

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-12.2
5.3

-13.2
2.5

-14.4
3.3

-15.0
4.3

-13.7
4.3

-11.4
4.3

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-3.6
39.8
-2.6

-5.4
45.0
-4.4

-6.1
51.3
-5.0

-6.7
54.8
-5.6

-4.8
54.9
-3.4

-3.2
52.7
-1.7

49.8
80.5
94.8

49.9
80.6
94.9

51.1
81.3
95.0

50.4
81.1
94.9

48.6
80.0
94.7

45.7
78.4
94.3

4.5
6.8

4.0
6.8

3.9
6.8

3.6
6.5

4.2
6.6

4.4
6.9

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Low (0.7)) based on GDP per capita in constant LCU.

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67

Oct 22NIGERIA

Key conditions andchallenges

Table 1

2021

Population, million

211.4

GDP, current US$ billion

429.1

GDP per capita, current US$

2029.9Poverty rate (national poverty line, %)Gini index

a

41.6

a

35.1

School enrollment, primary (% gross)

b

87.5

b

55.0

Total GHG Emissions (mtCO2e)

363.7

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018).
b/ WDI for School enrollment (2018); Life expectancy(2020).

While economic growth in Nigeria has rebounded, macroeconomic stability has
weakened. Amidst global commodity
shocks, a depreciating currency, andmonetization of the deficit, inflation issurging and pushing millions of Nigerians into poverty. Meanwhile, a costly
petrol subsidy, low oil production andnon-oil revenues, and increasing interest
rates are causing fiscal challenges. Risks
are tilted to the downside stemming fromthe lack of macro-fiscal reforms, an uncertain external outlook, deteriorating security, and the upcoming 2023 elections.

Percent of GDP, Percent annual growth

Percent

110

5

90

4

70

3

10

50

2

5

30

15

1
0

10
0

-1

-10

-5

-2

-30
2018

GDP growth (%)
GDP growth (%) projection
Oil price

2020

2022

In H1 2022, GDP grew by 3.5 percent, driven by trade, transport, telecommunication, and financial services. In contrast, theoil sector shrank by 19.7 percent despite
the sharp increase in global oil prices. The
subdued oil production — below the
OPEC quota — is the result of funding
shortfalls, lack of adequate maintenance,and security risks.
Inflation spiked and reached 19.6 percent
in July 2022. The monetary authorities
have responded by increasing the monetary policy rate by 250 basis points since
May 2022. However, this measure has
not been fully effective in containing inflation due to the monetarization of the
deficit, a depreciating currency and anincrease in imported food and energy inflation. The banking sector remains robust, and credit expanded by 21.3 percent in Q1 2022 spurred by CBN’s development finance interventions.
On the fiscal front, the decoupling between
oil prices and oil revenues that started in
2021 continued in 2022. While oil prices
have risen globally, the fiscal position has
worsened because the cost of the petrol
subsidy has increased to about 2.7 percent
of GDP and oil production has fallen toa three-decade low. Low non-oil revenues
and high interest payments compound fiscal pressures. Thus, the fiscal deficit is expected to remain above 5 percent in 2022,

FIGURE 2 Nigeria / Real GDP growth and contributions toreal GDP growth

US$/bbl20

2016

Recent developments

Following a contraction of 1.8 percent in2020 because of the COVID-19 pandemic,
GDP growth rebounded to 3.6 percent in
2021 driven by base effects in most nonoil sectors. However, macroeconomic stability has weakened due to a depreciating
currency, increasing inflation, higher fiscalpressures, and declining forex reserves.
High inflation has been chronic in Nigeria
for the last two decades, but since 2019 inflation has accelerated driven by the multiple exchange rates, trade restrictions, andmonetization of the public deficit. These
policies have pushed inflation from 11.8
percent in 2018-2019 to 17 percent in 2021,
almost double the inflation target of 9 percent set by the Central Bank of Nigeria(CBN). Nigeria’s fiscal position has been
deteriorating since 2015 due to low and declining oil and non-oil revenues and rising expenditures, resulting in persistently
high fiscal deficits.
To put the economy on a sustainable andinclusive growth path, it will be critical tostabilize the macroeconomy by reducing
inflation, increasing revenues, and adopting a single market-driven exchange rate
regime. It would be also important to reopen land borders for trade, remove import and FX restrictions on staple foods
and medicines, and reduce subsidized
CBN lending to medium and large firms.
Such reforms will be essential for diversifying the economy out of oil, building

FIGURE 1 Nigeria / Oil price shock transmission channels

2014

resilience, and creating quality jobs thatare critically needed to reduce poverty.

-3

2024

2018

Revenues (% GDP)
Revenues (% GDP) projection
Oil price projection

2019

Agriculture
Services

Sources: National Bureau of Statistics and World Bank.

2020

2021

2022f

Oil Industry
GDP

Sources: National Bureau of Statistics and World Bank.

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68

Oct 22

2023f

2024f

Non-oil Industry

breaching the stipulated limit of 3 percent
specified by the 2007 Fiscal Responsibility
Act. This will keep the public debt stock atover 37 percent of GDP and push the debt
service to revenue ratio from 85.4 percent
in 2021 to 102.3 percent in 2022.
The current account balance (CAB) recorded a surplus of 2.3 percent of GDP in Q1
2022, driven by a 129-percent increase in
crude oil exports reflecting higher oil
prices. This CAB surplus, which is expected to shrink during the rest of the year as aresult of higher import prices of food andrefined petroleum products, has not translated into increased foreign reserves due tohigher FX interventions, new FX schemes,
and lower capital inflows.

Outlook
The economy is projected to grow by anaverage of 3.2 percent per year between
2022 and 2024, slightly above the population growth rate of 2.6 percent. Growth

will be driven by services, trade, construction, and agriculture. Oil production is
projected to remain subdued in 2022 because of inefficiencies and insecurity. From
the demand side, growth will be driven by
private consumption and investment reflecting the strong growth in the services
and construction sectors.
Inflation is projected to average 18.5 percent in 2022 and decrease slightly to 15.5
percent in 2023, as the main sources of inflationary pressure are expected to persist,
hampering poverty reduction. With Nigeria’s population growth continuing to outpace poverty reduction, the number ofNigerians living below the national poverty line is set to rise by 11.8 million between
2019 and 2024.
Fiscal, external, and debt pressures are expected to persist over the outlook period
due to rising global and domestic interest
rates and low oil revenues resulting fromthe moderation in oil prices and inability
to significantly increase oil production.
While the current account is expected toremain positive in 2022 and 2023, this is

TABLE 2 Nigeria / Macro poverty outlook indicators

not expected to translate into higher international reserves. Meanwhile, non-oil revenues will not increase as a share of GDP
without significant tax revenue reforms.
As a result, the fiscal deficit will remainhigh and average more than 6 percent of
GDP in 2022-2024, pushing debt service toballoon to about 111 percent of revenues
by end-2024.
Downside risks to Nigeria’s outlook haveintensified. Growth may be affected by afurther decline in oil production amidst
deteriorating security, scarcity of foreignexchange, and tighter liquidity. In parallel,
debt pressures will increase if the petrol
subsidy is not phased out and planned reforms to increase non-oil revenues do notmaterialize. The February 2023 generalelections are another source of risk if theylead to large government spending and/or cause social unrest. The authorities canstrengthen the economy by implementing
macroeconomic reforms to: (i) reduce inflation, (ii) address mounting fiscal pressures, and (iii) catalyze private investment
to create quality jobs.

(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

2019
2.2
-1.0
8.8
8.3
15.0
27.3

2020
-1.8
-1.0
61.6
-14.7
-33.4
-61.9

2021
3.6
25.6
-34.0
4.6
-32.1
44.4

2022e
3.3
4.5
-14.0
7.9
0.5
4.0

2023f
3.2
2.6
-3.6
3.9
9.0
4.3

2024f
3.2
2.9
1.0
8.0
3.6
9.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

2.3
2.4
2.3
2.2

-1.9
2.2
-5.8
-2.2

3.4
2.1
-0.5
5.6

3.3
2.7
-1.4
5.4

3.2
2.7
5.8
2.5

3.2
3.0
3.6
3.1

Inflation (Consumer Price Index)

11.4

13.2

17.0

18.5

15.5

13.5

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-3.1
-0.5

-4.0
-0.2

-0.4
-0.4

1.1
-0.3

1.2
-0.3

0.1
-0.3

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-4.6
30.5
-2.6

-5.1
36.0
-2.7

-5.9
37.7
-3.7

-5.9
37.6
-2.2

-6.4
37.6
-2.7

-5.9
38.0
-2.1

40.2

42.1

41.6

41.3

41.0

40.7

2.5
37.2

1.1
37.2

1.5
37.0

1.3
36.4

1.1
35.5

1.0
34.4

a

Poverty rate (national line, %)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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
a/ Calculations based on 2018-LSS. Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2024. These calculations use the national poverty line of 137,430
naira per person per year, in 2018/19 prices. The national line is used, as it will remain the yardstick on which policymakers in Nigeria focus, even as the PPP price data andinternational poverty lines for cross-country comparisons are updated. For further details see https://blogs.worldbank.org/africacan/what-does-moving-2017-ppps-and-new-international-poverty-lines-mean-nigeria

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69

Oct 22

RWANDAKey conditions andchallenges

Table 1

2021

Population, million

13.3

GDP, current US$ billion

11.0

GDP per capita, current US$

825.1

International poverty rate ($2.15)

a

52.0
a

78.0

a

92.2

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

a

43.7

School enrollment, primary (% gross)

b

131.3

b

69.3

Total GHG emissions (mtCO2e)

7.4Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2016), 2017 PPPs.
b/ WDI for School enrollment (2019); Life expectancy(2020).

Rwanda is facing new challenges fromincreases in food and fuel prices, compounded by other spillovers from thewar in Ukraine. Real GDP growth isprojected at 6.0 percent in 2022 and 6.9
percent on average in 2023–24, after a
10.9 percent in 2021. Inflation is expected to rise to around 12 percent,raising households living costs. After increasing in 2020, poverty is expected toreach pre-crisis levels in 2024.

Rwanda achieved impressive economic
growth over 2010-2019, averaging 7.2 percent, aided by a large public investment
push. Capital accumulation, mostly largescale public investment in infrastructure,
was the main growth driver. Limitations of
the state-led development model have become apparent. Labor productivity and total factor productivity are low for its income level. To sustain growth and create
jobs to reduce poverty, the government
must facilitate private sector-led development. Key reforms should aim to enable
competitive domestic enterprises, foster
innovation, develop long-term finance,and promote regional integration.
Rwanda remained with some wounds
from the COVID-19 pandemic. Economic
scarring may manifest in persistent increases in poverty and inequality, reductions in potential growth and increased
debt vulnerabilities. Learning losses due toschool interruptions, lower returns to spendingoneducationduetothelackorlowqualityof remote learning, and premature youth employmentfollowingschooldropouts,mayresult in permanent losses in lifetime earnings
and productivity, especially among children
from poor households. Negative impact on
potential growth could be accentuated by
the additional human capital depreciation
through prolonged unemployment anddeteriorating health conditions of productive individuals. With recent increases inpublic and publicly guaranteed debt levels, at 73.3 percent of GDP in 2021, meeting
spending needs, while safeguarding fiscal
sustainability and containing debt vulnerabilities, will require stepping up efforts toensure spending is well-targeted and costeffective, secure concessional financing,and implementing measures to mobilize
domestic revenues. Rwanda has relatively
higher poverty rates than African peerswith similar income per capita, and poverty reduction has become less responsive
to growth in recent years. Inequality in
Rwanda measured by the Gini coefficientis the second highest among low-income
countries at 43.7 (2017). Rwanda now faces
challenges in fully translating its strong
growth into commensurate gains in poverty and inequality reduction.
High reliance on rainfed agriculture andlivestock production, makes Rwanda highly exposed to seasonal weather patterns.
Rapid urbanization and depletion of forest
and water resources in recent years led toincreased vulnerability to flood risks, landdegradation, and biodiversity loss.

Recent developments
Early economic indicators point to potential moderation in growth in H1-2022, as
inflation pressures, due to spillovers fromthe war in Ukraine, depress consumption
and investment. The index of industrial
production for formal activities increased
by 9.4 percent compared to 21.4 percent
in the same period of 2021. The composite
indicator of economic activities rose by

FIGURE 1 Rwanda / Headline, food and energy inflation

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

Percent
30

Poverty rate (%)
Food inflation

25

Real private consumption per capita (constant LCU)

100

60000090

Energy inflation

50000080

2070Headline inflation

400000

60

15

50

10

30000040

520000030
20

0100000

10

-5

0

0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

-10
Nov-20Mar-21

Jul-21

Nov-21

Mar-22

International poverty rate
Upper middle-income pov. rateJul-22

Sources: World Bank staff estimates.

Source: World Bank. Notes: see Table 2.

MPO

70

Oct 22Lower middle-income pov. rate
Real priv. cons. pc

12.1 percent compared to 21.8 percent of
the same period in 2021. In 2022, food production fell by 2.3 percent. Furthermore,
external demand for Rwanda’s goods andservices has moderated, potentially widening Rwanda’s trade deficit (about 0.7 percent of GDP in 2022).
Headline inflation reached 15.9 percent inAugust 2022, mostly due to high food inflation (29.2 percent), amid rising global
commodity prices and adjustments to fueland fertilizer prices and reduced agricultural food production. Poorer households
are expected to be more affected by foodinflation since food purchases represent
more than 70 percent of their budgets. To
reduce inflationary pressures and preserve
the purchasing power of consumers, theNational Bank of Rwanda raised its policy
rate to 6.0 percent from 5.0 percent in August 2022, building on a 50-basis point increase in February.
The government maintained a fiscal stimulus to protect human capital and support therecovery. The pandemic response significantly accentuated the prioritization of human capital spending. The share of social
sectors in total spending was maintained atabout 23 percent for the last three FYs toFY22, reflecting the expansion of spendingon health and social protection to protect themost vulnerable. The Economic Recovery
Fund, amounting to US$250 million, hasbeen the cornerstone of the support the recovery from the COVID crisis. Additionally, the government fast-tracked a US$250
million package—through the Manufacture and Build to Recover Programme—to
support private investments in manufacturing and construction. With grant increases, the fiscal deficit is estimated tohave declined to 6 percent of GDP in FY21/
22 from 7.5 percent in FY20/21.

OutlookGDP growth is expected to accelerate to 6.9
percent on average in 2023–24 due to uncertainty surrounding the war in Ukraine.
Tapering growth in private consumption
is expected to drive small reductions inpoverty to reach pre-crisis levels (below 48
percent) in 2024. Rwanda is being affected
through slower external demand, inflation(higher oil and fertilizer prices) and higher
Central bank interest rate. Industrial activities will continue benefiting from government support of the manufacturing andconstruction sectors and a recovery intourism activities. However, softening
global growth momentum will negatively
affect Rwanda’s current account deficit in
the near term. The Central Bank projects
headline inflation to average about

TABLE 2 Rwanda / Macro poverty outlook indicators

12.1 percent in 2022, well above the upperbound of the central bank’s target range of
5±3 percent. The inflation will start trending toward its target range in mid-2023.
Persistence of higher levels of inflation,
especially in food, has the potential todelay or even revert the expected small
poverty gains in the next few years. Iffood inflation is twice as high as non-foodinflation, as has been the case for the last
few months, poverty in 2024 is projected
to be 2.4 percentage points higher thanthe pre-war projection.
The government plans to rationalize bothrecurrent non-wage spending and capitalbudgets to preserve space for growth-enhancing investment. This will be driven byphasing out COVID-related spending,tight recurrent spending control, discontinuing underperforming public investment and avoiding inefficient spending(through digitalizing delivery of somepublic goods and strengthening the oversight of SOEs). On the revenue side, theimplementation of the Medium-Term Revenue Strategy through tax policy reforms(personal/corporate income tax and valueadded taxes). Fiscal consolidation, however, faces rising challenges, including fromthe increased spending pressures frommeasures to contain the impact of the war
in Ukraine (such as the current fuel andfertilizer subsidy).

(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

2019
9.5
5.5
17.5
32.1
19.9
18.0

2020
-3.4
-5.0
-1.9
-2.3
-9.2
-3.4

2021
10.9
7.2
4.3
21.1
2.8
3.6

2022e
6.0
2.2
4.1
24.6
34.5
30.8

2023f
6.7
3.5
6.2
2.2
25.1
8.9

2024f
7.0
6.4
8.3
0.7
13.2
5.9

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

8.9
5.0
16.6
8.3

-3.5
0.9
-4.2
-5.5

10.9
5.8
14.7
12.2

6.0
2.9
9.7
6.2

6.7
5.5
9.2
6.3

7.0
5.0
8.5
7.4

Inflation (Consumer Price Index)

2.4

7.7

0.8

12.1

8.0

5.0

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-11.9
2.5

-12.2
1.0

-10.9
1.9

-12.4
3.0

-11.2
3.2

-10.1
2.9

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-9.2
56.8
-7.7

-10.4
72.4
-8.8

-7.9
73.3
-5.7

-7.1
73.1
-4.6

-6.2
75.9
-3.8

-6.0
76.4
-3.6

48.1
75.6
91.5

51.4
77.8
92.1

49.4
76.5
91.7

49.6
76.6
91.8

49.2
76.4
91.7

47.5
75.3
91.4

1.3
17.0

1.7
17.4

3.4
17.6

4.0
17.7

4.3
17.8

4.4
17.9

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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

Oct 22SÃO TOMÉ ANDPRÍNCIPE
Table 1

2021

Population, million

0.2GDP, current US$ billion

0.5

GDP per capita, current US$

2361.7

International poverty rate ($2.15)

a

15.6
a

44.8

a

79.7

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

a

40.7

School enrollment, primary (% gross)

b

106.8

b

70.6

Total GHG emissions (mtCO2e)

0.4Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2017), 2017 PPPs.
b/ WDI for School enrollment (2017); Life expectancy(2020).

São Tomé and Príncipe (STP)´s economy issuffering with the surge in commodity
prices associated with the war in Ukraine,
which worsened terms of trade despite better tourism prospects. Persistent electricity
outages further weaken growth prospects.
Inflation picked in end-June as fuel andfood prices increased due to global supply
bottlenecks. Expanded social protection has
kept poverty stable. Geopolitical factors
and delays in the implementation of structural reforms pose risks to the outlook.

Key conditions andchallenges
STP is a small, remote, island economy
heavily exposed to external shocks andconstrained by a weak private sector andlow human capital. Growth opportunities are further limited by underdeveloped infrastructure, especially unreliable
and expensive electricity. STP is highly
dependent on overseas development aid(ODA) and has pursued a “public expenditures-led” growth model. This growthmodel is unsustainable due to declining
external financing and low domestic revenue mobilization.
STP’s fast-growing population is young
and lacks employment opportunities, relying on informal and subsistence activities.
Poverty remains high, with about 15.3 percent of the population living on less than
US$ 2.15/day (in 2017 PPP terms) in 2022
while another 29 percent of the population
lives on less than US$ 3.65/day (the poverty line for lower middle-income countries).
To reduce the poverty impact of the pandemic, the Vulnerable Families Program, introduced in 2019, was complemented with
the COVID-19 response cash transfer program to provide support to 16,000 families.
Despite a stronger tourism’s recovery, theongoing energy crisis, destructive flooding
in late 2021 and May 2022, and lower-thanexpected externally financed public investments continue to take a toll on STP’s economy in 2022. STP remains highly vulnerable to climate change and risks stemmingfrom its fragile energy sector that needs urgent investment and governance reforms.
Reducing reliance on ODA and building theprivatesector’sabilitytogeneratejobsareessential for sustainable and inclusive poverty
reduction. Its natural wealth, including extensive marine zone, and growing humancapital present important opportunities ifbarrierstobusinesscanbereduced.

Recent developments
Real GDP growth is estimated to decline
from 1.8 percent in 2021 to 1.1 percent in
2022 owing to persistent energy shortages,
lower external financing for public investments, notwithstanding a strong recovery
of tourism. The current account deficit(CAD), excluding grants, is projected toworsen to 23.6 percent of GDP due to higher fuel and other import prices and lower
global demand for commodities. However,tourism’s recovery is being led by the resumption of international travel, additional
air connectivity to STP, and progress on
COVID-19 vaccination (46.4 percent of the
population fully vaccinated). The number ofannual tourist arrivals reached 14,160 by July-2022 compared to 15,101 in all of 2021.
Lowerexternalfinancing,higherimportbill,
and unexpected flood-related spending reduced net international reserves to about
US$ 16.3 million in end-March 2022, coveringlessthantwomonthsofimports.
Overall fiscal revenue performance will be
undermined by lower levels of domestic
revenue mobilization as economic activity
slows down, and delays in external grants

FIGURE 1 São Tomé and Príncipe / Real GDP growth andGrantsFIGURE 2 São Tomé and Príncipe / Actual and projected
poverty rates and real GDP per capita

Percent of GDP

Poverty rate (%)

Percent

16

5

14
4

12

Real GDP per capita (constant LCU)

100

20500

90

20000

80

19500

70

10

19000

60

3

18500

50

8

18000

40

2

6

17500

30

4

1

2
0

20

17000

10

16500

0

0
2015 2016 2017 2018 2019 2020 2021 2022f 2023f 2024f
Grants

16000
2010

2012

2014

2016

2018

International poverty rate
Upper middle-income pov. rate

Real GDP growth rate (rhs)

Sources: Ministry of Finance, IMF, World Bank MTI.

Source: World Bank. Notes: see Table 2.

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72

Oct 22

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

disbursements. Expenditures are expected
to increase driven by higher cost of goods
and services and adjustment in civil service wages in June, which represent
around half of the total current primary
spending. The domestic primary deficit(excluding oil) is projected to increaseslightly from 4.5 percent in 2021 to 4.6 percent of GDP in 2022, while public sector
gross debt will increase from 91.6 percent
to 93.4 percent of GDP.
Inflation has surged to 16.7 percent in June
2022 from 9.5 percent in end-2021, reflecting higher global prices of imports, higher
local food prices exacerbated by more expensive inputs, and the fuel price adjustments of April. Given its currency peg, thereal exchange rate has appreciated, undermining competitiveness. To help in curbing inflation, the central bank raised thebase interest rate from 9 percent to 10 percent in June, tightening excess liquidity.
Despite high inflation, slow recovery, andpopulation growth outpacing economic
growth, growth in agriculture, a key sectorof employment, and the extension of pandemic cash transfers through the end of2022 have propped up household incomes
sufficiently to avoid increases in poverty.

OutlookReal GDP growth is projected at 2.1 percent in 2023 supported by higher externally funded infrastructure development projects and a more robust recovery of tourism. Since growth will barely outpace projected population growthof 1.9 percent, poverty is expected tofall only marginally, reaching 15.0 percent by 2024. The CAD is projected to
improve to around 20.9 percent of GDP
in 2023 as tourism receipts and demandfor high-value commodities gradually increase and fuel imports should gradually decline as the energy sector becomes
more efficient.
The improvement in domestic resource
mobilization through the introduction of
VAT coupled with planned energy reforms is expected to improve the government’s fiscal position, contributing tonarrowing the domestic primary deficit
to about 3.1 percent of GDP in 2023.
At the same time, since the COVID-19
expansion of cash transfers will end in
December 2022 (reducing the number

TABLE 2 São Tomé and Príncipe / Macro poverty outlook indicatorsof beneficiary families from 16,000 to
4,500), it will be important to use thecountry’s growing social protection system strategically to mitigate the poverty
impact of higher consumer prices due tothese reforms.
The central bank is expected to support thepeg, as external financing improves andthe inflation differential to the euro area
moderates. Reforms in the energy sector
continue to be critical to address unsettled
external arrears.
The outlook is subject to substantial
risks. Delays in the implementation ofmuch needed reforms (the introductionof VAT and energy sector reforms)
could narrow the fiscal space for social
and infrastructure spending. Furthermore, the legislative elections on 25 September further contribute to delays in
the reform agenda due to political uncertainty. Climate-related events could
undermine the agricultural and fisheries
sectors, and delays in externally funded
projects could subdue industrial activity
and strain the economy. Risks to the reform agenda are partially mitigated by
the support of the multilateral development partners.

(annual percent change unless indicated otherwise)

Real GDP growth, at constant market prices

2019
2.2

2020
3.1

2021
1.8

2022e
1.1

2023f
2.1

2024f
2.4

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

2.5
1.0
0.7
3.2

2.3
-1.1
4.4
2.2

1.5
-1.0
-1.5
2.5

1.1
1.0
-1.2
1.7

2.1
1.5
-0.5
2.7

2.4
2.0
1.3
2.7

Inflation (Consumer Price Index)
Current Account Balance (% of GDP)

7.7
-19.9

9.4
-11.4

9.5
-17.1

17.2
-20.3

10.7
-18.9

9.3
-17.5

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-2.6
99.9
-2.0

-4.9
87.6
-4.6

-5.9
91.7
-5.7

-6.2
94.2
-5.7

-4.9
92.6
-4.5

-4.0
88.5
-3.6

15.4
44.7
79.4

15.3
44.5
79.2

15.3
44.5
79.1

15.4
44.7
79.4

15.4
44.6
79.3

15.3
44.6
79.3

2.3
36.6

1.2
37.0

0.9
37.1

1.3
37.5

1.4
38.0

1.6
38.6

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
a/ Projection using point to point elasticity at regional level with pass-through = 0.87 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. Forecasts are from 2022 to 2024. Actual data: 2017. Nowcast: 2018-2021. Forecasts are from 2022 to 2024.

MPO

73

Oct 22SENEGAL

Key conditions andchallenges

Table 1

2021

Population, million

17.2

GDP, current US$ billion

27.6

GDP per capita, current US$

1607.3

International poverty rate ($2.15)

a

9.3
a

37.4

a

74.4

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

a

38.1

School enrollment, primary (% gross)

b

83.0

b

68.2

Total GHG emissions (mtCO2e)35.0Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ Most recent WDI value (2020).

Growth is projected to decelerate to 4.8
percent in 2022, after reaching 6.1 percent in 2021, as domestic and external
shocks dampen industrial and agricultural production. The fiscal deficit is expected to remain high, at 6.2 percent of GDP,
while poverty has stagnated. Risks, mainly on the downside, include continued inflationary pressures associated with aprolonged conflict in Ukraine, ECOWAS
sanctions on Mali, regional instability,
climate, and domestic social unrest.

Senegal’s economy is weathering the impact of several adverse shocks. The ongoing Ukraine conflict poses immediate challenges through higher energy and foodprices. Elevated energy prices are increasing the cost of doing business, and negatively impact growth in extractive andmanufacturing industries. Real GDP
growth averaged 5.5 percent between
2015-21, but didn’t translate into significant poverty reduction or reduced inequality. Senegal’s structural long run constraints to inclusive and sustained growth
include insufficient competition, inadequate private financing and uneven tax enforcement, inequitable and inefficient public social spending, and high and rigid labor costs that have constrained the development of the private sector, limiting job
creation in productive sectors.
Risks are mainly on the downside. A
prolonged conflict in Ukraine could
keep inflation pressures elevated andfurther strain fiscal space to cushion theeffect of the crisis on the poor, creating discontent and political instability.
Senegal is also negatively affected bysub-regional insecurity, rising social andgeopolitical tensions, and the tightening of international and regional financing conditions. Finally, Senegal is exposed
to climate shocks (floods, droughts, and associated health hazards), which could reduce agricultural productivity, exacerbated

FIGURE 1 Senegal / Evolution of main macroeconomic
indicators
Percent
12
10
8

Recent developments
Growth is estimated to decelerate to 4.8
percent in 2022 (2.1 percent in per capita
terms), from 6.1 percent in 2021 (3.3 percent in per capita terms). The higher international prices for oil, fertilizer and foodhave depressed private consumption, andslowed industrial production in 2022. The
poverty headcount rate is expected to remain stable around 37 percent (using thelower middle-income poverty line), as
growth is driven mainly by urban services,while the majority of the poor derive theirincomes from agriculture. High food inflation, which accounts for about half of final household consumption, has also hindered poverty reduction.
Inflationary pressures continue to negatively impact livelihoods and affecting
nonmonetary dimensions of welfare, especially human capital. Inflation accelerated to 11.3 percent (y/y) in August
2022, driven mostly by a sharp increasein food prices (+17.1 percent). Risingfood prices are already causing the poorest households to replace higher quality
foods with poorer substitutes, with thepossibility of worsening malnutrition.
Previous negative shocks, such as the2020 pandemic have already worsened
food insecurity with the incidence of(moderate) food insecurity increasingfrom 33 percent in 2018/19 to nearly 50
percent in 2020.

FIGURE 2 Senegal / Actual and projected poverty rates andreal private consumption per capita
Poverty rate (%)

Percent
0

GDP growth (%)
Primary fiscal balance (% of GDP)
Current account balance (% of GDP, rhs)

by the recent increase in the prices of fertilizer imports.

Real private consumption per capita (constant LCU)

100

70000090-2600000

80

6

-4

70

500000-660400000

50

4
-8
2
-10

0

30

200000100000

10

-14

-4

300000

20

-12

-2

40

0

0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

-6

-16
2015

2017

2019e

2021p

International poverty rate
Upper middle-income pov. rate

2023p

Sources: Senegalese authorities and World Bank staff calculations.

Source: World Bank. Notes: see Table 2.

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74

Oct 22Lower middle-income pov. rate
Real priv. cons. pc

Monetary and exchange rate policies aremanaged by the Central Bank of West
African States (BCEAO). Its reserves declined to 5.2 months of imports in June
2022, from 5.5 months in 2021, due to higher prices of energy and food imports fromthe war in Ukraine. To counter inflationpressures, the BCEAO in June and September 2022 raised rates for liquidity calls (2percent to 2.5 percent) and the marginal
lending window (4 percent to 4.5 percent).
The trade deficit deteriorated to 9.4 percent
of GDP in H1 2022 from 6.8 percent in H1
2021, driven by higher imports (38.9 percent, y/y), mainly petroleum products,
food, and raw materials and subdued exports (a 24.6 percent (y/y) increase, driven
by higher exports of phosphoric acid andpetroleum products).
On the fiscal front, Government’s response
to rising food and energy prices included
suspending customs duties on oil, rice andsugar imports, doubling budgeted energy
subsidies, increasing the prices of high-octane gasoline (+15 percent) and diesel (+20
percent) and electricity tariffs for medium
and high consumers (+18 percent). Social
tariffs remained unchanged compared to2021. The fiscal deficit in H1 2022 widened
to 4.4 percent of GDP, compared to 3.9 in
H1 2021. The 2022 budget deficit of 6.2 percent may be exceeded without additional
fiscal consolidation measures in the second
half of the year. Transfers and subsidies(+22 percent, y/y), interest payments (+19.6
percent) and the wage bill (+17.1 percent)drove the increase in Government consumption in H1 2022. The debt-to-GDP ratio reached 73.2 percent of GDP in 2021, a+9.4 ppt increase since 2019.

Outlook
The recovery’s momentum remains uncertain and is likely to be influenced byoil price developments, social unrest, regional insecurity and monetary policy
tightening, which could depress external
demand. Real growth is expected to decelerate to 4.8 percent in 2022, but should
rebound in 2023-2024 to an average
growth of 9.3 percent, mainly driven byhydrocarbon production. Average annual
inflation is expected to peak at 8.7 percent

TABLE 2 Senegal / Macro poverty outlook indicators

in 2022, but decelerate in the medium
term as global inflation pressures andconsequently government consumption
for social support eases.
The Current Account Deficit (CAD) is expected to widen to 13.6 percent of GDP
in 2022, as import prices, notably for energy, increase. Hydrocarbon receipts and increased regional trade should significantly improve the CAD to an average of 6.5
in 2023-2024, financed by oil-sector related
foreign investment and a mix of concessional and commercial borrowing.
Government remains committed to fiscal
consolidation in the medium term to keep
debt on a sustainable path. Fiscal policy is
expected to remain expansionary in 2022,
but to decline afterwards as increases inwages, transfers and energy subsidies are
not expected to continue in the medium term. The fiscal deficit is projected toaverage 3.8 percent in 2023-2024 driven
by domestic revenue mobilization and thegradual phasing out of energy subsidies.
Fiscal consolidation and growth are expected to support a decline in the debtto-GDP ratio in 2023-2024, to an averageof 68.8 percent.

(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

2019
4.6
3.8
7.5
10.3
14.7
6.8

2020
1.3
2.2
2.6
4.3
-13.2
7.0

2021
6.1
6.0
5.4
7.4
14.7
8.0

2022e
4.8
4.9
8.8
8.5
-1.6
5.5

2023f
8.0
5.5
4.7
9.7
10.7
5.7

2024f
10.5
6.1
4.0
8.0
22.1
5.6

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

4.5
4.3
5.0
4.3

1.9
12.8
-0.4
-0.1

5.8
-1.0
10.9
5.7

4.8
-2.0
3.9
7.2

8.0
3.5
10.6
8.1

10.5
3.6
17.5
9.0

Inflation (Consumer Price Index)
Current Account Balance (% of GDP)

1.0
-7.9

2.5
-10.9

2.2
-13.3

8.7
-13.6

6.1
-8.9

5.0
-4.2

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-3.9
63.6
-1.9

-6.4
69.2
-4.4

-6.3
73.2
-4.3

-6.2
75.1
-4.1

-4.6
71.5
-2.5

-3.1
66.0
-0.9

9.3
37.4
74.2

9.3
37.4
74.3

9.2
37.1
73.7

9.1
36.9
73.3

8.9
36.7
72.9

8.8
36.4
72.3

3.9
26.6

1.1
25.5

3.1
25.3

1.6
25.1

3.9
25.8

4.8
26.8

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
a/ Calculations based on 2009-, 2014-, 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

Oct 22SEYCHELLES
Table 1

Key conditions andchallenges
2021

Population, million

0.1

GDP, current US$ billion

1.5

GDP per capita, current US$

14691.9

International poverty rate ($2.15)a

0.5

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

a

1.2

a

a

6.7
32.1

School enrollment, primary (% gross)

b

100.8

b

77.2

Total GHG emissions (mtCO2e)0.5Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ Most recent WDI value (2020).

Seychelles' economy continues to recover, with real GDP growth projected at
11.0 percent in 2022, driven largely bya recovery of tourism. Key risks to theoutlook include inflationary pressuresand lower-than-expected tourism stemming from the Ukraine war, and new
COVID-19 variants. These risks could
reduce household income, increase
poverty, and limit the effectiveness of social transfers. Fiscal consolidation andstructural reforms are therefore criticalfor sustaining inclusive growth.

Seychelles is a small island economy
heavily dependent on tourism and fisheries. Tourism centers on large hotels thatoffer comprehensive packages, exhibitinga high degree of vertical integration, withlimited participation of local operators offering complementary services such as local restaurants, taxis, and other accommodations. The fishing industry also contains little local value added. Yet, Seychelles' tuna canneries are among thelargest in the world, contributing 8 to20 percent to GDP annually and employing 17 percent of the population. Climatechange and rising sea levels have affectedsoil salinity and aquifers,, constraining
agriculture and fisheries' growth. During
the extreme rainfalls of 1997-1998 El Ninoand 1998-2000 La Nina, fisheries accounted for 45 percent of total losses, followedby agriculture and tourism.
The limited domestic sources of growth,
combined with a heavy reliance on imports, exposes Seychelles to external
shocks. These are transmitted mainly
through disruptions in international travel and tourism demand, fluctuations infishing stocks, and unstable prices of essential commodities. In addition, Seychelles is vulnerable to new COVID-19
variants. A potential external shock fromnew infection waves (despite a vaccination rate of 84 percent) could adversely impact Seychelles’ main tourist

markets. The service sector accounts forthe largest share of employment (withtourism alone directly employing an estimated 27 percent of the labor force). Adverse shocks to services could once again
derail the downward trend in poverty.
The recent Ukraine war would exacerbate these effects by undermining the authorities’ efforts to mitigate the impact ofhigh food and energy prices. Specifically, the needed increase in social transfers
could lead to a deterioration of fiscal anddebt sustainability.

Recent developments
The economy has continued on its recovery path in 2022, driven by a reboundin tourism and the services sector. In thefirst half of 2022, tourist arrivals havebeen strong, reaching about 70 percentof the 2019 level (in contrast to the 60
percent decline in 2020). Although thewar hurt tourist arrivals from Russia andUkraine, increased tourist arrivals from
Western Europe have helped offset thisloss. As a result, tourism earnings in Q1
2022 reached pre-pandemic levels (ataround SCR 650 million). Tourism growth
has also helped catalyze growth in the industrial and agriculture sectors (throughlinkages to fisheries and canneries),
buoyed by growth in private consumption. Average annual inflation has moderated, in line with an appreciation of
the Seychelles rupee (as tourism has recovered). This has partly offset the upward pressure on prices from the Ukraine

FIGURE 1 Seychelles / Real GDP growth and sectoral
contributions to real GDP growth

FIGURE 2 Seychelles / Actual and projected poverty rates
and real GDP per capita

Percent, percentage points
12

Poverty rate (%)

Real GDP per capita (constant LCU)

20

30000018

9250000

16
6

14

3

10

0

1500008100000

6

-3

4

50000

2

-6
-9

2000001202018
Services

2019

2020
Industry

2021

2022e

Agriculture

2023f

0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

2024f

International poverty rate
Upper middle-income pov. rate

GDP at Basic Prices

Sources: National Bureau of Statistics and World Bank staff calculations.

Source: World Bank. Notes: see Table 2.

MPO

76

Oct 22Lower middle-income pov. rate
Real GDP pc

war and residual cost-push factors arisingfrom pandemic-related disruptions of
production, trade, and distribution channels. On the external front, the current
account deficit (CAD) narrowed in thefirst half of 2022 due to higher tourism
receipts. As a result, gross international
reserves remained close to 2021 levels,reaching USD 668 million as of June 7,2022 (or 4.1 months of imports). Freezes
on staffing and wages, coupled with ayear-on-year 37 percent expansion of revenues (for Q1 2022) due to robust economic growth, is expected to keep the fiscal deficit on a declining path and support debt reduction.
As tourism continues to pick up, poverty
rate is projected to decline to 7.2 percent
in 2022 from 7.4 percent in 2021 (whenmeasured against the new poverty line
for upper middle-income countries of
USD 6.9 a day per capita in PPP terms).
However, the ongoing inflationary pressures may undermine this projection if
the recently announced subsidies/assistance are not well targeted to the mostvulnerable households.

Outlook
The ongoing rebound in tourism and activity will lead to growth peaking at 11.0 percent in 2022 before eventually moderating
to about 5.0 percent in the medium-term.
Tourist arrivals and investments in large resorts will continue to be the key growth driver over in the medium-term, complemented by growth in private consumption. Higher food and fuel prices are expected to raise
inflation in 2023. Thereafter, price pressures
should moderate, reflecting strong growthprospects and a stable rupee backed by recovering tourist arrivals. The current account deficit is projected to peak in 2022
(due to higher import prices of fuel andwheat), then narrow over the medium termas tourism inflows rebound and FDI inflows
increase. Tourist earnings are expected toreach 2019 levels by 2024.
Fiscal consolidation is the key priority fora sustained downward debt trend, withan expected reduction in the deficit to
3.8 percent by end-2022. The GoS will

TABLE 2 Seychelles / Macro poverty outlook indicators

continue to contain wages and salaries,
at around 11 percent of GDP over the
medium term, and to rationalize expenditures on goods and services. Increased
capital expenditure on some new capitalprojects (i.e., drug rehabilitation center,
La Digue hospital) will be financed by
grants. Revenues are projected to remainbuoyant, supported by efforts to improvetax administration and compliance. Savings from fiscal consolidation will help finance increased transfers (of an estimated
0.3 percent of GDP), to support low-income households in dealing with the impact of higher- than-expected inflation.
As growth continues to pick up, poverty
will reach pre-pandemic levels of 6.4 percent by 2023 and decline further to 5.7 percent by 2024 as inflation stabilizes. This
may further be boosted as Aeroflot is planning to resume direct flights to Seychelles
before the end of the year since Russian
tourists made up nearly 14 percent of Seychelles tourists in early 2022 before the onset of the Ukraine war. However, given
how long the war is dragging on, thisprospect is not fully certain.

(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

2019
3.1
5.9
0.8
-1.7
3.1
2.0

2020
-7.7
-5.0
11.0
-33.6
-35.7
-34.2

2021
7.9
8.9
2.3
22.0
12.3
14.4

2022e
11.0
9.2
4.3
18.9
17.6
15.3

2023f
5.2
2.5
2.1
9.9
17.3
14.4

2024f
4.8
5.9
1.7
4.0
17.3
14.9

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

3.1
2.2
3.2
3.1

-7.7
-0.3
0.8
-8.9

7.9
2.7
5.1
8.4

11.0
6.9
7.8
11.5

5.2
3.4
3.0
5.5

4.8
1.1
2.0
5.2

Inflation (Consumer Price Index)

1.8

1.2

9.8

4.1

4.7

1.5

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-16.1
16.0

-21.9
10.7

-20.1
10.2

-22.4
11.0

-19.3
10.6

-17.4
11.2

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-0.8
58.0
2.6

-18.4
88.7
-14.8

-5.6
76.2
-2.9

-3.8
73.3
-1.4

-0.8
67.0
1.8

1.1
61.3
2.9

0.5
1.2
6.4

0.6
1.4
7.4

0.5
1.2
6.6

0.4
1.0
5.6

0.4
0.9
5.1

0.4
0.8
4.8

5.0
78.8

-2.0
79.8

-29.2
70.7

8.2
72.3

5.3
73.1

7.2
74.5

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Med (0.87)) based on GDP per capita in constant LCU.

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77

Oct 22

SIERRA LEONE
Table 1

2021

Population, million

8.1

GDP, current US$ billion

4.0

GDP per capita, current US$

490.5

International poverty rate ($2.15)

a

26.1
a

64.3

a

89.9

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

a

35.7

School enrollment, primary (% gross)

b

141.3

b

55.1

Total GHG emissions (mtCO2e)9.4Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ Most recent WDI value (2020).

A nascent economic recovery from thepandemic was disrupted in 2022 by a net
negative terms-of-trade shock with theonset of the war in Ukraine. Domestic inflation accelerated and presented risks tosocial and political stability. Back-to-backeconomic shocks have aggravated fiscalpressures and risks to debt sustainability.
Slower growth and higher food inflation
have intensified food insecurity andslowed the pace of poverty reduction.

Key conditions andchallenges
Sustained economic growth has been constrained by (i) exposure to multi-dimensional exogenous shocks (economic, epidemic, climactic); (ii) fragile institutions;and (iii) limited fiscal space. Agriculture
and mining account for two-thirds of all
economic output. Thus, the economy is vulnerable to global commodity price fluctuations and climatic shocks. Institutions areunder-resourced, and inefficiencies compounded by corruption. Fiscal space is limited and insufficient to bridge significant social and physical infrastructure deficits.
Since the 2010s, the economy has been affected by back-to-back crises, interspersedwith periods of short-lived recovery: theEbola epidemic (2014-16), the collapse inglobal commodity prices (2015-16), mudslide in Freetown (2017), COVID-19 pandemic (2020), and implications of the war
in Ukraine (March 2022 onwards).
Accelerating inflation and intensifying fiscal pressures pose significant risks to theeconomic outlook. Risks of social instability have also risen, as witnessed during theviolent riots in August 2022 which left 20
people dead.

Recent developments
In 2021, GDP growth reached 4.1 percent,driven by a rebound in private consumption

and mining activity. However, in 2022, thisnascent recovery was disrupted by a net
negative terms-of-trade shock with the onset of the war in Ukraine and the rise inglobal food and fuel prices (only partiallymitigated by higher prices for key exports). The rise in fuel prices also caused
pervasive power outages.
Higher inflation has put pressure on theLeone, which has depreciated by over
20 percent since end-2021, further fuelingimported inflation. Bank of Sierra Leone
raised the monetary policy rate by 175
basis points during 2022, but monetary
policy effectiveness is limited by a shallow financial sector and fiscal dominance(over 3/4th of domestic credit is to thegovernment). This sovereign-banking
nexus has supported stability in the financial sector, despite an increase in nonperforming loans (by 2.4 pp during 2021
to 14.8 percent of loans).
Fiscal pressures have intensified. In response to COVID-19, the deficit rose from
3.1 percent of GDP in 2019, to average 6.2
percent of GDP during 2020-21. During2022, inflationary pressures have prompted
authorities to increase energy subsidies andcash transfers to vulnerable households,
slowing the planned fiscal consolidation.
After dropping to 7.0 percent of GDP in
2020, the current account deficit rose to
14.5 percent of GDP in 2021, in line withhistorical averages, as the economy recovered, and trade flows resumed. An increase in mining FDI due to resumption ofoperations at the Marampa mine, an additional allocation of Special Drawing Rights(SDR), and emergency support from the
IMF and WB boosted external reserves

FIGURE 1 Sierra Leone / Real GDP growth andcontributions to real GDP growth

FIGURE 2 Sierra Leone / Actual and projected poverty rates
and real GDP per capita

Percent, percentage points
15

Poverty rate (%)

105Real GDP per capita (constant million LCU)

100

1.80

90

1.60

80

1.40

70

1.20

60

0

1.00

50

0.80

40

-5

0.60

30

-10
-15
2019

2020

Gov. cons.
Inventories
GDP

2021

2022

Exports
Private cons.

2023

2024

20

0.40

10

0.20

0

0.00
2011

GFCF
Imports

Sources: Sierra Leone authorities and World Bank staff estimates and projections.
MPO

2013

2015

2017

Oct 222021

2023

International poverty rate

Lower middle-income pov. Rate

Upper middle-income pov. Rate

Real GDP pc

Source: World Bank. Notes: see Table 2.

78

2019

(>5 months of imports) in 2021. However,rising debt service obligations and increased forex demand for imports haveeroded reserves through 2022.
High food and fuel inflation, and lowerthan-normal agricultural yields, had significant social impacts. According to theWorld Food Programme (2022), 73 percent
of Sierra Leoneans are food insecure. The
poverty rate is estimated to have increased
during the pandemic in early 2020. However, since 2021, poverty is estimated tohave declined, albeit slowly, because GDP
growth occurred mostly in the capital-intensive mining sector. These estimates are
based on real per capita GDP growth anddon’t consider the additional distributional impact of food and energy inflation,
which have a proportionately higher effecton the poorer segments of the population.

OutlookGDP growth is now projected at 3.7 percent during 2022, down from 5 percent
projected at the end of 2021. It will besupported by: (i) resumption of iron-ore
mining at Marampa and Tonkolili, for the

first time since Ebola; and (ii) a gradual
recovery in consumption demand. However, supply chain disruptions and inflationary pressures caused by the war
in Ukraine will dampen investments andslow the recovery in private consumption.
Over the medium-term, GDP growth isprojected to average 4 percent, but remain
below the long-term average of 4.3 percent, reflecting economic scarring from repeated shocks. Inflation will remain elevated (averaging 22 percent in 2022) andmoderate gradually to 18 percent by 2024,
in line with global projections for commodity prices and pick-up in domestic
food production.
The overall fiscal deficit is projected at
5.0 percent of GDP in 2022, 1.2 percentage points higher than the original budget. However, it is expected to decline toabout 3 percent of GDP by 2024, as theauthorities strengthen expenditure controls and improve revenue mobilization
through the development of a mediumterm revenue strategy.
The current account deficit is expected
to narrow to 12.7 percent of GDP by2024 as the recovery in the mining sector
boosts exports. However, import growthis also expected to remain high driven by

TABLE 2 Sierra Leone / Macro poverty outlook indicators

persistent high food and fuel prices, anda gradual rebound in aggregate demand(including from public investments). The
deficit is expected to be financed over the
medium-term by FDI in mining and agriculture and continued access to concessional financing from multilateral.
The poverty rate (at PPP US$2.15/day)is expected to decline moderately given
the pick-up in economic growth, driven
largely by the mining sector. Reducing
poverty and food insecurity would require raising agricultural productivity,
which employs nearly 80 percent of the
population, and creating jobs outside
agriculture for low-skilled workers.
Besides commodity price fluctuations,the main risks to the outlook stem fromrising public discontent, and uncertainties associated with the upcoming general elections. Any aggravation of the negative terms-of-trade shock could destabilize inflation and cause further public expenditure overruns. Higher food inflation
would hurt the poor disproportionately.
Rising inflation can further spur public
discontent and rioting, which could hamper the authorities' reform appetite aheadof general elections in mid-2023, resulting in the populist policies.

(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

2019
5.3
4.3
5.1
-34.2
-1.6
-7.0

2020
-2.0
4.3
2.7
-4.1
-9.8
7.5

2021
4.1
4.2
0.1
22.2
40.8
18.5

2022f
3.7
6.7
-1.2
5.3
22.0
14.2

2023f
3.7
4.0
18.2
3.4
12.2
14.0

2024f
4.4
5.1
7.0
9.5
13.0
11.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

5.3
5.4
10.9
3.8

-2.0
1.6
-7.1
-5.9

4.1
2.5
17.4
3.3

3.7
2.8
9.0
3.5

3.7
3.0
8.0
3.4

4.4
3.2
9.8
4.5

Inflation (Consumer Price Index)

14.8

13.5

11.9

21.9

21.0

18.0

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-15.3
7.9

-7.0
3.4

-14.5
8.7

-14.9
8.4

-13.9
6.4

-12.7
5.5

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-3.1
70.9
-0.4

-5.8
76.3
-2.7

-6.6
78.8
-3.4

-5.0
81.0
-2.1

-4.5
80.7
-1.5

-3.0
78.1
0.1

24.9
63.2
89.5

26.3
64.6
90.1

25.6
63.9
89.8

24.9
63.3
89.5

24.3
62.8
89.3

23.5
62.0
88.9

-2.7
9.5

-1.4
9.1

0.7
9.0

6.4
8.5

0.8
8.5

0.6
8.5

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 = 0.6 based on GDP per capita in constant LCU.

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Oct 22

SOMALIA

Key conditions andchallenges

Table 1

2021

Population, million

a

15.2

GDP, current US$ billion

7.6

GDP per capita, current US$

502.2

International poverty rate ($2.15)
Gini index

b

70.7

b

36.8

School enrollment, primary (% gross)
Life expectancy at birth, years

c

d

33.0
57.7

Source: WDI, Macro Poverty Outlook, and official data.
a/ Estimates based on 2013 population estimates by UNFPA and assumes an average annual population growth of
2.8%.
b/ Most recent value (2017), 2017 PPPs.
c/ Somali Poverty and Vulnerability Assessment Report(World Bank, 2019).
d/ Most recent WDI value (2020).

2021 saw a modest economic rebound at
2.9 percent, on par with the population
growth rate. Despite an improvement inpolitical stability following the conclusionof the elections, economic growth in 2022
is projected to decline to 2.2 percent.
Drought conditions have worsened, commodity prices have increased, and humanitarian support has been insufficient
for addressing high levels of food insecurity. Internal displacement is widespread,and poverty is projected at 72 percent.

As a legacy of decades of conflict andfragility, the Somali economy does not
generate the jobs and incomes needed toreduce poverty. Economic growth has
been slow and insufficient to keep up withpopulation growth. Real GDP growth averaged only 2.9 percent between 2014 to
2021 with no growth in per capita terms.
Overall employment remains low; lessthan half of the Somali working-age population is actively participating in the labormarket with lower participation among
women and youth, at 43 percent and 39
percent, respectively. The economy is extremely vulnerable to natural disasters andexternal economic shocks. Cycles of floods
and droughts have become increasingly
frequent, damaging traditional agriculture-based livelihood systems, and contributing to widespread food insecurity
and internal displacement. Somalia is indebt distress and depends on official development assistance (ODA) and external
remittances to finance consumption andthe large trade deficit which averaged 67
percent of GDP in 2020 and 2021.
To achieve sustained economic growth,
Somalia will need to build resilience toshocks. While more urbanized parts of theeconomy continue to develop, including
the booming new services sectors such as
telecommunications, there are insufficientjobs to move people out of poverty. The
country lacks monetary policy instruments

and there is negligible fiscal space to respond to shocks or to invest in much-needed human and physical capital. Encouraging broad-based private sector activity
including entrepreneurial activities for
women and youth can help the economy
to increase domestic production capacityand move away from a consumptiondriven economy dependent on external
flows. Somalia is participating in the
Heavily Indebted Poor Countries (HIPC)
initiative to address high levels of indebtedness for loans contracted before thecivil war. Reaching the HIPC Completion
Point milestone is envisaged in the second half of 2023, which would enable Somalia to qualify for debt relief and provide enhanced access to finance for development priorities.

Recent developments
Somalia is experiencing a severe droughtwith famine conditions emerging in someparts of the country, which is preventing
the economy from sustaining a modest rebound in growth. Real GDP growth is projected to slow down to 2.2 percent in 2022,
from 2.9 percent in 2021. Exports, which
are dominated by livestock, have been adversely affected by the drought, while theimport bill has risen by 10 percent y-o-y
as food and energy costs increased globally. Overall, the trade deficit is estimatedto widen by 8.3 percentage points to 74
percent of GDP. Commodity prices whichstarted rising in mid-2021 following challenges in global supply chains continue to

FIGURE 1 Somalia / External position

FIGURE 2 Somalia / Actual and projected poverty rates andreal GDP per capita

Percent of GDP

Poverty rate (%)

80

120

420

100

415

80

410

60

405

40

400

20

395

70

Real GDP per capita (constant LCU)

60
50
40
30
20
10
0

0
2016

2017

2018

Remittances
Trade deficit

20192020 2021e 2022f 2023f 2024f

390
2017

2019

International poverty rate
Upper middle-income pov. rate

GrantsCurrent account deficit

Source: Somalia Authorities & World Bank Staff Calculations.

Source: World Bank. Notes: see Table 2.

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Oct 22

2021

2023
Lower middle-income pov. rate
Real GDP pc

increase due to the worsening drought
conditions, as well as the impacts of the
Ukraine war. Inflation reached 7.7 percent
in July 2022 (y-o-y) compared to 4.3 percent in the same period in 2021.
Poverty in Somalia is deep and widespread, increasing susceptibility to negative shocks. An estimated 72 percent of
the population lived below the poverty line in 2021 with the majority of the
population having experienced a reduction in income compared to pre-pandemic levels. The modest economic rebound pushed nominal GDP per capita
to US$502 in 2021 from US$466 in 2020,
but there has been no growth in real
GDP per capita. The worsening drought
conditions are estimated to have led tonearly 50 percent of the population being
food insecure and 1 million people displaced from their homes as rural
dwellers seek access to food and basic
services in urban areas by end of July
2022. This growing size of the internallydisplaced population is likely to contribute to greater vulnerability andpoverty overall. Increasing remittance inflows and grants (jointly estimated at 60
percent of GDP) as well as the government’s social protection program, Baxnaano, are providing some relief to thechallenging economic situation.
Somalia’s fiscal situation has been challenging in 2022. While domestic revenue
mobilization recovered to the preCOVID-19 pandemic levels, the tax-toGDP ratio remains low at 2 percent. Following the peaceful conclusion of parliamentary and presidential elections in 2022,
the new government should be in a position to focus on taking measures to build
economic resilience including expanding
revenue mobilization, which is currently
dominated by trade-related taxes.

Outlook
The economy is expected to pick up
over the medium term, with growth
projected to expand to 3.6 percent in

TABLE 2 Somalia / Macro poverty outlook indicators

2023 and 3.7 percent in 2024. The peaceful conclusion of elections is expected toincrease business confidence and encourage new investments. Improved growth
conditions for Somalia’s main trading
partners, the Gulf Cooperation Council
countries, are projected to contribute to
an increased demand for the country’s
livestock exports. Ongoing investments
in sectors such as energy, transport, education, and health are expected to improve conditions for trade and gradually contribute to improvements in humancapital. Furthermore, upon reaching the
HIPC Completion Point milestone Somalia is expected to access new sourcesof financing to boost economic growth
and resilience.
The international poverty rate is projected to remain at around 72 percent
between 2022 and 2024. Accelerating
the pace of poverty reduction will require policy interventions and public investments that raise productivity, create jobs, and expand pro-poor programs
which focus on women and youth.

(percent of GDP unless indicated otherwise)aReal GDP growth, at constant market prices
CPI inflation, annual percentage change

2019
2.7
4.5

2020
-0.3
4.3

2021e
2.9
4.6

2022f
2.2
8.5

2023f
3.6
3.6

2024f
3.7
3.8

Current account balance
Trade balancePrivate remittances
Official grants

-13.0
-66.2
24.3
30.1

-14.9
-67.4
23.5
30.3

-12.5
-65.7
27.4
27.0

-15.5
-73.9
30.3
29.4

-13.1
-69.6
28.9
28.7

-12.3
-67.5
28.7
27.6

0.3
3.5
1.7
4.9
2.5
82.0

0.4
3.1
4.3
7.0
3.3
56.8

-1.1
3.0
1.9
6.0
3.3
45.0

0.2
3.1
4.3
7.3
3.3
44.0

-0.1
3.4
3.3
6.8
3.1
6.5

-0.2
3.7
2.2
6.1
2.9
9.0

70.3
90.0
98.5

71.9
90.8
98.7

71.9
90.8
98.7

72.2
90.9
98.7

71.9
90.8
98.7

71.5
90.6
98.7

b

Fiscal balance
Domestic revenue
External grants
Total expenditure
Compensation of employees
External debtc,dInternational poverty rate ($2.15 in 2017 PPP)c,dLower middle-income poverty rate ($3.65 in 2017 PPP)c,dUpper middle-income poverty rate ($6.85 in 2017 PPP)

Sources: Federal Government of Somalia, IMF, and World Bank staff estimates.
Notes: e = estimate; f = forecast.
a/ GDP baseline estimates 2019-21 are by Somalia National Bureau of Statistics (SNBS, June 2022).
b/ Federal Government of Somalia (FGS).
c/ Calculations based on 2017 SHFS-wave 2. Actual data: 2017. Nowcast: 2018–21. 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.

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Oct 22

SOUTH AFRICA
Table 1

2021

Population, million

60.0

GDP, current US$ billion

421.2

GDP per capita, current US$

7015.8International poverty rate ($2.15)

a

20.5
a

40.0

a

61.6

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

a

63.0

School enrollment, primary (% gross)

b

98.4

b

64.4

Total GHG emissions (mtCO2e)

560.7

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2014), 2017 PPPs.
b/ WDI for School enrollment (2019); Life expectancy(2020).

The South African economy continues torecover, albeit more slowly than expected,
with growth estimated at 1.9 percent in
2022. Employment growth picked up in
the first half of 2022, but the labor market
situation remains challenging. Poverty
has reached levels not seen for more thana decade, while inflation has increased toa 13-year high. The outlook is cloudedwith risks, and sustained reforms and investments are required to support better
growth outcomes and poverty reduction.

Key conditions andchallenges
South Africa’s economy only expanded byan average of 1.0 percent between 2012 and
2021, leading to a contraction of income percapita of 5.6 percent during this period.
GDP rebounded 4.9 percent in 2021 but remained below pre-Covid levels. The country’s long-standing weak performance has
been rooted in persistent structural constraints, especially in the energy sector, andin low and uneven human capital development. Low investment has been a significant drag on economic performance, exacerbating the decline in potential output
amid weak business confidence and limitedcompetition in several priority sectors.
The adverse welfare effects of the pandemic
remain visible. In April, South Africa ended
a two-year National State of Disaster related
to COVID-19. However, the virus has left
significant scarring on the economy sincearound 821 thousand fewer people were
employed in Q2-2022 compared to preCOVID levels. The absence of pro-job
growth explains that only 38.7 percent of theworking-age population is employed. Job
losses have been higher for the more vulnerable, exacerbating inequality, which was already among the highest in the world (GiniIndex of 67 in 2018). As a result, it is estimated that poverty rates (63.1 percent in 2021
based on the upper middle-income povertyline) have climbed back to levels of morethan a decade ago, and an additional 1.5 million people are poor relative to 2019.

FIGURE 1 South Africa / Employment growth andunemployment rate

South Africa’s growth recovery is fragile as
it is not broad-based and exposed to the negative impacts associated with the energy crisis on businesses and households. External
and fiscal accounts have benefited from therecent upswing in commodity prices but thecountry’s heavy trade reliance on commodities and the government’s high debt
level continue to make them vulnerable toshocks, including weaker global growthand climate risks. Today, real GDP per capita resembles the levels seen over a decadeago. A lack of improvement in living standards would threaten social stability andput additional pressure on public finances,which are already strained.

Recent developments
South Africa’s economy began 2022 on a
positive note but a multiplicity of shocks
subsequently hit economic momentum.
Real GDP increased by 1.7 percent QoQ
in the first quarter, driven by manufacturing, trade, and financial services. However,
the economy contracted in Q2 by 0.7 percent because of the devastating floodingin the KwaZulu-Natal province, and theintensification of electricity supply shortages, which hurt confidence and restrained
industrial output and activity in other sectors. Price pressures also increased due tothe effects of the Ukraine war. The escalation of load shedding drove the government to launch a new energy plan in Julyto end the power crisis in the mediumterm. While growth momentum was disrupted, the unemployment rate declined

FIGURE 2 South Africa / Actual and projected poverty rates
and real GDP per capita

Millions
1.0

Poverty rate (%)

Percent
38

82000

70

80000

60

78000

50

76000

40

74000

26

30

72000

24

20

70000

22

10

68000

20

0

36

0.5

34
0.0

Real GDP per capita (constant LCU)

80

32

-0.5

30

-1.0

28

-1.5
Quarterly change in employment
Unemployment rate (right-axis)

-2.0
-2.5
Q1

Q2

Q3

2020

Q4

Q1

Q2

Q3

2021

Q4

Q1

Q2

66000
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023
International poverty rate
Upper middle-income pov. rate

2022

Sources: Statistics South Africa and World Bank.

Source: World Bank. Notes: see Table 2.

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82

Oct 22Lower middle-income pov. rate
Real GDP pc

to 33.9 percent in Q2, albeit still above theelevated pre-pandemic levels.
The war-induced spike in commodity
prices boosted South Africa’s export
prices but also raised input costs. The
current account surplus improved to 3.7
percent of GDP in 2021 but deteriorated
in the first half of 2022. Higher mineralprices provided a windfall for tax revenues as miners' earnings remained firm,
leading to a lower than expected fiscal
deficit of 5.0 percent of GDP in FY2021/
22. Public debt as a share of GDP wasequal to 67.4 percent at the end of
FY2021/22, lower than in FY2020/21 due
the relatively rapid GDP growth rate.
The shock from the Ukraine war propelled
the rise in domestic energy and foodprices, underpinning the increase in headline inflation to a 13-year high of 7.8 percent YoY in July. To counter inflation risks
and contain the rise in inflation expectations, the South African Reserve Bank accelerated monetary tightening in recent
months, taking its cumulative hikes to 275
basis points thus far in the current cycle.

OutlookGDP growth is expected to ease to 1.9 percent in 2022 and average below this rate in
2023 and 2024. The outlook is in the context of strong realized growth in the firstquarter, the full reopening of the economy, planned infrastructure spending, andthe partial rebound from the direct shocks
which hindered growth in Q2, particularly
severe flooding. In the absence of reforms,
structural bottlenecks will continue tohamper growth outcomes, including theextent of electricity shortages and logisticalconstraints. Investment is expected toslightly improve from low levels.
The economic outlook is clouded withrisks, concerning slowing global growth,
persistent spillovers from the war in
Ukraine on input costs, and a further tightening in global financial conditions.
South Africa’s expected growth remains insufficient to address socio-economic challenges. The unemployment rate is expected

TABLE 2 South Africa / Macro poverty outlook indicators

to remain elevated over the medium run,hindering progress in reducing poverty
and inequality. The poverty rate is estimated to hover around 63 percent between
2022 and 2024. Headline inflation is projected to average 6.8 percent in 2022, heavily affecting the most vulnerable and eliciting further monetary tightening.
Revenue overperformance has mitigatedthe deterioration in public finances overthe last two years, but significant vulnerabilities persist. The revenue windfall associated with higher global commodity
prices is considered temporary, and limiting fiscal slippages remains critical. The
acceleration in inflation has fueled demand for wage increases. Nevertheless,keeping the growth of the wage bill under control, limiting transfers to financially distressed SOEs, and containing the
expansion of social protection programs(beyond the SRD grant) will be essential
to protect fiscal sustainability. Public sector financing needs are expected to remain large, and higher interest rates will
impact the pace of fiscal consolidation.

(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

2019
0.3
1.2
2.1
-2.1
-3.4
0.4

2020
-6.3
-5.9
0.8
-14.6
-11.9
-17.4

2021
4.9
5.6
0.6
0.2
10.0
9.5

2022e
1.9
2.6
0.4
4.2
6.7
11.9

2023f
1.4
2.2
-1.7
4.8
2.3
4.9

2024f
1.8
2.0
0.8
4.8
3.0
4.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

0.2
-6.4
-1.5
1.1

-5.9
14.9
-12.5
-4.4

4.7
8.8
6.1
4.1

1.9
0.9
-2.5
3.3

1.4
2.0
1.5
1.3

1.8
2.0
1.1
2.0

Inflation (Consumer Price Index)

4.1

3.3

4.6

6.8

5.7

4.6

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-2.6
0.5

2.0
1.5

3.7
9.7

0.2
0.5

-1.6
0.6

-2.1
0.6

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-5.0
57.2
-1.5

-10.0
70.2
-5.8

-5.0
67.4
-0.8

-5.8
71.8
-0.9

-5.7
74.9
-0.5

-5.3
77.4
0.0

21.0
40.6
62.3

23.0
43.2
64.0

22.2
42.0
63.1

22.0
41.7
63.0

21.9
41.6
62.9

21.7
41.3
62.8

1.0
78.3

-1.0
78.0

0.7
78.2

0.6
78.0

0.3
77.7

0.5
77.4

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Med (0.87)) based on GDP per capita in constant LCU.

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SOUTH SUDAN
Table 1

2021

Population, million

11.4

GDP, current US$ billion

5.0

GDP per capita, current US$

437.3

International poverty rate ($2.15)

a

67.3
a

86.5

a

96.6

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

Key conditions andchallenges

a

44.2

School enrollment, primary (% gross)

b

73.0

b

58.1

Total GHG emissions (mtCO2e)60.8Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2016), 2017 PPPs.
b/ WDI for School enrollment (2015); Life expectancy(2020).

Despite high oil prices, the economy isprojected to contract by 2.8 percent in
FY2021/22 due to falling oil production
and weather-related and external shocks.
These, coupled with structural challenges
related to weak governance, inadequate
service delivery, and ongoing localized
conflict, contributed to high levels of foodinsecurity and widespread poverty. Key
downside risks include heightened conflict, climate shocks, and adverse terms oftrade amid limited fiscal resources andpressing humanitarian needs.

A decade after independence, South Sudan’s development prospects remain constrained by high levels of fragility amid
localized/inter-communal conflict. A 2018
peace agreement ended five years of civil
war; however, the transition period needed for its full implementation has been extended until 2025. The country is vulnerable to climate change and external shocks.
Oil accounts for nearly all exports andaround 90 percent of government revenues. A modest economic recovery in2019 was upended by historic floods andthe COVID-19 pandemic that led to a massive loss in oil revenues. The government’s
response – salary arrears and reliance onmonetary financing – further compounded
economic hardship and added to currency
and inflation pressures.
Since 2021, reforms initiated under an
IMF staff-monitored program havehelped improve macroeconomic andprice stability. Higher oil prices following
the Ukraine war have supported FX
buffers and fiscal revenues. Poverty,
however, remains dire, with 7 in 10 people living in extreme poverty. Some 8.3
million people, comprising 75 percent of
the population, face severe food insecurity made worse by higher global foodprices and domestic floods. In addition,
2.2 million people are internally displaced (55 percent of whom were womenand girls), up from 2 million in 2021. An

FIGURE 1 South Sudan / Exchange rate developments

600
500

Recent developments
Economic activity has remained weighed
down by a fourth consecutive year offlooding, lingering impacts of the
COVID-19 pandemic, violence flareups,
and higher food inflation due to the war
in Ukraine. Oil production fell 8.6 percent
in FY2021/22 due to floods and COVID-related delays in investments to replace exhausted wells. Agricultural prospects remain disappointing: the cereal deficit in
2022 is estimated at 541,000 tons (16 percent higher than in 2021), mainly driven by
reduced yields due to widespread floods
and prolonged dry spells. GDP is estimated to contract by 2.8 percent in FY 2021/22,

FIGURE 2 South Sudan / Actual and projected poverty
rates and real GDP per capita

Spread, percent
300

SSP/USD
700

additional 2.3 million remain refugees inneighboring countries.
External risks relate to adverse global oil
and food prices that reduce scarce fiscal
resources amid pressing humanitarianneeds. Implementing the 2018 peace deal,
the timeline for which was recently extended by 2 years, is essential for domestic
peace and stability and the resumption of
growth. Macroeconomic, governance, andtransparency reforms are urgent to ensure
scarce resources are spent on development
needs and to facilitate a sustainable andinclusive economic recovery. Reforms andinvestments are especially critical in agriculture, which supports livelihoods for 80
percent of the population; these will help
to support diversification away from theoil sector, create jobs, and build resilience
to climate change.

Poverty rate (%)

Real GDP per capita (constant LCU)

120

3500

250

100

3000

200

80

150

60

2500
2000

400

1500

300
200
100
0
Oct'20Jan'21

Apr'21

Spread, % (rhs)

Jul'21

Oct'21
Official XR

Jan'22

100

40

50

20

0

0

1000
500
0
2009

Apr'22

2011

2013

2015

2017

International poverty rate
Upper middle-income pov. rate

Parallel XR

Source: World Bank.

Source: World Bank. Notes: see Table 2.

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2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

following a 5.1 percent decline the previous year.
Tighter monetary policy and successful exchange rate reforms in 2021 helped to easeinflation pressures, which averaged 22 percent in FY2021/22, vs. 43.1 percent in
FY2020/21. Official Juba CPI data shows
year-on-year inflation dropped to -11.5 inJune 2022; however, monthly inflation momentum has increased since March in linewith global food prices. The exchange rate
premium between official and parallelmarkets has increased, albeit modestly,
following the appreciation of USD anddrawdown on FX deposits at the central
bank by the Ministry of Finance to reduce
salary arrears.
Notwithstanding higher oil revenues, fiscal pressures remained significant in
FY2021/22due to rising road investments,
reduction of arrears, and unanticipateddebt repayments.
The FY2022/23 draft budget envisages sustained increases in capital expenditures, a
20 percent increase in public sector salaries
to protect against the impacts of inflation,and rising transfers to regions, which will
widen the fiscal deficit. Public financial
management (PFM) reforms to strengthen

expenditure controls and cash management have been initiated, including an
IFMIS. But there is limited transparency on
oil revenues, including servicing of nonconcessional external debt. South Sudan
remains at a high risk of debt distress forboth external and domestic debt.
Rising food import costs have been offset
by higher oil export revenues, completionof transfers to Sudan, and weaker demandfor capital imports. Consequently, the current account shifted to a surplus of 0.8 percent of GDP from a deficit of 5.5 percent.

OutlookGDP growth should remain negative in
FY2022/23, reflecting the continued impact of floods on agricultural and oil
output, with oil production projected todrop by 3.8 percent. Nonetheless, higher
government current spending should
support a return to positive growth in
the service sector.
Over the medium term, growth should
rise to above 2 percent as oil output
recovers and non-oil activity improves,

TABLE 2 South Sudan / Macro poverty outlook indicators

supported by higher government outlays
on critical public investments, health andeducation, and moderating inflation. Thisoutlook is predicated on prudent monetary and fiscal policies that anchor
macro-stability, progress on governance,transparency, and structural reforms, andsteady implementation of the peace deal.
The current account surplus is expected
to benefit from the completion of financial transfers to Sudan, but eventually
narrow as the peak in global energy
prices passes.
Poverty is tenacious and expected to remain stagnant at around 71 percent in
the medium term as real growthprospects are limited. Addressing this reinforces the urgency of fiscal and PFM reforms that generate budgetary resources
to increase social expenditures. While efforts to modernize tax administration using digital solutions and expand the tax
base will help, fiscal pressures will remain substantial given sizable debt service obligations, reduction of legacy arrears, and ramping up social and humanitarian expenditures. It is, thus, also vitalto strengthen the management and transparency of oil revenues.

(annual percent change unless indicated otherwise)

Real GDP growth, at constant market prices

2019
3.2

2020
9.5

2021
-5.1

2022e
-2.8

2023f
-0.8

2024f
2.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

3.2
9.9
20.9
-12.1

9.5
6.0
27.5
-9.6

-5.1
-4.0
-2.3
-9.7

-2.8
-1.8
-3.4
-2.0

-0.8
-1.8
-1.8
1.1

2.1
2.5
1.2
3.5

Inflation (Consumer Price Index)

63.6

33.3

43.1

22.0

28.0

16.1

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-6.3
-1.7

-20.3
-0.4

-5.5
0.9

0.8
1.0

3.5
0.9

1.9
2.4

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-1.0
32.7
-0.5

-9.8
40.7
-7.8

-6.8
57.6
-4.4

-3.0
59.5
-0.8

-7.0
46.4
-5.2

0.9
34.9
2.0

70.5
88.5
97.4

67.8
86.9
96.8

70.1
88.3
97.4

71.1
88.9
97.5

71.1
88.9
97.5

70.5
88.5
97.4

-10.2
2.9

0.2
3.3

0.7
3.3

0.1
3.3

0.0
3.4

0.3
3.5

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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.

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Table 1

2021

Population, million

44.9

GDP, current US$ billion

34.3

GDP per capita, current US$

764.3

International poverty rate ($2.15)

a

15.3
a

49.7

a

86.2

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

a

34.2

School enrollment, primary (% gross)

b

79.0

b

65.5

Total GHG emissions (mtCO2e)

127.1

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2014), 2017 PPPs.
b/ WDI for School enrollment (2018); Life expectancy(2020).

Real GDP growth is projected at 0.3 percent in 2022, following a contraction in
2021. Annual inflation remains in triple
digits, and balance of payments pressures
have increased due to high global food andfuel prices from the Ukraine-Russia war.
Extreme poverty is estimated to have increased in 2021, and the political impasse
may delay HIPC completion, undermining efforts to tackle significant external
debt vulnerabilities. Failure to reach domestic political consensus is a key
downside risk.

The political impasse that started with the
October 2021 military takeover has severely impacted the Sudanese economy.
Grants were expected to provide almost
one-third of revenues in 2021-2022, but international assistance has been on holdsince the military takeover. The pause inexternal grants caused a depreciation of
the SDG, weakening the balance of payments. This has been exacerbated by the
Ukraine war because Sudan imports about
half its wheat from Russia. As a result,higher global food prices, coupled withhigher import needs have raised importcosts, worsening the balance of payments,and food insecurity. The World Food Program projects that as much as 39 percentof the population could become food insecure by the Fall of 2022. Recent floods
could further devastate agriculture production, displacing populations, and worsening household welfare.
Reduced fiscal space has caused the government to cut public expenditures, limiting much-needed investment and service
delivery spending. Protests and ongoing
civil disturbances have disrupted tradeand food distribution channels, including
blockades of some national trade routes.
This has stalled growth. The country faces
a dilemma of either raising prices and potentially exacerbating unrest or increasing
subsidies, and returning to monetizationof a larger fiscal deficit at the risk of serious

macroeconomic destabilization. Reforms
are need to stimulate growth and containinflation. Sudan plans to reach HIPC completion point in the coming years and has
remained current on its debt servicing to
the IMF and World Bank. Failure to reachdomestic political consensus is a key
downside risk; the economy remains highly vulnerable to external shocks amidst
limited policy buffers.

Recent developments
The October 2021 military takeover coupled with the pause in donor support led
to an estimated 2 percent growth contraction in 2021. Economic activity continued
to stall during 2022H1, largely due to reduced mobility and disruption of criticalbusiness services, including logistics andtelecommunications. But increased public
spending on wages and goods and services, coupled with higher exports of goldand live animals, provided some support
to the economy. Although declining, inflation remains extremely high at 150 percent
in June 2022, following a significant reduction in commodity subsidies in 2021, andmore recently due to higher global foodand fuel prices arising from the Ukraine
war. Following a shift to a freely floatingexchange rate in early March 2022, thePound depreciated from SDG600 to
SDG800 to the dollar in one week. However, following a reversion to a managed
float in late March, it appreciated back to
SDG680 on the parallel market andSDG585 on the formal market. In 2022Q1,

FIGURE 1 Sudan / Real GDP growth and sectoral
contributions to real GDP growth

FIGURE 2 Sudan / Actual and projected poverty rates andreal GDP per capita

Percent
4

Poverty rate (%)

32Agriculture
Industry
Services
Gross value added at basic prices

Real GDP per capita (constant LCU)

100

800

90

700

80

600

70

1

60

500

50

400

0

40

300

-1

30

200

20

-2

100

10
0

-3

0
2009

-4

2018

2019

2020

2021e

2022f

2023f

2011

2013

2015

2017

International poverty rate
Upper middle-income pov. rate

2024f

Sources: National Bureau of Statistics and World Bank's Staff Calculations.

Source: World Bank. Notes: see Table 2.

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2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

following a US$46.47 million drawdown,
reserves are roughly US$1.6 billion (or 2.1
months of imports).
In the wake of the political impasse andpause in grants, the authorities significantly cut subsidies on fuel, wheat, andmedicines and reduced capital spending,narrowing the fiscal deficit in 2021. With
lower spending, overall public debt declined to 215.6 percent of GDP in 2021
(from 249.1 percent in 2020). A portionof the savings financed higher spending
on wages, social transfers, and electricity
subsidies in 2022H1. Between H12021 andH12022, the deficit declined from
SDG45.8 million to SDG 37.1 million, driven by higher nontax revenues, goods
and services taxes, and direct taxes.
Based on the latest household survey(2014) and GDP growth projections, poverty continued to increase from 18.4 percent
in 2018 to 29.1 percent in 2022, at a lineof $2.15/day (in 2017 PPPs). The protracted
economiccrises,compoundedby
COVID-19, the military takeover in October 2021, the Ukraine war, food insecurity,and climate shocks are expected to havecontributed to nearly 10 percentage points

increase in extreme poverty. Cash andfood transfer programs could help assist
at-risk populations.

Outlook
Growth is expected to average around 2
percent over 2023-2024, driven by agriculture, especially exports of livestock, aswell as mining and a recovery of services. Inflation is expected to decline but
remain high, following the government’s
commitment to contain the fiscal deficit
and limit monetization.
>Balance of payment pressures on the exchange rate will continue into 2023, mainly
due to the fallout from the Ukraine crisis.
Sudan will need to import a substantial
amount of food and wheat at much higher
prices. Higher fuel prices will not adversely affect the balance of payments because higher inflows from crude exports
and transit fees from South Sudan almost
exactly offset higher payments for petroleum and fuel imports. However, pressures could ease somewhat if the political

TABLE 2 Sudan / Macro poverty outlook indicators

impasse is resolved in the coming months,
prior to the start of 2023, and Sudan reengages with the international community.
The fiscal deficit is projected to averagearound 2 percent over 2023-2024. In theabsence of grants to finance increased
wages and transfers, the authorities are
expected to delay capital spending andrely on trade receipts and revenues fromexports of gold and animal products. Total expenditures are expected to average
12.4 percent of GDP, while total revenues
as a share of GDP are expected to average
10.2 percent of GDP. With the authorities
expected to limit the contraction of additional debt and maintain its debt service
obligations, the debt-to-GDP should decline further; even so, debt ratios are expected to remain elevated with delays inreaching HIPC completion point.
Substantial efforts are needed to curb thepoverty trend. Projections suggest that extreme poverty will continue to increase until 2023. Even though extreme poverty is
expected to stagnate in 2024, poverty rates
measured by all poverty lines are still
higher than the pre-Russia-Ukraine conflict levels in 2024.

(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

2019
-2.2
-0.6
-6.5
-0.2
7.0
13.8

2020
-3.6
-3.4
-8.8
-2.0
5.2
-9.0

2021
-1.9
-0.8
-9.8
-2.1
2.0
-0.5

2022e
0.3
0.3
2.5
-1.8
3.5
4.8

2023f
2.0
2.1
2.7
2.0
4.0
5.0

2024f
2.5
2.7
3.3
3.0
5.2
6.7

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-2.2
-1.5
-0.7
-3.8

-3.6
-2.5
-5.7
-3.0

-1.9
-0.6
-0.7
-3.9

0.2
0.5
1.0
-0.6

1.9
2.0
2.0
1.9

2.5
2.9
3.1
1.8

Inflation (Consumer Price Index)

51.0

163.3

359.7

190.0

105.0

47.0

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-15.6
-2.9

-17.5
-2.7

-5.9
-1.6

-6.6
-1.6

-7.0
-1.8

-6.6
-2.3

Fiscal Balance (% of GDP)

-10.9
200.3
-10.7

-5.9
249.1
-5.9

-0.3
215.6
-0.3

-2.7
183.8
-2.4

-2.3
168.5
-1.9

-1.6
157.7
-1.2

21.3
57.2
89.5

24.6
61.6
91.0

27.6
64.6
92.0

29.1
66.1
92.4

29.4
66.4
92.5

29.4
66.3
92.5

-0.3
20.8

-1.3
19.8

-1.1
19.1

-0.7
18.5

-0.4
17.8

-0.1
17.1

a

Debt (% of GDP)
Primary Balance (% of GDP)b,cInternational poverty rate ($2.15 in 2017 PPP)b,cLower middle-income poverty rate ($3.65 in 2017 PPP)b,cUpper 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
a/ Debt projections do not include any restructuring achieved during the HIPC process.
b/ Calculations based on 2014-NBHS. Actual data: 2014. Nowcast: 2015-2021. Forecasts are from 2022 to 2024.
c/ Projection using neutral distribution (2014) with pass-through = 1 (High (1)) based on GDP per capita in constant LCU.

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Key conditions andchallenges

Table 1

2021

Population, million

61.7

GDP, current US$ billion

65.8

GDP per capita, current US$

1066.0International poverty rate ($2.15)

a

44.9
a

74.3

a

92.3

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

a

40.5

School enrollment, primary (% gross)

b

96.9

b

65.8

Total GHG emissions (mtCO2e)

158.6

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ Most recent WDI value (2020).

The Tanzanian economy continues to expand but below its potential. GDP grewby 4.3 percent in 2021, up from 2.0 percent in 2020. Poverty is estimated to have
dropped somewhat in 2021 but remains
above pre-pandemic levels. Continued recovery hinges on strengthened implementation of supportive private sector policies, but faces risks from an uncertain external environment. Policy priorities
should be to strengthen pandemic response while laying the groundwork forinclusive private-sector-led growth.

Tanzania remains a lower middle-income country despite the global pandemic-induced contraction of GDP per
capita in 2020. Thanks to a sustained
long period of high GDP growth andmacroeconomic stability, Tanzania graduated to LMIC status in July 2020. Overthe period of two decades to 2020, GDP
growth averaged 6.5 percent per annum
and inflation remained low while bothcurrent account and fiscal deficits weremanageable. Private investment was a
key driver of growth. However, in recent years, a combination of lower extractives FDI and difficult business environment (excessive bureaucracy, hightaxes, inadequate infrastructure, andskills shortages) have resulted in a slower growth of private investment. Moreover, with the global pandemic andRussia-Ukraine crisis, the macroeconomic framework faces challenges, including
BoP and inflation pressures.
The pace of poverty reduction in Tanzania
has been slow in recent years. During
2011-2018, it fell less than 2 percentage
points from 28.2 to 26.4 and based on theinternational poverty line it remained unchanged. High population growth andlimited wage job creation, among otherfactors, have hindered the inclusiveness ofgrowth. The COVID-19 pandemic andchanging rainfall patterns have further exacerbated these challenges.

Strengthening the pandemic response andsupporting private sector-led inclusive
growth will remain priorities over the
medium term. Priority policy actions
should focus on saving lives, protecting
poor and vulnerable households, attracting new foreign and domestic investment,
supporting an employment-intensive andresilient growth, including in the agricultural sector, and expanding the available
fiscal space while maintaining debt sustainability. Achieving Tanzania’s development vision of successful transition to a
middle-income country with shared prosperity for the population will require thegovernment to revise, strengthen, and expand its existing efforts to support struggling firms while implementing structuralreforms to address longstanding constraints on private investment andwomen’s access to economic opportunities
as well as addressing the skills challenge.

Recent developments
Tanzania’s economic activities are recovering, with real GDP growth estimated at
4.3 percent in 2021, up from 2.0 percent in2020. The accommodation and restaurants,
mining, ICT, transport, and electricity sectors drove the recovery. While economic
activities were expanding, they have notreached pre-pandemic levels. Leading indicators such as cement production, electricity generation, private-sector credit,
goods and services exports, nonfuel goods
imports, telecommunications, and tourist
arrivals have continued to increase by June

FIGURE 1 Tanzania / Real GDP growth forecasts underalternative scenarios

FIGURE 2 Tanzania / Actual and projected poverty rates
and real private consumption per capita

GDP growth forecast

Poverty rate (%)

109Real private consumption per capita (constant million LCU)

120

1.40

100

1.20

8
7

1.00

80

6

0.80
60

5

0.60

4

40

3
2

0.40

20

0.20

1
0

0
2019

2020

2021

min

a

b

2022
c

2023
Max

0.00
2007 2009 2011 2013 2015 2017 2019 2021 2023

2024International poverty rate
Upper middle-income pov. rate

Baseline

Sources: World Bank Staff Estimates and Projections (2018-2024).

Sources: World Bank. Notes: see Table 2.

MPO

88

Oct 22Lower middle-income pov. rate
Real priv. cons. pc

2022. Driven by higher energy and foodprices, inflation has increased but remains
manageable at 4.6 percent in August 2022.
The current-account deficit widened to 5.3
percent of GDP in the year ending in June
2022, as the cost of imports grew fasterthan exports earnings. A combination ofhigh value of oil and other industrial supplies (+45 percent y-o-y), lower value ofgold exports (-11 percent) more than offset
the increased earnings from tourism andmanufactured goods export (+30 percent).
The current-account deficit was fundedlargely by external loans and foreign reserves. The Tanzanian shilling remains relatively stable against the currencies of major trading partners. To partly finance the
BOP, the gross official reserves declined
to US$ 5.2 billion by end-June 2022 from
US$6.7 billion at end-October 2021.
Due to increased expenditures associatedpartly with implementation of the fuel subsidyprogram,thefiscaldeficitisestimatedat
3.5 percent of GDP in 2021/22. Both foreignand domestic loans funded the deficit. Public and publicly guaranteed debt remained
relatively low at US$27.6 billion (39.5 percent of GDP) in June 2022 with interest payment consuming about 12 percent of domestic revenue. The latest joint IMF-World Bank
Debt Sustainability Analysis, conducted inJuly 2022, concluded that Tanzania’s risk ofexternaldebtdistressremainsmoderate.

Poverty based on the international poverty
line of US$ 2.15 per person per day (PPP2017) is estimated to have risen by 1.3 percentage point in 2020, due to the economic
slow-down that particularly affectedhousehold businesses. Poverty dropped
somewhat in 2021 but remains above prepandemic levels.

Outlook
Tanzania’s real GDP is projected to growat 4.6 percent in 2022. A delayed recovery
to potential GDP is based on worsening
global environment following the RussiaUkraine crisis. So, only a modest improvement in GDP growth is projected for 2022
and then a pick-up to 5.3 percent in 2023
as the global environment moderates andimproved private sector policies deliver a
private investment response. The currentaccount deficit is projected to widen to 4.4
percent of GDP in 2022 due to rising imports bill, which will more than offset an
expected increase in exports earnings. The
fiscal deficit is projected to narrow slightly
to 2.9 percent of GDP in 2022, driven byincreased domestic revenues from expanding economic activities.
Uncertainty of the macroeconomic outlook
remainshigh,withrealGDPgrowthranging

TABLE 2 Tanzania / Macro poverty outlook indicators

between 3.5 – 5.5 percent under alternative
scenarios, below its long-run potential
growth rate of about 6 percent. Tanzania’svulnerability to the global pandemic remains high amid the relatively low vaccination rates. Moreover, Tanzania remains
vulnerable to a protracted Russia-Ukraine
crisis, reduced capital flows, persistent inflationary pressures, elevated debt levels,and supply bottlenecks.
No significant reduction in the poverty
rate is foreseen for 2022 as per capita private consumption is projected to stagnate.
Year-on-year food price inflation reached
6.5 percent in July 2022, which particularly
affects the poor, given the relatively highshare of food in their total consumption
pattern. Rising food price inflation is the
top concern of Tanzanian citizens according to a nationally representative telephone survey released by Twaweza (anNGO) in August 2022. Poor rainfall in the
recent long rainy season has put food production under pressure, further compounding the challenges faced by poor
households and those living just above thepoverty line. Boosting poverty reduction
requires strengthening human capital,raising the resilience and agricultural productivity of smallholders, including
through strengthening linkages to input
and output markets, and the creation ofquality jobs.

(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

2019
5.8
3.1
2.3
8.0
19.0
-1.4

2020
2.0
1.0
7.4
2.4
-8.6
-7.6

2021
4.3
4.3
14.9
6.8
8.7
20.3

2022e
4.6
3.6
9.0
8.4
8.3
15.3

2023f
5.3
3.4
2.6
8.6
10.6
9.6

2024f
6.1
3.0
2.9
9.0
11.8
7.2

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

5.8
3.5
10.3
4.2

2.0
3.1
2.5
0.9

4.3
3.5
4.5
4.7

4.6
3.7
4.8
5.1

5.3
4.1
5.2
6.3

6.1
4.3
6.4
7.0

Inflation (Consumer Price Index)

3.5

3.4

3.4

5.2

4.5

4.0

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-1.6
2.0

-1.3
1.1

-3.1
1.6

-4.4
1.8

-4.2
2.1

-3.3
2.6

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-3.0
38.3
-0.5

-2.3
38.7
-0.3

-3.4
39.8
-1.6

-2.9
40.7
-1.2

-2.9
39.4
-1.1

-2.6
38.3
-0.9

44.9
74.3
92.2

46.2
75.1
92.5

45.5
74.6
92.3

45.6
74.6
92.3

45.7
74.7
92.4

46.0
75.0
92.5

1.9
10.4

1.7
10.7

0.7
10.0

2.6
10.8

2.9
11.9

2.1
12.4

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Med (0.87)) based on private consumption per capita in constant LCU.
MPO

89

Oct 22TOGO

Key conditions andchallenges

Table 1

2021

Population, million

8.5

GDP, current US$ billion

8.4

GDP per capita, current US$

992.4

International poverty rate ($2.15)

a

28.1
a

56.8

a

84.0

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

a

42.4

School enrollment, primary (% gross)

b

126.3

b

61.3

Total GHG emissions (mtCO2e)9.4Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ Most recent WDI value (2020).

Disruptions associated with the conflictin Ukraine, with rising inflation, slowing
external demand and tightening financing conditions, are expected to result ingrowth moderating to 4.8 percent in
2022, before recovering to a weaker-thanexpected 5.6 percent in 2023 as the impact of these shocks gradually wane. The
poverty rate is projected to decline modestly in 2022, and more significantly in
2023, as food price inflation moderates
and agriculture production strengthens.

Togo was able to maintain relatively robust growth in recent years, but fiscal
space has declined after stimulus measures since the onset of the COVID crisis. A successful period of fiscal consolidation prior to the global pandemic
lowered public debt to 52.4 percent of
GDP in 2019, from 60.1 percent in 2016,
while a reform-induced pickup in private investment helped maintain real
GDP growth at an average of 5.1 percent (2.5 percent in per capita terms)
over that period. Since 2020, a sharp increase in public spending helped cushion the COVID-related slowdown andcontributed to the recovery in 2021, butraised public debt to a 15-year highof 63.6 percent of GDP. The extreme
poverty rate (percent of the population living below the new international poverty line of US$2.15 per capita
per day, 2017 PPP) is estimated to have
dropped to 26.6 percent in 2021, about
0.8 percentage points below pre-pandemic levels. The fallout from the conflict in Ukraine, slowing external demand and rising inflation are expected
to restrain growth in 2022, while tighter
financing conditions combined withhigher-than-expected budget deficits
hasten the need for fiscal consolidation.
The outlook is subject to significant
global risks, including escalating
geopolitical tensions, recessions amongmajor trading partners, and financial
market turmoil which could impact
Togo through volatile commodity
prices, decelerating export demand,and debt refinancing pressures. At theregional and domestic level, persistent
low precipitation and a greater frequency of extreme weather events
could intensify food insecurity and exacerbate regional instability and social strife. These challenges will require reforms aimed at accelerating
structural transformation and job creation, increasing resilience to shocks,
and restoring fiscal space.

Recent developments
Following a robust recovery in 2021,
growth lost momentum in the first halfof 2022. Whereas the recovery in 2021
was largely driven by a rebound in
manufacturing activity, amid booming
external demand, activity deteriorated
significantly in 2022, with industrial
production expanding by only 0.9 percent year-on-year in May 2022, downfrom 10.6 percent in December 2021.
This slowdown reflected weakening demand from major trading partners,
global supply chain disruptions, and asignificant rise in energy prices adversely affecting both supply and demandconditions. The agriculture sector also
faced challenges in 2022, as reduced
rainfall and rising fertilizer and energy
prices contributed to slowing production and higher food prices.

FIGURE 1 Togo / Inflation

FIGURE 2 Togo / Actual and projected poverty rates andreal GDP per capita

Percent change (y-o-y)
35

Poverty rate (%)

30

90

25

80

20

70

5000001560400000700000600000

50

10
5
0

40

30000030200000

20

-5
-10
2005

Real GDP per capita (constant LCU)

100

100000

10

2008

2011

Overall inflation
WAEMU criteria

2014

2017

0

2020

0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
International poverty rate
Upper middle-income pov. rate

Food price inflation

Source: Central Bank of West African States (BCEAO).

Source: World Bank. Notes: see Table 2.

MPO

90

Oct 22Lower middle-income pov. rate
Real GDP pc

Rural populations who disproportionately rely on agriculture for own foodconsumption and income are at agreater risk of falling into poverty due
to recent shocks, but real income in
the agriculture sector is still expected to slightly outpace rural population
growth this year. Weakening external
demand and rising import prices for
crude oil, wheat, and rice have contributed to a growing trade deficit in
the first half of 2022, but this was partially offset by a sharp uptick in theprice of phosphate and cotton boosting
export revenues.
Togo's inflation rate was significantly
above expectations in the first half of2022 but appears to have peaked at
8.8 percent in March, hovering around
7 percent since then. While domestic
food prices have been the most important driver of inflationary pressures,the rising cost of imported goods
played an increasing role during thefirst semester of 2022. External pricepressures are expected to taper off towards the end of the year as global

commodity prices have started to retrench, but second-round effects on
domestic value chains are expectedmaintain headline inflation above 6
percent throughout 2022. To alleviate
adverse effects on the population, thegovernment has implemented significant fiscal support measures, including
large subsidies for fertilizers and fuelprices, higher public sector wages andpensions, and grants for education andtransport expenses, which are expected
to contribute to the budget deficit increasing to 6.4 percent of GDP in 2022,
up from 4.8 percent in 2021.
Monetary and exchange rate policies
are managed by the Central Bank ofWest African States (BCEAO). Its reserves declined to 5.2 months of imports in June 2022, from 5.5 months in
2021, due to higher energy and foodimport bills caused by the Ukraine crisis. To counter inflation pressures, theBCEAO raised rates for liquidity calls(2 percent to 2.5 percent) and the marginal lending window (4 percent to 4.5
percent) in June and September 2022.

TABLE 2 Togo / Macro poverty outlook indicators

Outlook
Growth is projected to pick up in 2023, but
at a slower pace than previously expected, while inflation and budget deficit projections were revised up. Following a temporary dip to 4.8 percent in 2022, growthis projected to reach 5.6 in 2023, about 0.2
percentage points below previous expectations. The growth pickup in 2023 will be
driven by public investment, notably associated with the extension of the rural road
network and the rehabilitation of the
Lomé-Kpalimé and Lomé-Aného roads,
the unwinding of international supply
chain disruptions and declining energy
and food prices. However, the recovery
will be constrained by persistent inflationary pressures, tighter financing conditions and slowing external demand.
The trade and current account deficit willremain elevated, at respectively 12.3 percent of GDP and 4.6 percent of GDP in
2023, despite terms of trade improving
amid lower international energy prices.

(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

2019
5.5
2.7
-2.9
20.4
2.1
1.4

2020
1.8
-0.5
2.0
15.0
-4.7
0.8

2021
5.3
5.3
6.4
8.9
12.0
13.8

2022e
4.8
4.0
4.4
10.1
4.3
5.9

2023f
5.6
5.6
1.7
8.7
5.7
6.3

2024f
6.4
6.3
0.7
9.1
6.6
6.3

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

4.4
1.9
6.5
4.5

2.0
1.3
5.3
0.9

5.1
6.0
6.8
4.0

4.8
4.0
3.8
5.6

5.6
4.5
5.4
6.1

6.4
5.7
7.5
6.2

Inflation (Consumer Price Index)

0.7

1.8

4.5

7.1

4.7

2.9

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-0.8
4.2

-0.3
0.7

-1.3
-1.1

-4.9
0.5

-4.5
0.6

-3.7
0.6

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-0.9
52.4
1.2

-6.9
60.4
-4.6

-4.8
63.6
-2.3

-6.4
63.4
-4.0

-5.8
62.9
-3.2

-3.9
61.5
-1.4

27.4
55.8
83.3

27.5
56.0
83.5

26.6
55.1
82.9

25.7
54.4
82.4

25.0
53.3
81.7

23.7
51.8
80.8

3.3
23.2

2.9
22.9

4.9
23.3

3.1
22.3

2.3
21.4

4.2
21.0

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Low (0.7)) based on GDP per capita in constant LCU.

MPO

91

Oct 22UGANDAKey conditions andchallenges

Table 1

2021

Population, million

47.1

GDP, current US$ billion

34.6

GDP per capita, current US$

733.9

International poverty rate ($2.15)
Gini index

a

42.2

a

42.7

School enrollment, primary (% gross)

b

102.7

b

63.7

Total GHG emissions (mtCO2e)

63.1

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2019), 2017 PPPs.
b/ WDI for School enrollment (2017); Life expectancy(2020).

Uganda’s real GDP grew by 4.6 percent in
FY22, following the reopening of the country in January 2022. Relentless upward
pressure on prices induced monetary tightening. After shedding more than two percentage points in FY22, the fiscal deficit isexpected to decline further in line with thefiscal consolidation effort. Nonetheless,sustained recovery in private investment
and consumption will raise real GDP
growth close to 6 percent in FY23 andFY24. Poverty is expected to inch down,though the pace of poverty reduction may
be affected by increasing prices.

The pace of economic growth, poverty reduction, and policy reform in Uganda has
slowed. Real GDP per capita grew by only
1.0 percent per year between 2011 and 2021
in a context of rapid population growth,
drought and other external shocks, a lesssupportive external environment, and reduced reform momentum. Althoughpoverty declined in the pre-COVID period,
most households rely heavily on agriculture and are vulnerable to climate change
and weather shocks.
Structural transformation is essential toreinvigorate economic activity and reducepoverty. Services constitute a large shareof GDP but many jobs in the sector are informal and low-skilled. Furthermore, approximately two thirds of the Ugandan
workforce is occupied in agriculture,
which produces less than a quarter of theGDP. To unlock its growth potential as
Uganda moves towards oil production, amore productive employment of this labor
is fundamental. In addition, given Uganda’s small domestic market and distortions, trade will be important in boosting
economic growth and development.
The private sector must drive growth.
Uganda’s growth model of debt-financed
public spending – which emphasizes infrastructure and has crowded out private
sector borrowing – is not sustainable. The
state should instead support the economy
through investments in human capital,

FIGURE 1 Uganda / Fiscal adjustment

regulations that facilitate investment andjob creation, and measures to reduce inequality and strengthen resilience. The
prospects for the shift to a private sector
led growth model will also rely on maintaining macroeconomic stability; bettersupporting the vulnerable, farmers, andsmall enterprises; increasing the uptake ofdigital technologies; and more effective
use of public resources.

Recent developments
The Ugandan economy grew at 4.6 percent
during FY22, faster than had been anticipated, due to the up-tick of activities after
the economy reopened in January 2022. On
the supply side, the services sector and industry were the main drivers of economic
growth for the fiscal year. There was astrong recovery in wholesale and retailtrade, real estate activities and education
services, while industry reboundedthrough construction and manufacturing.
On the demand side, private investment
and private consumption recovered towards pre-COVID levels. The current account deficit widened to over 9 percent of
GDP in FY22 primarily reflecting a deterioration in the terms of trade and widened
trade deficit.
According to the high-frequency phonesurvey, employment rate fell from 91 percent in March/April 2021 to 79 percent in
October/November 2021 and remained at
this level in June/July 2022. Half of the population was moderately food insecure in
June/July 2022. Households, in particular

FIGURE 2 Uganda / Actual and projected poverty rate andreal private consumption per capita

Percent of GDP
18

Poverty rate (%)

Percent of GDP
60

16

12

2.00

50

40

10

2.50

60

50

14

Real private consumption per capita (constant million LCU)

70

40

1.50

30

1.00

30

8
6

20

4
2
0
2019

2020

Public Debt to GDP

2021

2022

2023f

Primary Fiscal Deficit

20

10

10

0

0

0.50
0.00
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

2024f

International poverty rate

Tax

Sources: Ministry of Finance, Planning and Economic Development, and WorldBank calculations.
MPO

Source: World Bank. Notes: see Table 2.

92

Oct 22

Real priv. cons. pc

the poorest ones, are being negatively affected by increased prices, either through being
unable to access food products or to buy thedesired amounts.
Inflationary pressures increased in 2022,
leading the Bank of Uganda to tightenmonetary policy. Driven by the spike incommodity prices, which government allowed to pass through to consumers, andpandemic-related disruptions in global
supply chains — both heightened by thewar on Ukraine, the annual headline andcore inflation reached 6.8 percent and 5.5
percent, respectively in June 2022, from 2.0
percent and 2.7 percent in June 2021. The
central bank raised its policy rate by 1 percentage point in June 2022 to 7.5 percent.
It adjusted the rate by an additional 1 percentage point in July and 0.5 percentage
points in August.
The government has initiated a revenuedriven fiscal consolidation. In FY22, it wasable to reduce the fiscal deficit to 7.3 percent of GDP (Table 2), despite increases inwages, the interest bill (primarily domestic
borrowing) and use of goods and services
driven by the reopening of schools andhealth sector supplies. Revenues benefitted
from the increase in excise duty by UShs.

100 per liter of petrol and diesel, and increased collection of tax arrears. Notwithstanding the improvement in the fiscal balance, public debt rose to 56 percent ofGDP, well above the path under the Charter of Fiscal Responsibility.

Outlook
Uganda’s economic growth is expected toaccelerate to about 6 percent in the medium-term, despite sustained commodity
price driven inflation pressures, gradualfiscal consolidation, and tighter monetary
policy. This will be bolstered by investments and exports of oil, and dividends
from government’s promotion efforts fortourism, export diversification, and agroindustrialization. Outside of the oil sector,
the slowdown of global growth andheightened tightening of the global financial conditions constrain capital inflows.
Accelerated growth may slightly reduce
the poverty rate from 42.1 percent in 2022
to 41.9 percent by 2024, but this projection
is subject to several downside risks: The
path of COVID-19, the evolution of the war

TABLE 2 Uganda / Macro poverty outlook indicators

in Ukraine, the pace of food inflation, andany environmental shocks that adversely
affect households due to their limited
adaptive capacity.
Inflation is projected to peak in 2023
due to lingering passthrough effects ofcommodity prices and a weaker shilling
due to capital outflows as advanced
economies raise interest rates further. In
addition, drought conditions will exertpressure on food prices. The BoU is expected to maintain a ‘tight’ monetary policy stance to contain inflation around thepolicy target of 5 percent.
To sustain the fiscal consolidation into
the medium-term, the planned reduction
in recurrent spending is expected to
be followed with improved efficiency inpublic investment projects and sustained
revenue effort. A lower fiscal deficit
is expected to ease pressure on debt,
which combined with deliberate effort
to minimize non-concessional borrowing should reduce fiscal risks. To avoid
crowding out of the private sector, thegovernment of Uganda plans to reduce
domestic borrowing as a share of GDP
to reach a debt to GDP ratio below 50
percent of GDP by FY26.

(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

2019
6.4
5.9
6.9
9.9
6.3
8.6

2020
3.0
2.0
7.9
-0.1
-1.2
-5.4

2021
3.4
4.2
6.1
5.1
2.6
8.6

2022e
4.6
4.3
-24.8
30.0
-20.5
1.8

2023f
5.5
4.2
6.6
6.7
26.2
15.4

2024f
6.1
5.4
7.9
7.1
8.3
7.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

6.4
5.2
9.0
5.6

3.0
4.6
3.1
2.2

3.4
3.8
3.4
3.3

4.6
5.1
5.5
3.8

5.5
5.4
6.5
4.9

6.1
6.2
6.6
5.8

Inflation (Consumer Price Index)

2.6

2.3

2.5

3.0

7.2

6.5

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

-7.1
3.5

-6.7
2.6

-10.2
2.1

-9.2
2.7

-12.7
2.3

-12.0
2.7

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-4.9
36.6
-2.8

-7.1
40.4
-4.8

-9.5
49.6
-6.8

-7.3
55.7
-4.0

-5.5
50.0
-1.3

-4.5
47.6
-1.3

42.2

42.3

42.2

42.1

42.1

41.9

2.1
19.9

2.4
20.3

2.8
20.3

3.4
20.5

3.7
20.8

4.0
21.3

International poverty rate ($2.15 in 2017 PPP)
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)a,bSource: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
Notes: e = estimate, f = forecast. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
a/ Calculations based on 2016-UNHS and 2019-UNHS. Actual data: 2019. Nowcast: 2020-2021. Forecasts are from 2022 to 2024.
b/ Projection using average elasticity (2016-2019) with pass-through = 0.7 based on private consumption per capita in constant LCU.

MPO

93

Oct 22ZAMBIAKey conditions andchallenges

Table 1

2021

Population, million

18.9

GDP, current US$ billion

19.3

GDP per capita, current US$

1019.1

International poverty rate ($2.15)

a

61.4
a

77.5

a

90.7

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

a

57.1

School enrollment, primary (% gross)

b

98.7

b

64.2

Total GHG emissions (mtCO2e)

93.1

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2015), 2017 PPPs.
b/ WDI for School enrollment (2017); Life expectancy(2020).

Growth in 2022 is expected to ease at 3.3
percent, reflecting challenges in mining
and agriculture despite strong momentum in services. A continuation of ongoing macro-fiscal and structural reforms
should help restore macroeconomic stability and reinvigorate growth following
multiple shocks—adverse weather, debt
distress, COVID-19 pandemic, and theRussia-Ukraine war. Over the medium
term, growth is expected to accelerate, despite a weaker global economy, but poverty
will remain above the pre-pandemic level.

Zambia’s economy is showing encouraging signs of stabilizing after a period ofmacroeconomic imbalances that weakened
economic performance. Between 2015 and2021, economic growth slowed down andaveraged 2.5 percent per year, lower than
the annual population growth rate of 2.9
percent. Poverty increased amid diminishing policy space and adverse weather
shocks. Thus, the COVID-19 pandemic hit
a struggling economy and the RussiaUkraine war has weakened recovery. Consequently, Zambia slipped back into the
low-income category in 2022 for the firsttime since attaining lower middle-income
status in 2011.
The key challenge for Zambia is to achievesustained macroeconomic stability that lays
the foundation for sustainable growth andto pursue structural reforms for an economic transformation that lifts more Zambiansout of poverty. Implementation of the government’s program, reflected in its 2023–25
medium-term budget framework and supported under the recently approved IMF
Extended Credit Facility arrangement,
combined with a deep and timely debt restructuring under the Common Framework, should help restore macroeconomic
stability. Swift implementation of structuralreforms to remove market distortions insuch sectors as agriculture and energy, supported by structural fiscal reforms to improve public spending efficiency, budget

credibility, and social spending, will be critical for economic transformation and sustainable job creation.

Recent developments
The momentum of Zambia’s rebound fromthe pandemic eased in the first half (H1) of2022. Real GDP growth moderated to 2.4
percent in Q1 2022, year-on-year, as agriculture and industry contracted. Copper
output declined by 6.7 percent, year-onyear, in H1 2022 despite firmer copper
prices, reflecting a prolonged rainy-season,
lower ore grades, and management challenges at two notable mines. The StanbicPurchasing Managers’ Index suggests thatprivate sector business activity remained
unchanged in Q2 2022, averaging 50.1
(same as in Q1 2022).
Fiscal revenues exceeded budgeted levels
by 5.5 percent in H1 2022, supported bystrong tax revenue and grants that offset
lower-than-planned non-tax revenue. Expenditure fell below target by 14.7 percent,reflecting delayed recruitment and continued external debt service standstill. The
current account balance remained positivein H1 2022, y/y, estimated at $700 million(about 3.4 percent of GDP) but the surplus
moderated in Q2 affected by the decline in
net exports as copper earnings reduced on
account of declining prices. The exchange
rate remained stable in H1 2022 with theappreciation in Q2 offsetting the depreciation in Q1 whereas international reserves
increased by $0.2 billion to $3 billion,
covering 3.6 months of imports in June,

FIGURE 1 Zambia / Inflation, exchange rate (ZMW/$) andCentral Bank policy rate

FIGURE 2 Zambia / Actual and projected poverty rates andreal GDP per capita

Zmw/$

Poverty rate (%)

35

100

30
25
20

6-8 percent target band
Food inflation
Headline inflationexchange rate (ZMW/$)Non-Food inflation
BOZ policy rate

Real GDP per capita (constant LCU)
8500

95

8000

90
85

7500

80

7000

75

15

70

6500

65

6000

60

10

5500

55
5

50

5000
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

0International poverty rate
Upper middle-income pov. rate

Jun'18 Dec'18 Jun'19 Dec'19 Jun'20 Dec'20 Jun'21 Dec'21 Jun'22
Source: Zambian authorities.

Source: World Bank. Notes: see Table 2.

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Real GDP pc

boosted by mining tax payments and inflows of project funds.
Fiscal and monetary policy restraint
damped inflationary pressures (Figure 1).
Inflation continued to decline throughout
2022, reaching single digits in June for the
first time since mid-2019, and was at 9.8
percent in August, reflecting exchange rate
appreciation, improved food supply, andhigh base effects from H1 2021. Improvement in fiscal consolidation has led to a
drastic reduction in central bank lending togovernment that nearly halved on a yearto-date basis at the close of August. Zambia has made considerable progress towards debt restructuring under the G20
Common Framework. In July 2022, the Official Creditor Committee committed to negotiate debt restructuring for Zambia under the Common Framework.

Outlook
Zambia’s economy is forecast to grow by
3.0 percent in 2022, 3.9 percent in 2023, andaccelerating slightly to 4.1 percent in 2024,
buoyed by improvement in the macroeconomic environment, stable and predictablemining policy, and improved electricity
supply supported by new generation capacity at Kafue Gorge. The planned fiscal
consolidation targets to achieve a positive
primary balance by 2024 through the reduction of inefficient subsidies in agriculture, electricity, and petroleum products;
cancellation of some public projects;
rolling back of election-related spending;and improved revenue mobilization
through various tax policy and revenue
administration reforms. Although theplanned fiscal adjustment is large—an adjustment of 8.5 percent of GDP since
2020—it is expected to have a muted impact on growth and poverty as it reflects
cuts in waste and rents, while increasingsocial spending.
Poverty is projected to remain unchanged in the short term but will reduce over the medium term as economic reforms translate into higher
per-capita growth and improved social
spending. Since June 2020, urban food

TABLE 2 Zambia / Macro poverty outlook indicators

security improved only slightly while
it worsened significantly among rural
households. However, a World BankHousehold Phone Survey, conductedin June 2022, shows that households’
expectations are aligned with 60 percent of respondents indicating thatthey expect the general economic situation in the country to improve in 5
years’ time, despite widespread foodinsecurity. The poverty rate is projected to remain at 62.3 percent in 2022,
before marginally declining by a half
percentage point by 2024.
Risks to the baseline outlook are firmly
to the downside. A sustained downward
trajectory in global copper prices willaffect external stability and impact tax
collections. Delays in concluding thedebt restructuring process could dampen market confidence and perpetuate an
uncertain economic environment whilst
a worsening of Russia-Ukraine war
could cause a resurgence in global fuel,fertilizer, and grain prices, which couldin turn reverse the deceleration of domestic inflation in Zambia.

(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

2019
1.4
2.3
-10.1
-14.1
-7.2
-13.7

2020
-3.0
3.1
10.8
-35.5
10.7
-10.7

2021
3.6
3.6
5.6
-9.5
23.0
21.0

2022e
3.0
4.5
-2.0
31.5
-2.0
14.3

2023f
3.9
4.5
11.4
11.5
7.0
15.0

2024f
4.1
4.5
8.8
-16.1
17.5
7.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

1.5
7.7
-3.3
3.5

-2.5
17.2
0.6
-6.2

3.6
-0.7
4.2
3.8

3.0
4.4
3.3
2.6

3.9
8.8
3.5
3.5

4.1
4.0
3.9
4.2

Inflation (Consumer Price Index)

9.1

15.7

22.1

12.0

10.0

9.7

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

0.6
-0.6

12.8
-1.0

8.7
2.1

2.0
3.4

0.5
3.4

4.1
3.4

-9.4
102.2
-2.5

-13.2
157.4
-7.3

-9.3
118.1
-2.9

-9.4
113.9
-1.8

-7.2
106.5
-0.1

-6.3
101.2
0.7

61.1
77.4
90.6

62.5
78.6
91.4

62.4
78.6
91.3

62.3
78.5
91.2

62.0
78.3
91.1

61.8
78.1
90.9

1.4
8.3

0.5
7.8

1.4
8.0

1.1
8.0

1.0
8.1

1.2
8.5

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)a,bInternational poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 = 0.87 (Med (0.87)) based on GDP per capita in constant LCU.

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Oct 22ZIMBABWE

Key conditions andchallenges

Table 1

2021

Population, million

15.1

GDP, current US$ billion

29.1

GDP per capita, current US$

1929.1

International poverty rate ($2.15)

a

39.8
a

64.5

a

85.0

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

a

50.4

School enrollment, primary (% gross)

b

97.3

b

61.7

Total GHG emissions (mtCO2e)

119.3

Life expectancy at birth, years

such as droughts and pandemic have allcontributed to increasing vulnerability inboth urban and rural areas. However,Zimbabwe's social assistance programs
have low coverage and may benefit from
improved targeting.

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2019), 2017 PPPs.
b/ Most recent WDI value (2020).

The economy is expected to grow in
2022, albeit at a slower pace, reflecting
worsening agriculture conditions andprice instability. Inflation has returned
to triple digit levels while the local currency has depreciated by over 70 percent since January 2022, constraining
demand. Allocated budgets are being
eroded by inflation and currency depreciation, affecting service delivery. Although it has declined since its peak of2020, the international poverty rate remains persistently high.

Zimbabwe’s economic development continues to be hampered by price and exchange rate instability, misallocation of
productive resources, low investment, andlimited structural transformation. High inflation, multiple exchange rates, unsustainable debt levels, and ineffective control
over government spending have increased
the cost of production, reduced incentives
for productivity-enhancing investment,
and encouraged informality. Trade integration has declined, and foreign direct investment (FDI) remains low, limitingtransfer of new technologies and investment in modernizing the economy.
Unsustainable debt levels and long-standing arrears to international financial institutions (IFIs) limit Zimbabwe’s growth potential. External debt is estimated at 76 percent of GDP in 2022. Over 70 percent of
the debt is in arrears, constraining accessto concessional finance needed to support
productive investment. The government
has prepared an Arrears Clearance, Debt
Relief and Restructuring Strategy and resumed token payments to IFIs and Paris
Club creditors.
Although it has declined since 2021, theextreme poverty remains persistently
high. Macroeconomic volatility, high dependence on low-productivity agriculture, slow pace of spatial and structuraltransformation, lack of creation of highproductivity jobs, and intermittent shocks

Recent developments
Economic activity slowed in 2022, constrained by worsening agriculture conditions and price instability. Real GDP
growth is projected to slow to 3.4 percent
in 2022 from 5.8 percent in 2021. Mining,trade, and tourism took advantage of highcommodity prices and relaxation of
COVID-19 restrictions helping to drive
growth in 2022. However, due to limited
rains, agriculture production contracted
after growing at double digits in 2021. Rising inflation, depreciation of the local currency, and higher interest rates havedampened consumption and investment.
Strong remittance inflows mitigated tosome extent the adverse impact on private
consumption and together with higher
gold exports have kept the external current
account in surplus.
Annual inflation returned to triple digit
levels, reaching 285 percent in August
2022, in response to further weakening of
the local currency and surge in global
prices due to the Russia-Ukraine war. Between January and August, the local currency depreciated by over 70 percent bothon the parallel and official markets. To
tame inflation, the Central Bank tightenedmonetary policy, raised the interest rates

FIGURE 1 Zimbabwe / Exchange rates

FIGURE 2 Zimbabwe / Actual and projected poverty rates
and real GDP per capita

ZWL$/US$

Poverty rate (%)

900

100

16000

Auction market exchange rate

90

14000

Parallel market exchange rate

80

Interbank market exchange rate

70

800
700

Real GDP per capita (constant LCU)

12000

600

60

10000

500

50

8000

40

6000

400

30

300

4000

20

200

10

100

0

2000
0
2011

0
Jan-20Jul-20Jan-21

Jul-21

Jan-22

2013

2015

2017

International poverty rate
Upper middle-income pov. rateJul-22

Sources: Zimstat and World Bank staff estimates.

Source: World Bank. Notes: see Table 2.

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2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

(from 80 percent to 200 percent), further
liberalized the forex market, and issued
gold coins as a store of value. These measures have stabilized the parallel market
and narrowed the parallel market premium to below 35 percent in September 2022.
Nevertheless, inflation is estimated to average 213 percent in 2022.
In a high inflationary environment, fiscal
deficit was kept low during the first halfof 2022 (2022H1) but fiscal pressures havebuilt up. Fiscal deficit stood at 0.3 percent
of GDP during 2022H1, well below theinitial target. However, inflation eroded
allocated budget, necessitating a large
supplementary budget. The additional
spending was allocated mainly for costof-living adjustments, public investment,
procurement of grain, and social protection. Pressures for further wage adjustments and pre-election spending are expected to keep the fiscal deficit at 1.8 percent of GDP in 2022.
In line with the modest economic growthin 2022, poverty rate declined marginally.

However, these modest gains are threatened by a looming food crisis and limited
fiscal space to mitigate the impact on thepoor. With most of the poor relying on
subsistence
agriculture,international
poverty rate is expected to remain high at
40 percent.

Outlook
Economic growth is projected to be around
its potential in the medium term but risks
to the outlook are significant. Real GDP
growth is expected to grow at 3.6 percent
in 2023 and 2024 supported by better agriculture season, slowing inflation, and relaxation of pandemic requirements. Agriculture production is projected to returnto growth as the rain levels normalize andfertilizer prices go down. Manufacturing
and services are expected to benefit fromsubsiding global and domestic prices, aswell as the pandemic. However, downside

TABLE 2 Zimbabwe / Macro poverty outlook indicators

risks to the outlook are high reflecting
global slowdown of growth, volatile commodity prices, climate change, and abilityof the government to control inflation andforex market distortions in an election period. Inflation is projected to slow down
as monetary stance remains tight and global prices go down. Nevertheless, inflationlevels will remain elevated and still in
triple digits in 2023.
Fiscal deficit is projected to widen during
the election year of 2023. Continuing
wage pressures, demands for higher
spending on agriculture and support toloss-making state-owned enterprises remain key fiscal risks.
Poverty rate is expected to decline modestly in the medium term, but vulnerability due to climate shocks and inflationary pressure remains high. The
shocks to agricultural output due tochanging and more volatile climate, andeconomic shocks such as inflation, supply-chain disruptions will continue tostrain household finances.

(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

2019
-6.1
-19.9
-1.7
-9.0
29.7
-29.5

2020
-5.3
-4.3
-1.2
-3.0
1.6
9.8

2021
5.8
11.3
4.8
6.2
6.0
25.1

2022e
3.4
3.3
1.7
-2.9
5.5
2.9

2023f
3.6
3.4
5.5
4.6
3.3
3.4

2024f
3.6
3.2
7.8
3.2
3.8
3.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-7.5
-17.8
-11.1
-2.1

-6.6
4.2
0.0
-13.6

8.9
17.3
6.4
8.8

3.4
-5.0
3.5
5.6

3.6
4.3
3.2
3.7

3.6
4.3
3.2
3.7

Inflation (Consumer Price Index)

255.3

557.2

98.5

212.7

105.5

50.5

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)

4.6
1.2

3.6
0.8

4.9
0.4

2.7
0.6

1.6
0.5

0.4
0.5

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

0.2
94.8
0.4

1.7
109.7
1.8

-1.7
79.6
-1.6

-1.8
78.9
-1.7

-2.1
78.8
-2.0

-1.1
76.3
-1.0

39.8
64.5
85.0

42.6
66.8
86.5

40.8
65.5
85.5

40.1
64.9
85.2

39.4
64.0
84.9

38.6
63.3
84.6

-0.2
11.8

-1.3
10.8

2.4
10.9

1.7
11.2

1.5
11.4

1.6
11.6

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org.
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 (Med (0.87)) based on GDP per capita in constant LCU.

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Macro Poverty Outlook

10 /2022