Sub-Saharan Africa

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

SpringMeetings2023

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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
Gambia, The
Ghana
GuineaGuinea-Bissau
Kenya
Lesotho

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Apr 23

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

2022

Population, million

35.0

GDP, current US$ billion

122.1

GDP per capita, current US$

3486.5International 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

85.0

b

62.3

Total GHG emissions (mtCO2e)

126.3

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).

Growth accelerated in 2022 due to increased oil production and higher oil
prices allowing for an expansive fiscal
stance in an election year. With an appreciating currency and food prices easing,inflation declined rapidly, and poverty fell
to 32.7 percent. Growth is expected tomoderate in the near-term, bogged downby the oil sector. Risks are elevated due toexcessive dependence on oil revenue, with
policies aimed at removing market distortions and enhancing resilience remaininga high priority.

Angola’s economic fortunes have been tied
to global oil demand, which brought
volatile growth and left Angola with highlevels of poverty and inequality. Reforms
over the past 5 years have improved
macroeconomic management and public
sector governance. Macroeconomic stability has been enhanced through a more flexible exchange rate regime, central bank autonomy, sound monetary policy, and fiscal
consolidation. Laws to allow greater private sector participation in the economy,increase the stability of the financial sector and reduce the impact of oil revenue
volatility on public finances have also
been introduced.
High poverty is linked to a lack of goodquality jobs: 80 percent of jobs are informal, and half are in the primary sector (often subsistence work). Urban and youth
unemployment remain high, exceeding 38
percent and 50 percent, respectively. Economic diversification remains elusive
while oil production is declining and global decarbonization looms in the mediumterm. Angola needs to urgently invest in
removing barriers to private sector investment to achieve economic diversification to support growth, job creation, andpoverty reduction.
Given the jobs challenge, high poverty,
and a rapidly growing population, investing in human capital and poverty reduction is a top priority. Inadequate provisionof health and education reduce the potential productivity of a child born in Angola
to 36 percent what it could be. Investments
in human capital will require sustainably
increasing spending and improving management and accountability to ensure results. Investments in education and healthhave been complemented with the roll-out
of a social registry and the Kwenda cashtransfer program in 2020, with close to amillion rural households registered. A
broader social safety net with adaptable income support could substantially reduce
extreme poverty, mitigate the impact ofshocks on households, and support investments in human capital.

Recent developments
GDP growth accelerated in 2022 to an estimated 3.5 percent - the first time since2014 that it outpaced population growth thanks to a small rebound in oil production and high oil revenues. Higher oil
prices allowed for fiscal expansion, especially in public investments, and appreciation of the domestic currency, underpinning strengthening domestic demand andgenerating growth in private consumption
estimated at around 5 percent. The oil sector contributed to this recovery with agrowth of 1.4 percent, the first expansion
since 2015. Non-oil output accelerated
with agriculture and fisheries growing almost 7 percent and the services sector recovering to pre-COVID-19 levels. Construction activity expanded, benefittingfrom higher government investment in the

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
6

Poverty rate (%)

4

80

2

70

Real private consumption per capita (constant LCU)

90

30000
25000

60

0

20000

50

-2

40

-4

30

15000
10000

20

-6

5000

10
-8
2020
Agriculture
Services

2021

2022e

2023f

Oil industry
Total

2024f

0

2025f

0
2008 2010 2012 2014 2016 2018 2020 2022 2024

Non-oil industry

International poverty rate
Upper middle-income pov. rate

Sources: Angola National Institute of Statistics and World Bank.

Source: World Bank. Notes: see Table 2.

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Apr 23Lower middle-income pov. rate
Real priv. cons. pc

context of improved financial conditions
and an election year.
With higher oil prices, the currency appreciated by 26.2 percent in 2022, though appreciation pressures have receded sincelate 2022. The current account surplus
stood at about 11 percent of GDP, driven
by high growth in oil exports (51 percent
year-on-year). International reserves stoodat US$14.5 billion dollars at the end of2022, or about 6 months of imports.
Inflation has fallen rapidly, allowing theCentral Bank to moderately loosen monetary policy. The year-over-year rate fell
from 27 percent in December 2021 to 13.9
percent in December 2022, the lowest ratesince 2015. As inflation pressures subside,
the Central Bank lowered the reference
rate from 20 percent until September 2022
to 18 percent by January 2023.
Positive per capita growth and slowing inflation are expected to have reduced
poverty at $2.15 per day (2017 PPP) by 0.4
percentage points to 32.7 percent, yet the
number of people living in poverty continued to grow, surpassing 11.4 million.
The government achieved a fiscal surplusof 2.7 percent of GDP, despite expenditure significantly exceeding budgeted

levels, especially on investment and fuelsubsidies. However, the non-oil primary
deficit, a measure of the structural fiscal
position, increased to 7.7 percent of GDP,up from 4.8 percent in 2021 and above
the government’s medium-term target of
5 percent. Debt-to-GDP declined to about
65 percent, with proactive debt management, including purchase of outstanding
Eurobonds reducing near-term externalfinancing needs.

OutlookDue to decreased oil production andreduced fiscal impulse, growth is expected to moderate to 2.6 percent in
2023, falling once again below population growth (3.1 percent). Growth in
the non-oil economy, especially in agriculture, construction and services is expected to remain robust, with non-oil
GDP growth exceeding four percent annually. While the poverty rate is expected
to continue marginally decreasing, due torapid population growth, the number ofpoor will surpass 11.7 million.

TABLE 2 Angola / Macro poverty outlook indicators

Inflation is expected to remain on a moderating trend, however possible adjustments
in regulated prices, especially for fuel,could temporarily increase prices. The current account surplus is expected to narrowgradually, as growth in non-oil exports
will be insufficient to offset the declining
trend of oil production and the expected
reduction of oil prices, while import
growth remains robust. The flexible exchange rate is expected to mitigate thepressures on external reserves and serve
as a first line of defense against external
shocks. External financing requirements
resulting from the large external debt service are met by bilateral and multilateralloans, bond issuances and, increasingly,
foreign direct investment.
Fiscal accounts are expected to remain balanced in the absence of new oil priceshocks. The 2023 budget targets a small
overall fiscal surplus. A significant declineof oil prices could result in a fiscal deficit
and increased financing needs. Fuel subsidy reform, which the government intends to undertake in the course of 2023,
could free up fiscal space that can be used
for greater investments in poverty reduction and human capital formation.

(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

2020
-5.6
-3.3
-8.2
-15.5
-6.2
-19.6

2021
1.1
6.4
-6.4
9.2
-10.7
-18.3

2022e
3.5
5.5
-1.6
-0.6
1.5
13.8

2023f
2.6
4.0
10.1
3.7
-1.3
9.6

2024f
3.3
4.0
25.0
0.2
-3.5
7.0

2025f
3.1
4.0
12.3
1.0
-3.4
0.8

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-6.8
2.8
-10.5
-3.9

-0.1
17.2
-8.3
6.2

3.4
6.8
2.1
3.9

2.5
4.6
0.3
4.2

3.1
4.6
-1.1
6.7

2.9
5.0
-0.7
5.7

Inflation (Consumer Price Index)

22.3

25.8

21.4

9.8

4.4

3.5

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

2.4
3.3

5.8
4.5

13.5
4.8

8.6
1.5

9.1
0.6

9.2
1.3

-1.9
20.8
130.7
4.9

3.9
24.1
85.7
9.3

2.6
24.4
64.5
7.0

1.9
22.7
60.7
6.0

0.1
20.6
54.9
3.6

-0.1
19.2
50.8
3.0

33.6
54.8
80.8

33.1
54.4
80.2

32.7
54.2
79.8

32.6
54.1
79.7

32.5
54.0
79.5

31.8
53.5
78.8

0.3
16.3

-1.7
16.0

-0.1
17.3

-0.5
18.5

-0.8
19.3

-0.8
20.0

Fiscal Balance (% of GDP)
Revenues (% 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.
a/ Calculations based on 2018-IDREA. Projection using point to point elasticity at regional level with pass-through = 0.7 based on private consumption per capita in constantLCU.
b/ Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.

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Apr 23

BENINKey conditions andchallenges

Table 1

2022

Population, million

13.4

GDP, current US$ billion

20.0

GDP per capita, current US$

Real GDP growth moderated in 2022 dueto the global economic slowdown and uncertainties generated by Russia’s invasionof Ukraine. Fiscal consolidation efforts between 2016-19 enabled countercyclical, expansionary fiscal policy to respond tooverlapping crises over 2020-22. This, combined with significant infrastructure investment under the second Government
Action Plan (PAG, 2021-26) and a resilient
agriculture sector, allowed Benin to maintain above-regional average growth and is
expected to have led to a reduction inpoverty in 2022. However, poverty andvulnerability remain high, with substantial
spatial disparities.
With rising global uncertainties and security threats in the North, sustaining economic growth over the medium term will
require pursuing structural reforms to alleviate critical constraints. First, rebuilding
fiscal space through improved revenue
collection and streamlined tax expenditures, while enhancing the efficiency of
public spending. Second, the impacts of recent crises and recurrent climate shocks
highlighted the need for accelerated implementation of reforms to strengthen shock
resilience, notably social protection.
In terms of risks, increased insecurity andsocial tensions in the North together withsustained food, energy, and fertilizer pricevolatility would negatively impact poorand vulnerable households, slowing

1501.3

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

poverty reduction and pushing morehouseholds into fragility. Extreme climate
events could also cause severe damage andjeopardize agricultural output.

a

37.8

School enrollment, primary (% gross)

b

116.7

b

60.1

Total GHG emissions (mtCO2e)28.5Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ WDI for School enrollment (2021); Life expectancy(2020).

After a strong rebound in 2021, real
growth moderated to 6 percent in 2022. Inflation remained subdued at 2.5 percent
due to a strong harvest season and measures to partially offset import price pressure and extreme poverty incidence declined by 1.1 percent. Benin's fiscal response to overlapping crises has significantly reduced fiscal space, with a steep increase in debt levels. Food, energy, and fertilizer price volatility, increased security
risks in the North, and extreme weather
events cloud the outlook.

Recent developments
Real GDP growth decelerated to 6 percent
in 2022 (3.1 percent in per capita term) due
to global geopolitical tensions and regional
instability. On the supply side, the primarysector remained resilient despite fertilizer
supply disruptions, thanks to higher cotton exports. Services remained the major
contributor to growth on the back of strongtransport and logistics sectors. On the demand side, private consumption growthslowed moderately, while public investment was scaled back as fiscal space narrowed. Year-on-year inflation accelerated
to 2.8 percent at end-2022, remaining well
below peers due to a strong harvest supporting local food supply and measures tocombat inflation, such as temporary import tax exemptions and export restrictions
to neighboring countries. Growth in agriculture combined with relatively low inflation is expected to have reduced theinternational poverty rate ($2.15 a day,2017 PPP) from 18.6 percent in 2021 to
17.5 percent in 2022.
Higher formal oil prices coupled with significant construction and security imports
widened the current account deficit (CAD)(including grants) to 6.1 percent of GDP in
2022 from 4.1 percent in 2021. The CAD
was primarily financed by regional bondemissions and concessional financing.

FIGURE 1 Benin / Fiscal 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

90000089080000080700000

6

Real GDP per capita (constant LCU)

70

4

60

2

50

60000050000040000040

030000030-220200000-4

10100000

-6

0

2013

2015

2017

Change in debt

2019

2021

2023

0
2011

2025

2013

2015

2017

2019

International poverty rate
Upper middle-income pov. rate

Fiscal balance

Source: World Bank.

Sources: World Bank. Notes: see Table 2.

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Apr 23

2021

2023

2025

Lower middle-income pov. rate
Real GDP pc

The fiscal deficit has remained elevated forthe third consecutive year, at 5.7 percent
of GDP in 2022, owing to unanticipatedspending to cushion the effects of the war
in Ukraine and contain rising security
threats in the North. Domestic revenues
remained resilient in 2022, reaching 13.4
percent of GDP, compared to 13.2 in 2021,
thanks to improvements in tax administration and the application of the new Tax
Code. Public debt continued to increase,reaching 52.8 percent of GDP in 2022(+11.6 ppt compared to 2019), with theshare of external debt significantly increasing over the last few years. Benin remains at moderate risk of external andoverall debt distress, but with limited
space to absorb shocks.
To counter inflation across WAEMU countries, the Central Bank of West African
States (BCEAO) raised policy interest rates
by a cumulative 75 basis points in 2022
(to 2.75 percent for liquidity calls and 4.75
percent for the marginal lending facility).
BCEAO will likely need to continue tightening in 2023 in line with other major central banks, and as foreign exchange reserves have declined and inflation remains
well above the target range of 1-3 percent.

Furthermore, delaying fiscal adjustments
towards the regional fiscal deficit target of
below 3 percent of GDP by 2025 could exacerbate debt sustainability risks in somecountries, while increasing regional financing needs, reducing FX reserve
buffers, and elevating inflationary risks.

OutlookIn the medium-term, real growth is expected to hover around 6 percent, equivalent to
3.1 percent per capita. Growth will be driven by private consumption as inflationarypressures abate, and total investment will
gradually shift from public to private. On
the supply side, the dynamism of the construction sector and agriculture production will support growth. Inflation is projected to reach the WAEMU target of 2 percent in 2024. The CAD should improve
progressively, averaging 4.7 percent of
GDP over 2024-25, thanks to an expected
decrease in the price of oil products. Regional bond issuances will largely finance
the CAD as international financial markets
are expected to remain tight.

TABLE 2 Benin / Macro poverty outlook indicators

Poverty reduction is expected to gradually revert to its pre-crisis downward
trend as economic growth remains robust. However, slower growth in services over the medium term is expected
to lead to a deceleration in the pace ofpoverty reduction, with the headcountrate ($2.15 a day, 2017 PPP) declining
only marginally from 17.5 percent in
2022 to 17.2 percent in 2023 and further
to 16.2 percent by 2025.
The planned revenue-based fiscal consolidation – complemented by the removal of
exceptional subsidies and more efficient
spending - should rebuild fiscal spacewith an expected deficit of 4.3 percent
of GDP in 2023 and around 3 percent
from 2024, in line with the current WAEMU convergence criterion. Delaying fiscal
adjustment towards the regional fiscal
deficit target could exacerbate debt sustainability risks in some countries, while
a deterioration of the external environment, a strong increase in military andsecurity spending, or an extreme weather
event could delay consolidation. Under
more benign conditions, public debt is expected to decline gradually after peaking
at 53.2 percent in 2023.

(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

2020
3.8
3.0
19.6
-6.2
-6.7
-11.3

2021
7.2
4.2
2.0
17.7
22.2
19.6

2022e
6.0
3.7
12.4
17.7
13.6
22.4

2023f
6.0
3.9
3.2
9.9
3.6
1.8

2024f
5.9
4.0
1.7
7.6
7.8
2.8

2025f
6.1
4.1
3.8
10.7
7.5
7.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

3.8
1.8
5.2
4.2

7.2
4.7
10.5
7.0

6.0
5.5
7.0
5.8

6.0
5.7
8.2
5.1

5.9
5.8
6.8
5.5

6.1
5.8
7.2
5.7

Inflation (Consumer Price Index)

3.0

1.7

2.5

3.0

2.0

2.0

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

-1.7
0.5

-4.2
-1.0

-6.1
0.7

-5.5
1.0

-4.7
1.1

-4.7
0.9

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

-4.7
14.4
46.1
-2.7

-5.7
14.1
50.3
-3.5

-5.6
13.9
53.0
-3.7

-4.3
14.4
53.5
-2.8

-2.9
15.2
52.1
-1.1

-2.9
15.6
50.7
-1.2

19.4
52.0
82.4

18.6
50.6
81.5

17.5
48.9
80.6

17.2
48.2
80.4

16.7
47.4
80.0

16.2
46.5
79.4

2.1
31.7

6.7
35.5

1.7
35.8

1.1
35.8

4.5
37.7

4.7
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.
a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
b/ Projection based on microsimulation model that accounts for differences in sectoral growth, food and nonfood inflation.

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BOTSWANA

Key conditions andchallenges

Table 1

2022

Population, million

2.5GDP, current US$ billion

20.4

GDP per capita, current US$

8287.7

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

65.6

Total GHG emissions (mtCO2e)59.6

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 (2021); Life expectancy(2020).

Botswana’s economy grew strongly, by 6.5
percent in 2022 supported by favorable external demand for diamonds. Growth is expected to slow and average 4.0 percent over2023-25. The outlook relies on robust
though slowing diamond demand and apickup in non-mineral activities, supported by improved electricity and water supply and continued tourism recovery.
Poverty is projected to decrease slightly to
14.6 percent, using the US$2.15 per day
international poverty line, while inequality remains among the highest in the world.

Prudent macroeconomic and fiscal policies
explain the low public debt ratio of 20.8
percent of GDP reported by Botswana at
the end of 2022, justifying favorable ratings by international rating agencies.
However, the significant fiscal buffers accumulated in the Government Investment
Account were depleted during the
COVID-19 pandemic. Preserving Botswana’s
strong fiscal position requires efforts to increase domestic revenue mobilization andlimit expenditure growth. The government’s plan includes improving the efficiency of public spending and reorientating expenditures toward investment andhuman capital to enable the private sector
in order to diversify the economy, raise
productivity, and create more jobs.
Botswana’s diamond-led growth model
has started to show its limitations, including fiscal vulnerabilities, weak economic
diversification, and persistent income inequities, which were further exacerbatedby the COVID-19 pandemic. Economic
growth slowed to 3.3 percent annually on
average over 2012-21 and translated into
low job creation, resulting in high unemployment (25.4 percent in 2022).
Botswana is vulnerable to external shocks,
especially fluctuations in the prices of diamonds and other commodities as well asclimate shocks such as droughts. In particular, droughts affect livestock (beef is theprimary agricultural export product) andcrop production therefore negatively impacting rural households. There is need toreform the public sector and its role in theeconomy to enable private sector development. Investments in the tourism, agriculture (mainly livestock value chain), energy, and manufacturing sectors bode well
to attract international capital flows. Government needs to accelerate the implementation of the “Reset Agenda” to transformthe economy into a high-income economy.
This should be supported by enhanced accountability, competition, and governance.
Excessive reliance on import substitution
and restrictions to promote industrialization should be avoided.

Recent developments
Thanks to a favorable global environment(especiallythediamondsector),Botswana’s GDP grew by an estimated
6.5 percent in 2022, in line with the strong
recovery recorded in 2021. This growth
was mainly driven by the good performance in mining and diamond trading.
The external balance improved, supported by the increased value of diamond exports (20.4 percent in 2022), with the current account recording an estimated surplus of 2.5 percent of GDP.
Inflation increased sharply to a decadehigh of 12.2 percent in 2022 (from 6.7 percent in 2021). It was triggered by an upward adjustment of administered prices, amodest recovery in domestic demand, andhigher international food and fuel prices
emanating from supply chain shocks from

FIGURE 1 Botswana / Inflation and real GDP growth

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

Percent, percent of GDP
15

Poverty rate (%)

10

Real GDP per capita (constant LCU)

70

Inflation
Real GDP

90000
80000

60

70000
50

5

0

60000

40

50000

30

40000
30000

20

20000
10

-5

10000

0

0
2009 2011 2013 2015 2017 2019 2021 2023 2025

-10International poverty rate
Upper middle-income pov. rate

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Sources: Bank of Botswana and World Bank staff.

Source: World Bank. Notes: see Table 2.

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Apr 23Lower middle-income pov. rate
Real GDP pc

Russia’s invasion of Ukraine. Import restrictions to promote local industries put
pressure on domestic prices. Higher foodprices might be a source of income growthfor some poor rural households engaged inagriculture, but they are expected to further hurt poor urban households, while
higher fertilizer prices hamper agricultural
production. As a response, the Bank of
Botswana tightened monetary policy byraising the interest rate by a cumulative
151 basis points during 2022.
The overall fiscal deficit narrowed to an
estimated 2 percent of GDP in 2022. Fiscal revenues exceeded budgeted levels
by 5.4 percent, outpacing the increasein wage expenditure, the fuel subsidy
program, and social welfare. Public debt
reached 20.8 percent of GDP in 2022.
Most of the new borrowing was on thedomestic market at relatively low interest
rates. Interest payments on debt increased to 0.7 percent of GDP in 2022
compared to 0.5 percent of GDP in 2021
owing to monetary tightening.
Unemployment remains structurally high,posing challenges to Botswana’s inclusive
development strategy, though it declined
slightly from the post-pandemic peak of

26 percent in 2021 to 25.4 percent in 2022.
Poverty based on the international poverty
line of US$2.15 per person per day (2017
PPP) was estimated at 14.7 percent in 2022.

OutlookAs global demand is expected to decelerate and diamond prices to stabilize, GDP
growth is projected at 4 percent in 2023
and into the medium term. The outlook
relies on a stable but robust performanceof the diamond sector, while a modest
pickup is projected in non-mineral activities, supported by improved electricity and water supply. Poverty under the
US$2.15 international poverty line is projected to remain relatively high for an
upper-middle-income country at around14.5 percent in 2023.
Fiscal pressures are expected to remain
significant amid elevated capital and current spending. Planned capital spending
has been increased significantly (27.8 percent in FY23) as an ‘economic stimulus’
but given the history of underspending
due to limited absorptive capacity, it raises

TABLE 2 Botswana / Macro poverty outlook indicatorsconcerns of spending inefficiencies. The
consolidation of the public sector’s wage
bill could prove difficult in a high inflation
context. The overall fiscal deficit is projected to increase to 2.9 percent in 2023, andthen to decline to 0.9 percent of GDP in
FY25. Public debt is projected to decline to
below 20 percent of GDP by 2025. The current account is expected to improve to asurplus of 3.1 percent of GDP in 2023 andto 4.8 percent of GDP in 2025.
Priorities for reform include accelerating
digital connectivity, business environment reforms, value chain development
in both mining and non-mining sectors,
and accelerating infrastructure development. Emphasis on strengthening fiscal
prudence and discipline (including
through implementation of state-owned
enterprise reforms), enhancing revenue
mobilization through improvements in
tax collection, and replenishing the Government Investment account to manage
debt sustainability are key measures thatwould aid inclusive growth. The outlook
is subject to substantial downside risks
mainly related to the broad effects of thewar in Ukraine and the projected deceleration in global demand.

(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

2020
-8.7
2.6
5.3
-9.2
-18.6
5.0

2021
11.8
2.4
4.0
-0.3
31.7
2.3

2022e
6.5
3.0
4.3
7.2
12.0
3.9

2023f
4.0
2.5
7.1
1.3
6.8
4.2

2024f
4.0
2.5
1.3
2.7
7.0
3.5

2025f
4.0
2.0
0.6
3.2
7.0
3.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-9.1
-2.7
-20.5
-1.3

11.9
-1.0
19.3
8.1

6.5
0.8
11.3
3.7

4.0
2.8
8.0
1.3

4.0
2.6
4.4
3.8

4.0
2.6
4.4
3.7

Inflation (Consumer Price Index)

1.9

6.7

12.2

7.5

4.5

4.5

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

-8.6
0.7

-0.5
0.6

2.5
0.9

3.1
0.8

4.3
0.7

4.8
0.6

-9.5
28.6
24.6
-8.9

0.0
31.8
22.3
0.5

-2.0
29.7
20.8
-1.4

-2.9
29.0
21.9
-2.0

-2.4
28.5
20.4
-1.6

-0.9
29.1
19.9
-0.3

16.0
39.1
64.6

15.1
37.2
62.8

14.7
36.5
62.0

14.5
36.2
61.7

14.4
35.9
61.5

14.3
35.6
61.2

-1.4
15.7

3.7
16.8

0.9
17.5

0.3
17.8

0.4
18.1

-9.6
13.0

Fiscal Balance (% of GDP)
Revenues (% of GDP)ab

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.
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: 2016-2022. Forecasts are from 2023 to 2025.
d/ Projection for $2.15 poverty using annualized elasticity (2009-2015) with pass-through = 0.87 based on GDP per capita in constant LCU. For higher lines use 85% and 50%of the 2.15 elasticity, respectively.

MPO

7

Apr 23

BURKINA FASO
Table 1

2022

Population, million

22.7

GDP, current US$ billion

21.3

GDP per capita, current US$

941.1

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

92.2

b

59.7

Total GHG emissions (mtCO2e)64.4

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 (2021); Life expectancy(2020).

GDP growth slowed to 2.5 percent in
2022 (-0.1 percent per capita) as insecurity led to the closure of several gold mines
and high food prices drove inflation to aregion-high 14.1 percent; poverty incidence increased by 5.9 percentage points.
Growth could strengthen to 4.3 percent
in 2023 with improved security; however, the medium-term outlook is subject
to substantial downside risks with security spending and expensive borrowing
delaying fiscal consolidation.

Key conditions andchallenges
Insecurity and political instability remain
the most critical growth constraints in the
short term. Several mines suspended operations in 2022 as a result of insecurity andnew mining investments were postponed.
As local populations are displaced, agricultural output growth weakens, aggravating food insecurity. The two coups in 2022
triggered a sharp reduction in the international community’s financial support
while negatively affecting private investment and foreign direct investment (FDI).
Continued violent incidents could further
reduce mining activity and the country’s
vital gold exports that provide a hedge
amid global uncertainty.
The primarily rain-fed agriculture andlivestock sectors, which account foraround 20 percent of GDP and employ
over 90 percent of the country’s poor, remain highly vulnerable to climate shocks
and natural disasters.

Recent developments
GDP growth slowed to an estimated 2.5
percent in 2022 (-0.1 percent per capita).
Growth was driven by the primary andtertiary sectors, which grew 5.1 and 5.6
percent, respectively, underpinned by a return to average rainfall and higher government support to public services. After

FIGURE 1 Burkina Faso / Real GDP growth and inflation

FIGURE 2 Burkina Faso / Actual and projected poverty
rates and real GDP per capita
Poverty rate (%)

Percent
35

Percentage points
25

strong 2021 growth, the secondary sector
contracted 4.9 percent in 2022 due tothe insecurity-induced closure of several
mines. As a result, growth was restrainedby lower exports (-0.6 percent) and private investment (-6 percent) while
buoyed by higher public investment(+39.8 percent), as the authorities increased security spending.
Soaring food prices (peaking at 30.8 percent year-on-year inflation in July) brought
annual inflation to 14.1 percent, which
coupled with negative per capita income
growth eroded the purchasing power ofhouseholds. Poverty incidence is estimatedto have increased by 5.9 percentage points,
implying an additional 1.5 million fell into
extreme poverty during 2022. While therise in import prices related to Russia’s invasion of Ukraine fed into domestic inflation, supply-side shocks from a poor harvest in late 2021 and insecurity driving
farmers from their lands drove inflation.
Providing supplies to blockaded areas has
been very difficult and food insecurity has
increased, with the country’s far north already in an emergency situation. Furthermore, local prices were up to 6 times the
5-year average.
High international gold and cotton prices
mitigated the impacts of production shortfalls caused by mine closures and pest infestations. Nevertheless, the current account balance deteriorated to -5.2 percent
of GDP with defense spending bringing inhigher fuel imports.
To counter inflation across WAEMU
countries, the Central Bank of West
African States (BCEAO) raised policy interest rates by a cumulative 75 basis

Real GDP per capita (constant LCU)

100

500000309045000025804000002010703500001560300000510502500000540200000030150000-520

100000

10

50000

20
15

-5
-10

-10

-15

-15
2019Q1

2019Q4

2020Q3

Real GDP Growth
Food inflation (rhs)2021Q22022Q102022Q402009 2011 2013 2015 2017 2019 2021 2023 2025

Headline inflation (rhs)International poverty rate
Upper middle-income pov. rate

Source: World Bank.

Source: World Bank. Notes: see Table 2.

MPO

8

Apr 23Lower middle-income pov. rate
Real GDP pc

points in 2022 (to 2.75 percent for liquidity calls and 4.75 percent for the marginal
lending facility). BCEAO will likely needto continue tightening in 2023 in line withother major central banks, as foreign exchange reserves have declined, and inflation remains well above the target rangeof 1-3 percent. Furthermore, delaying fiscal adjustments towards the regional fiscal deficit target of below 3 percent of
GDP by 2025 could exacerbate debt sustainability risks in some countries, while
increasing regional financing needs, reducing FX reserve buffers, and elevating
inflationary risks.
The fiscal deficit increased to 10.6 percent
of GDP in 2022 - the largest deficit in
the region. Revenues increased as a shareof GDP despite an underperforming mining sector, thanks to higher import taxes
and ongoing reforms in digitalizing tax
administration processes. Given worsening insecurity, security spending rose to
4.6 percent of GDP in 2022 (3.4 percent in2021). Fiscal transfers (9 percent of GDP)
were also higher than normal, partly due
to a one-time payment of arrears linked
to fuel subsidies (4.6 percent of GDP).

Public debt reached 54.3 percent of GDP
by the end of 2022, with higher-interest
domestic debt making up the majority ofthe public debt stock.

Outlook
Growth will increase to 4.3 percent in 2023
(1.7 percent in per capita terms), driven by
the agriculture and service sectors, and arecovery in gold mining.
Average annual inflation is projected to decline to 4.9 percent in 2023, reflecting a decline in global oil and food prices and assuming no further deterioration in insecurity. The fiscal deficit is projected to remain
high, at 6.9 percent of GDP, exceeding thetarget (4.7 percent) of the adopted budget,
due to higher security spending and the inclusion of securitized debt linked to fuelsubsidies in spending figures. Convergence to the WAEMU’s 3 percent target
is not expected before 2027. Financing the
deficit will prove challenging as tighter
global financing has already increased thecost of funding on the WAEMU regional

TABLE 2 Burkina Faso / Macro poverty outlook indicatorsbond market and access to concessional
funding remains constrained. A return tocivilian rule, scheduled for mid-2024,
could usher in renewed concessional funding, helping debt sustainability.
Assuming improvements in security andthe implementation of the transition
agenda, growth is projected to improveover the medium term, reaching 5.1 percent by 2025.
Poverty rates are predicted to remain unchanged in 2023, as inflation offsets
growth in the incomes of poor households, before beginning to trend downwards by about 1 percentage point a year.
This marginal decline will only just keep
up with increasing population growth,and the number of poor is expected to remain about 7.5 million.
Persistent insecurity is the primary risk to
the outlook. Furthermore, a slowdown inglobal growth, higher inflation, and monetary tightening internationally could leadto higher financing costs. The price of gold
remains at historically high levels, but
could weaken in real terms, posing a risk
to the current account and domestic revenue mobilization.

(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

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
2.5
3.4
1.3
3.8
-0.6
1.7

2023f
4.3
3.1
10.9
5.1
2.8
4.6

2024f
4.8
4.3
6.9
5.0
3.4
4.0

2025f
5.1
4.1
6.5
6.1
4.1
3.9

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

1.9
5.2
12.8
-4.9

6.9
-4.1
11.0
10.3

2.5
5.1
-4.9
5.6

4.3
4.7
0.5
6.2

4.8
4.5
2.8
6.0

5.1
4.3
4.1
6.0

Inflation (Consumer Price Index)

1.9

3.9

14.1

4.9

3.8

2.4

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

-0.1
-0.6

-3.0
0.5

-5.2
0.5

-4.4
0.6

-3.6
0.5

-3.0
0.5

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

-5.1
19.1
44.9
-3.7

-7.5
20.3
48.2
-6.0

-10.6
20.7
54.3
-8.5

-6.9
20.6
58.3
-5.1

-5.4
20.6
60.8
-3.5

-5.1
20.5
62.4
-3.1

26.5
56.2
79.0

26.8
56.3
77.8

32.7
61.8
80.8

32.7
62.0
81.0

32.1
61.7
80.5

30.9
60.5
80.0

3.2
10.5

6.0
11.1

4.6
11.4

5.0
11.8

5.1
12.3

5.1
12.7

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.
a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
b/ Projection based on microsimulation model that accounts for differences in sectoral growth, food and nonfood inflation.

MPO

9

Apr 23

BURUNDI

Key conditions andchallenges

Table 1

2022

Population, million
GDP, current US$ billion

3.6

GDP per capita, current US$

279.8

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

Burundi’s economic development has beenhampered by structural challenges that reinforced a cycle of fragility and poverty. Burundi is faced with a multidimensionalfragility trap characterized by recurring political instability, low economic diversification, high population growth, environmental degradation, and volatile growth. The
cessation of aid between 2015-2019 constrained the government's ability to ensure
access to services. The macroeconomic policy reaction prevented larger cuts to current
expenditures but led to foreign exchange restrictions, exchange rate overvaluation, fiscal dominance of monetary policy, and highpublic sector indebtedness.
Moreover, human capital accumulation
has not kept up with fast population
growth. Transition to secondary schoolingremains low (48 percent), and below LIC
and SSA averages. Learning poverty rates- measured as the share of children who
cannot understand a simple text by the endof primary school - remain high (93 percent). Among adolescent girls, as many as
30 percent are out of school. Furthermore,
Burundi has one of the highest rates ofchronic undernutrition in SSA and worldwide, with almost one in two households
being food insecure and over half of thechildren under five stunted. The share ofstunted children among those under theage of five increased to 55.8 percent in 2021
from 52.6 percent in 2020 and this is poised

12.9

a

38.6

School enrollment, primary (% gross)

b

115.1

b

61.6

Total GHG emissions (mtCO2e)8.9Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2013), 2017 PPPs.
b/ Most recent WDI value (2020).

Economic growth is estimated at 1.8
percent in 2022, a slight deceleration
over 2021, driven by industry and services. Agriculture contracted due to insufficient rainfall and delays in fertilizer
distribution. Higher commodity prices
due to Russia’s invasion of Ukraine lifted inflation. Growth is expected to accelerate in 2023-25, although downside
risks, including from fiscal slippage, aresubstantial. With rapid population
growth, per capita GDP continues tocontract, while poverty is expected toreach 83 percent in 2023.

to deteriorate with the inflationary pressures on food prices due to the war in
Ukraine. Against this backdrop, monetary
poverty has been estimated at 83.0 percent(based on the international poverty line of$2.15/day) in 2022, up from 65.1 in 2013
(the last year with current data availability
to the World Bank).
Gradual re-engagement with the international community since 2020 creates anopportunity for reforms to stabilize thecountry’s economy and scale up investments in human capital and infrastructure as a part of a process to change Burundi's growth trajectory.

Recent developments
Higher oil and food prices led to negative
terms of trade shock which slowed economic growth, accelerated inflation, and increased fiscal and current account deficits.
Growth decelerated to 1.8 percent in 2022(-0.8 percent in per capita terms) from 3.1
percent in 2021, driven by industry andservices. Agriculture contracted by 0.8 percent due to delays in fertilizer supply, limited rainfall, and poor seed quality. Government consumption and investment
supported growth on the demand side.
At 11.5 percent of GDP, the fiscal deficit
has worsened from 4.6 percent in 2021.
This reflects a sharp increase in subsidies,transfers, and stronger capital spending
while revenues slightly decreased. The fiscal deficit was mainly financed by T-bonds
and credits from the Central Bank withpublic debt reaching 67.5 percent of GDP.

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

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

Percent, percentage points
5

Poverty rate (%)

4

100

3

80

2

60

1

40

0

20

Real GDP per capita (constant LCU)

120

200000180000160000140000120000100000
80000
60000
40000
20000

-1
2018

2019

Agriculture
Taxes

2020

2021

2022

2023

Industry
GDP growth

2024

0

2025

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

Services

Sources: Official statistics and World Bank calculations.

Source: World Bank. Notes: see Table 2.

MPO

10

Apr 23Lower middle-income pov. rate
Real GDP pc

Driven by oil prices, the current accountdeficit (CAD) remained high at 15.5 percent of GDP in 2022. Weak demand in key
export markets and ongoing mining contract negotiations affected export performance while imports of both capital andconsumption goods increased. The CAD is
primarily financed by trade credits. International reserves cover 1.8 months of imports at end-2022, down from 3.2 months
in 2021. The foreign exchange parallel market premium reached 75 percent in February 2023 (2022: 62 percent).
Headline inflation reached 18.8 percent in
2022, while food inflation was reported at39.2 percent in December-2022. The latter
will disproportionately burden the poor
who spend a higher share of their income
on food products. In the short term, this is
expected to further increase the number ofpoor. In the longer term, this is likely tolead to human capital depletion as households are forced to adopt coping strategies
such as reducing food consumption, selling productive assets, or putting children
to work, resulting in premature school
dropout, particularly among girls.

Outlook
Growth is projected to increase to 3-4 percent over 2023-25. Services should continue
to recover while the pace of agricultural
growth is likely to pick up assuming favorable rainfall and good distribution of fertilizers. Industry is projected to accelerate due
to a loosening of forex constraints, resolution in mining disputes, and increased power generation. Private consumption andpublic investment are projected to remainhigh given economic recovery and a recovery in partner-financed public infrastructure programs. The fiscal deficit is expected
to narrow to 5.5 percent of GDP in 2023 and4 percent by 2025 as revenues increase,aligned with fiscal consolidation efforts under the recently requested IMF program. As
a result, public debt is expected to decrease,reaching 62 percent of GDP by 2025. External pressures will aggravate in 2023 before
gradually easing as import prices moderate,and exports pick up, but the CAD will remain high at 11 percent of GDP in 2025.

TABLE 2 Burundi / Macro poverty outlook indicators

Against the backdrop of Burundi’s population set to double as early as 2050 –further exacerbating existing pressures onlimited land resources - substantial structural reforms are necessary to dramatically expand the private nonfarm sector andincrease agricultural productivity. In theabsence of that, Burundi’s growth pathremains vulnerable to a return to the cycle of fragility and poverty. Under thecurrent trajectory, poverty is projected at
81.9 percent (based on $2.15/day, 2017
PPP) for 2024.
Downside risks are high, particularly on
the fiscal front. Weak domestic revenue
mobilization efforts could lead to revenue shortfalls and unexpected arrears,
which would undermine fiscal sustainability. Weather shocks may hold backagricultural growth and poverty reduction. On the upside, foreign aid could
accelerate reflecting the re-engagementwith the international community andexports could strengthen as a result of
broad structural reforms, which would
significantly strengthen the BOP, growth,and revenue collection.

(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

2020
0.3
0.3
19.2
-16.6
-14.9
3.4

2021
3.1
3.0
2.9
3.9
3.4
3.2

2022e
1.8
2.4
5.9
4.0
5.8
7.0

2023f
3.0
3.3
5.1
6.6
8.2
7.1

2024f
4.0
3.6
5.0
8.7
12.8
7.1

2025f
4.2
3.7
4.4
10.4
13.2
7.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

0.3
2.8
1.8
-1.7

3.1
3.4
3.0
2.9

1.8
-0.8
3.2
3.1

3.0
3.1
2.9
2.9

4.0
4.1
4.4
3.7

4.2
4.5
4.3
3.8

Inflation (Consumer Price Index)

7.5

8.3

18.8

23.8

16.0

13.0

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

-10.3
0.2

-12.3
0.3

-15.5
0.3

-17.0
-0.1

-12.9
-0.1

-11.5
-0.1

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

-6.6
22.6
66.0
-3.6

-4.6
23.8
60.3
-1.6

-11.5
23.3
67.5
-8.7

-5.5
26.4
66.5
-2.6

-4.5
27.2
63.5
-1.4

-4.0
27.7
61.9
-1.4

81.8
96.0

81.8
96.0

83.0
96.6

83.0
96.6

81.9
96.1

80.3
95.2

2.6
8.7

3.9
8.7

4.0
8.6

3.9
8.6

3.8
8.7

3.7
8.8

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower 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.
a/ Calculations based on 2006-QUIBB and 2013-ECVMB. Actual data: 2013. Nowcast: 2014-2022. Forecasts are from 2023 to 2025.
b/ Projection using point-to-point elasticity (2006-2013) with pass-through = 1 based on GDP per capita in constant LCU.

MPO

11

Apr 23

CABO VERDE
Table 1

Key conditions andchallenges
2022

Population, million

0.6GDP, current US$ billion

2.3

GDP per capita, current US$

3943.9International 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

74.8

Total GHG emissions (mtCO2e)0.7Life 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).

Growth rebounded to 15 percent in 2022,with real per capita incomes surpassing
pre-pandemic levels, driven by the recovery of tourism. Russia’s invasion of
Ukraine intensified inflation pressures,
which peaked at 7.9 percent. Growthfriendly fiscal consolidation should support growth converging to 5.5 percent
over the medium term while the outlook
remains subject to downside risks stemming from the war in Ukraine, a global
deceleration, delayed structural reforms,
and climatic shocks.

Political stability, democratic institutions, and relatively pro-market reforms have generated significant economic and social progress since independence in 1975. However, Cabo
Verde’s development model, predominantly based on tourism and foreign
direct investment (FDI), has shown
signs of fatigue since the 2008 global
financial crisis. Ineffective countercyclical fiscal policies led to growing
financing needs and increased public
debt between 2010-2015. To put public
debt back on a sustainable path, theGovernment initiated a fiscal consolidation program in 2016, including thereform of loss-making state-owned enterprises (SOEs).
The shock resulting from COVID-19 produced the largest economic contraction onrecord (14.8 percent) in 2020 and exposed
the country’s economic vulnerabilities.
Global travel restrictions led to a sharp
contraction in tourism and related activities. Progress in fiscal consolidation anddebt reduction were reversed, particularly
as contingent liabilities related to SOEs
materialized, and the poverty rate peakedat 21.5 percent (using the $3.65 perday-2017 PPP), driven by substantial job
losses, particularly in the tourism sector.
Recent shocks have highlighted the economy’s exposure to external risks and narrow dependence on tourism, in addition

to growing climate risks and fiscal risks,
which requires investments and structuralreforms to help diversify the economy.

Recent developments
Economic activity is estimated to have expanded by 15 percent in 2022, with per
capita incomes surpassing pre-pandemic
levels (2019). On the supply side, accommodation, transport, and commerce explained 60 percent of growth. On the demand side, exports (mainly tourism) andprivate consumption accounted for 90 percent of growth. The rebound in economic
activity in 2022 was accompanied by a reduction in poverty (0.8 percentage points
to reach 19.3 percent in 2022), despite thespike in inflation.
Headline inflation reached 7.9 percent (y/y) in December 2022 after inflationarypressures emerged in 2021, fueled by highinternational oil and food prices and global
supply chain disruptions due to the war in
Ukraine. Food inflation peaked at 15.7 percent while energy and transportation inflation increased to 10.1 and 11.1 percent,respectively. Higher food prices and low
agricultural production, driven by the fiveyear long drought, intensified food insecurity. Cabo Verde’s monetary policy isaligned with the Eurozone, as the escudo ispegged to the euro.
The poverty rate fell from 20.1 percent
in 2021 to 19.3 percent in 2022 (using
US$3.65 per-day-2017 PPP), reaching thepoverty levels of 2015. Economic growth
was fundamental for poverty reduction,

FIGURE 1 Cabo Verde / Real GDP growth and inflation

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

Percentage
40

Poverty rate (%)

30

Real GDP per capita (constant LCU)

70

40000060

3500002030000050
1025000040

0200000

-10

30

-20

20

-30

10

-40

10000050000

02019Q1 2019Q3 2020Q1 2020Q3 2021Q1 2021Q3 2022Q1 2022Q3
Real GDP growth
Food and beverages inflation

15000002007 2009 2011 2013 2015 2017 2019 2021 2023 2025

Headline inflation
Energy inflation

International poverty rate
Upper middle-income pov. rate

Source: Government of Cabo Verde.

Source: World Bank. Notes: see Table 2.

MPO

12

Apr 23Lower middle-income pov. rate
Real GDP pc

led by the creation of new jobs, especiallyin the tourism sector. However, poverty
reduction was dampened by the increase
in inflation in 2022, especially higher foodprices. It is estimated that without the increase in food prices, poverty would havebeen 16.2 percent in 2022 ($3.65 per day
PPP 2017), almost 3 percentage points
lower and close to the pre-pandemic level(16.1 percent) in 2019.
The fiscal deficit narrowed to 3.8 percent of
GDP in 2022, supported by the strong economic performance and increased fiscal
revenues. Public debt declined from 142.7 to
126.2 percent of GDP, driven by GDP
growth. Total revenue increased 39 percent,driven by personal income and VAT taxes,
while total expenditure increased 20.6 percent, reflecting higher current expenditure,
estimated at 4.2 percent of GDP, to protect
the most vulnerable from rising food insecurity and to control fuel and energy prices.
The social protection system, through cashtransfers, supported the most vulnerable.
The current account deficit (CAD) declined
from 11.2 percent of GDP in 2021 to 0.9
percent in 2022, supported by a higher
surplus in net-services exports and robust
remittances. The CAD was financed byconcessional loans and FDI as international reserves reached 7.2 months of imports.

OutlookReal GDP growth is projected to reach 4.8
percent in 2023 (3.8 percent in per capita
terms). Over the medium-term, private
consumption, investment in tourism andthe blue economy should support growth.
The outlook is subject to substantial downside risks stemming from uncertainties
due to the war in Ukraine, mainly throughinflation and its impact on private consumption, slow global growth, particularly
in Europe, delayed structural reforms to
manage fiscal risks, and climatic shocks.
Inflation is expected to moderate in 2023,
as global growth moderates, commodity
prices stabilize, and supply bottlenecks
ease. Headline inflation is projected at 4.5
percent. Over the medium-term, the nominal anchor (peg to the Euro) and return
to fiscal consolidation should contain inflation, converging to 2 percent by end-2024.
The authorities are committed to gradualrevenue-driven fiscal consolidation over

TABLE 2 Cabo Verde / Macro poverty outlook indicators

the medium-term, which includes enhanced management of fiscal risks, revenue mobilization, and the waning of exceptional shock measures. Consequently,
the fiscal deficit is projected to reach 2 percent of GDP by 2025 and the public debtto-GDP ratio to improve from 126.2 percent in 2022 to 106 percent by 2025. Fiscal
risks will remain high as the fiscal deficit is
exposed to contingent liabilities in sectors
particularly vulnerable to external shocks.
The CAD is projected to reach 2.1 percent
of GDP in 2023, driven by higher imports,
particularly for private investment. Overthe 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 ofprospective imports.
Poverty (using US$3.65 per-day-2017
PPP) is projected to remain above 19 percent in 2023 due to higher prices, especially of food items. The poverty rate is
expected to fall to 18.7 percent in 2024
and then continue falling to 17.5 percent
by 2025, supported by economic growth
and the stabilization of inflation.

(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

2020
-14.8
-11.3
0.8
19.7
-58.6
-22.6

2021
7.0
9.4
30.1
-9.1
6.4
4.4

2022e
15.0
18.6
15.5
-1.9
57.6
25.0

2023f
4.8
4.6
5.2
11.7
9.8
11.1

2024f
5.4
5.1
-10.6
19.3
9.6
8.9

2025f
5.3
5.0
-1.0
12.7
9.4
9.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-14.8
-6.3
-2.0
-19.2

7.0
4.8
9.5
6.3

15.0
-10.3
5.3
20.9

4.8
0.5
4.2
5.3

5.4
1.0
4.9
5.8

5.3
1.0
5.2
5.6

Inflation (Consumer Price Index)

0.6

1.9

7.9

4.5

2.0

2.0

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

-15.0
3.7

-11.2
3.5

-0.9
5.0

-2.1
4.2

-2.4
3.1

-1.8
2.9

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

-9.1
24.7
142.6
-6.5

-7.3
22.6
142.7
-5.2

-3.8
26.1
126.2
-1.4

-3.9
27.3
119.2
-1.6

-3.1
26.0
113.2
-0.7

-2.0
26.2
106.2
0.2

6.1
21.5
51.9

5.2
20.1
50.4

5.3
19.3
48.7

5.0
19.4
49.1

4.8
18.7
47.7

4.7
17.5
46.2

2.9
87.0

-2.1
86.3

-1.0
86.0

-0.5
85.8

0.1
85.7

0.8
85.7

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.
a/ Calculations based on 2015-IDRF. Actual data: 2015. Nowcast: 2016-2022. Forecasts are from 2023 to 2025.
b/ Projection based on microsimulation model that accounts for differences in sectoral growth, food and nonfood inflation.

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13

Apr 23

CAMEROON

Key conditions andchallenges

Table 1

2022

Population, million

27.9

GDP, current US$ billion

47.2

GDP per capita, current US$

1689.6

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

60.8

Total GHG emissions (mtCO2e)

126.1

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).

Recent shocks undermined Cameroon’s real GDP growth in 2022 and fueled inflation, with adverse consequences on poverty. The medium-term outlook shows reduced fiscal and current account deficits,with growth remaining firmly positive. Inflation should ease but remain above the regional target of 3 percent in 2023. Extreme
poverty incidence (less than $2.15 a day
PPP) is expected to be 24.3 percent in 2023,
almost unchanged from 2022. Several
downside risks surround this outlook,adding the urgency to accelerate structuralreforms and rebuild fiscal buffers.

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. The oil sector accounted
for 4 percent of the country’s GDP and 15
percent of its fiscal revenues in 2022.
Cameroon’s debt service is on the rise, calling for improved debt management.
The current development model has run
out of steam, as governance indicators
have deteriorated, human capital remains
weak, the business environment is unfavorable, and climate change represents agrowing threat. The country has become
more fragile since conflicts affecting 6 out
of 10 of its regions have displaced people,
increased violence, and led to social services collapsing. The country struggles tolower poverty meaningfully faced withmodest growth and conflicts.

Recent developments
Cameroon’s economy expanded at aslightly slower pace in 2022, after growing by 3.6 percent in 2021. Real GDP
growth recorded 3.4 percent in 2022, supported by LNG exports, agri-food industries, construction, and services. Oil GDP
grew at a slower pace (0.9 percent y-o-

y at the end of 2022Q3). In the primarysector, food crop production dropped because of higher farm input prices. In thesecondary sector, oil production declined
while LNG production was sustained. Financial services and communications
drove the expansion of the tertiary sector.
Staple food prices and administratively
controlled prices of selected mass-consumption products have increased, driving headline inflation up in 2022.
Higher exports (+48.2 percent y-o-y in October) driven by increased oil prices, andprivate transfers from abroad improved
Cameroon's current account balance in
2022. Imports increased by 14.4 percent in
end-October 2022, compared to the previous year, as import costs increased due
to supply chain tensions. The current account deficit is estimated to have narrowed to 2.9 percent of GDP in 2022
(from 3.8 percent of GDP in 2021).
Cameroon's fiscal position has improved
amid higher expenses on fuel subsidies,
thanks to higher oil revenues (+67 percent y-o-y in end-June 2022) and cutsin current and capital spending to cover
the higher fuel subsidy bill (2.9 percent
of GDP). Non-oil tax revenues grew by
19 percent over the same period, driven
by corporate income tax and VAT collections. Overall, increased spending on fuel subsidies has offset the revenue gains
from higher oil prices (1.4 percent ofGDP). The overall fiscal deficit (payment
order basis, including grants) reached 1.8
percent of GDP in 2022. More arrears
have, however, been accumulated (6.5
percent of total expenditures, from 1.5
percent in 2021).

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

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

Percent, percentage points
10

Poverty rate (%)
90

800000880700000670600000

4

60

2

50

0

40

-2

30

-4

20

20000010

100000

-6
2000

2004
Gov. cons.
Inventories
Statistical disc.

2008

2012

2016

Exports
Private cons.
GDP

2020

2024

Real GDP per capita (constant LCU)

500000400000300000

0

GFCF
Imports0
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025
International poverty rate
Upper middle-income pov. rate

Source: World Bank.

Source: World Bank. Notes: see Table 2.

MPO

14

Apr 23Lower middle-income pov. rate
Real GDP pc

In 2022, the Bank of Central African
States (BEAC) continued to tighten its
monetary policy to contain inflationarypressures and support the external viability of the exchange rate arrangement. The
BEAC increased the policy rate in September 2022 (to 4.5 percent), its second
increase in 2022. Moreover, the BEAC
decreased its weekly liquidity injections
from CFAF 160 billion in April 2022 to
CFAF 50 billion in December 2022.
The last household poverty survey, carriedout in 2014, indicated that 25.7 percent of
the population lived below the international poverty line of $2.15 PPP per person perday. Simulations suggest that, due to low
economic growth and limited safety net
programs, the country has struggled to reduce poverty in a substantial manner. Extreme poverty is estimated at 24.3 percent
in 2023 – just 1.4 percentage point decline
in nine years. In the meantime, the numberof poor has increased by 1.2 million since2014 due to population growth.

Outlook
Economic growth is expected to gain momentum over the medium term and reach
4.2 percent, on average, over 2023-24, supported by sustained activity in the secondary and tertiary sectors. The fiscal
deficit is projected to narrow to 1.5 percent
of GDP by 2024 amid increasing non-oil revenues. The reduction of fuel subsidies, supported by an average 21 percent increase inretail fuel prices decided in end-January2023, and other spending reprioritization
would contain public spending. The current
account deficit is expected to remain below
3 percent of GDP, owing to high oil and nonoil commodity export revenues.

TABLE 2 Cameroon / Macro poverty outlook indicators

The outlook remains subject to risks associated with (i) tighter financial conditions,(ii) higher inflation, and (iii) a persistentsecurity crisis in the North-West, SouthWest, and Far North regions. Should suchrisks materialize, real GDP would growmore modestly than expected, affecting fiscal and external accounts. Higher international oil and food prices would add toinflationary and fiscal pressures, although
oil revenues would increase. The government would then have to drastically reduce expenditures to narrow the fiscal
deficit and match more limited financingthat would be available from external anddomestic sources.
As the country recovers from the various
shocks, extreme poverty incidence (lessthan $2.15 PPP a day) is expected to decline in 2024 and in 2025, albeit at a very
slow pace of only about 0.3 percentage
points per year.

(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

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

2022e
3.4
3.4
7.6
2.3
9.8
7.5

2023f
3.9
3.0
6.9
6.5
8.7
8.5

2024f
4.2
3.2
6.4
7.6
8.8
8.8

2025f
4.5
3.9
2.1
9.4
9.9
10.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

0.5
0.1
1.3
0.3

3.6
4.1
4.1
3.2

3.4
4.3
4.2
2.7

3.9
4.7
4.5
3.4

4.2
5.0
4.5
3.9

4.5
5.6
4.5
4.2

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

2.5
-3.6

2.5
-3.8

5.5
-3.0

5.7
-2.7

4.3
-2.3

3.0
-2.1

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

-3.2
12.6
45.8
-2.3

-3.2
13.7
47.1
-2.1

-1.8
15.5
46.4
-0.8

-1.6
15.8
42.8
-0.6

-1.5
16.1
40.4
-0.6

-1.4
16.4
38.5
-0.5

24.8
46.3
73.6

24.6
46.1
73.4

24.5
46.0
73.2

24.3
45.8
72.9

24.0
45.6
72.5

23.7
45.3
72.1

0.1
6.8

0.3
6.8

0.6
7.0

0.8
7.1

0.9
7.2

0.9
7.3

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.
a/ Calculations based on 2009- and 2014-ECAM-IV. Actual data: 2014. Nowcast: 2015-2022. Forecasts are from 2023 to 2025.
b/ Projection using point to point elasticity at regional level with pass-through = 1 based on GDP per capita in constant LCU.

MPO

15

Apr 23

CENTRALAFRICAN REP.
Table 1

2022

Population, million

5.6

GDP, current US$ billion

2.4

GDP per capita, current US$

438.8

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

128.1

b

54.6

Total GHG emissions (mtCO2e)

48.1

Life expectancy at birth, years

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

After two consecutive years of virtualstagnation, CAR’s economy is estimatedto have recorded zero growth in 2022 andis projected to grow at an average rate of
3.6 percent in 2023-25, allowing per capita GDP to return to its pre-covid-19 pandemic level. Nevertheless, the poverty rateis expected to remain high despite gradualincreases in private consumption. The
medium-term outlook remains subject toheightened external and internal risks.

The Central African Republic (CAR) isa sparsely populated country with anarea of 623,000 square kilometers anda population of under six million. Despite its abundant natural resources,
the country ranks at the bottom of
human capital and development indices and remains one of the mostfragile countries in the world. The
agricultural sector remains one of the
key drivers to economic growth, but
its potential (and the potential of therest of the economy) continues to beconstrained by a huge infrastructure
deficit, limited human capital accumulation and a fragile security environment. Repeated cycles of armed conflicts have hampered CAR’s ability to
add value to its local production, create jobs and bridge the poverty gap.
Poverty remains widespread, with thebulk of the poor living in extreme
poverty. Limited fiscal space constrains the provision of public goods
in remote areas, where access to education and health remains weak: accessto basic service delivery is limited andconcentrated in the capital city. The
private sector continues to suffer fromlimited access to financing, although
the banking sector remains well capitalized. The humanitarian situation isstill alarming, exacerbated in 2022 byrising food and energy prices.

Recent developments
After two consecutive years of virtualstagnation, economic activity is estimatedto have reached a complete standstill in
2022, due to floods and fuel shortages.
The production of the agriculture sector
suffered from floods, which destroyed
about 18,000 hectares of crops, and forced
the displacement of more than 6,000 people since June 2022. Timber production,
which accounts for about 56.8 percent of
CAR’s export earnings, was the hardest
hit in 2022, as prices declined steadily
by an average of 16.1 percent since thepeak reached in January 2021. The positive performance of the mining sector
in 2022H1 was offset by persistent fuelshortages, exacerbated by Russia’s invasion of Ukraine. On the aggregate demand side, private consumption remained the principal growth driver, supported by increased domestic credit. As
cash flow pressures remained highthroughout 2022, public investment contracted by 17.7 percent, contributing to a
decline in gross fixed investment.
Limited fuel supply, due to the protracted
effect of the war in Ukraine has led to an
unprecedented increase in the retail priceof petroleum products and contributed toinflationary pressures in 2022. The fuelshortage worsened an already worrisome
humanitarian situation and pushed thousands of households into extreme poverty. Overall, poverty is projected to remain
elevated, with 69.1 percent of the population living in extreme poverty in 2022

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
8

Poverty rate (%)

Real GDP per capita (constant LCU)

120

62500001002000004802150000

0

60

-2

40

100000

-4

50000

20
-6
2017

2018

2019

2020

Net Exports
Government Consumption
Real GDP growth

2021

2022

2023

2024

2025

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: Word Bank. Notes: see Table 2.

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16

Apr 23Lower middle-income pov. rate
Real GDP pc

(i.e., below the international poverty line of
US$ 2.15 per person per day, 2017 PPP).
In 2022, the Bank of Central African States(BEAC) continued to tighten its monetary
policy to contain inflationary pressuresand support the external viability of theexchange rate arrangement. The BEAC increased the policy rate in September 2022
(to 4.5 percent), its second increase in 2022.
Notwithstanding spending moderation,
the overall fiscal balance (including grants)
improved marginally in 2022 but remained
in deficit as a standstill in donor budget
support continued to weigh on the budget.
Tax revenues declined from 8.2 percent of
GDP in 2021 to 7.2 percent of GDP in 2022,
driven by persistent fuel shortages which
resulted in lower petroleum taxes. Fiscal
consolidation efforts have been maintained and are expected to continue, as uncertainty about budget support remains
high. Financing needs for 2022 were almost fully covered by the use of the country’s SDR allocation, with the residual being covered by domestic borrowing fromcommercial banks (CFAF 46.1 billion, an
equivalent US$74.9 million or 3.0 percent
of nominal GDP).
Despite a marginal improvement in net
transfers (private and official), the current
account deficit widened in 2022, due tolower export earnings and a high importbill resulting from higher international oil
prices. Increased capital and financial inflows in the form of foreign direct investment, due to an improved security situation, could only partially cover this wider
current account deficit. As a result, theoverall balance of payment switched froma surplus of 0.6 percent of GDP in 2021 to a
deficit of 8.3 percent of GDP in 2022.

OutlookThe medium-term outlook is of modest rebound. Provided that official fuel prices
will reflect regular market prices and the
security gains continue, real GDP growthis projected at 3.0 percent in 2023, before
reaching 3.8 percent on average over theperiod 2024-25. Net exports, private consumption and gross fixed investment are
expected to drive growth from the demandside over the medium term, supported byhigher international timber prices, lower
inflation, and a moderate fiscal consolidation effort. Over the medium term, Inflation is projected to fall within the 3 percent
CEMAC ceiling. The overall fiscal balance(including grants) is expected to remain in
deficit over the medium term despite theintroduction of new taxes on electronic

TABLE 2 Central African Republic / Macro poverty outlook indicators

communication. Public debt is expected toremain sustainable provided that the government continues to implement reforms
to reduce fiscal risks and debt-related vulnerabilities under the Sustainable Development Finance Policy (SDFP). With sustained security gains, capital and financial
inflows are expected to more than offset
the deficit in the current account, resulting
in a moderate balance of payment surplus
over the medium term.
The medium-term outlook is subject tohigh external and internal downside risks.
Internal risks include a reversal in security
gains due in part to the constitutional referendum, a deterioration in food security
due to food price pressures, and climatechange-related events (flooding) that could
further exacerbate humanitarian needs. A
continued freeze on budget support and a
decline in international timber prices are
the main external risks. Lower international timber prices could affect the agricultural sector, reduce export earnings, and delay prospects for economic recovery. Although the poverty trend is projected to
be stable until 2024, the poverty rate remains high and the increase in fuel prices
at the pump could impact the cost of
the household consumption basket andincrease the number of poor if adequate
measures are not taken.

(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

2020
1.0
-3.7
20.6
30.0
-10.5
-0.3

2021
1.0
2.8
-3.8
-15.9
-4.3
-7.2

2022e
0.0
4.8
-8.4
-4.6
-6.5
7.0

2023f
3.0
0.0
-2.8
4.9
8.2
-4.7

2024f
3.8
2.3
-0.9
9.6
3.6
1.0

2025f
3.8
2.1
0.0
12.5
16.3
7.2

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

1.0
5.0
0.6
-1.9

1.0
2.9
-0.4
0.1

0.0
-2.4
-5.6
4.9

3.0
3.2
0.1
4.1

3.8
3.3
0.3
5.8

3.8
3.4
0.7
5.5

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

0.9
-8.5

4.3
-10.6

5.8
-13.2

6.3
-8.9

2.7
-7.2

2.8
-7.0

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

-3.4
21.8
43.4
-3.1

-6.0
13.7
47.6
-5.7

-5.6
12.3
52.1
-5.2

-4.0
13.3
49.5
-3.5

-2.5
14.6
49.3
-1.8

-2.3
15.6
49.3
-1.5

68.7
84.7
94.6

69.0
84.7
94.6

69.1
84.8
94.7

69.1
84.8
94.7

69.0
84.7
94.6

68.8
84.7
94.6

1.6
0.5

1.0
0.5

0.6
0.5

0.8
0.5

0.9
0.5

0.9
0.5

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.
a/ Calculations based on 2008-ECASEB. Actual data: 2008. Nowcast: 2009-2022. Forecasts are from 2023 to 2025.
b/ Projection using neutral distribution (2008) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU.

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17

Apr 23

CHAD

Key conditions andchallenges

Table 1

2022

Population, million

17.7

GDP, current US$ billion

12.8

GDP per capita, current US$

720.5

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

93.7

b

52.8

Total GHG emissions (mtCO2e)

115.4

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 (2021); Life expectancy(2020).

Chad’s economic recovery in 2022 wasdampened by floods and insecurity;
GDP growth was moderate at 2.2 percent (-0.9 percent in per capita terms),
while poverty incidence increased by 2.4
percentage points. Growth is expected toremain modest over the medium-term,around 3.2 percent, as oil prices remain
high, but downside risks from foodscarcity and general insecurity, climatic
shocks, an extended political transitionand oil price volatility predominate.

Chad's oil-dependent economy has witnessed successive crises since the 2014-15
oil price shocks. Notwithstanding the
2018-19 recovery, annual GDP growth has
been subdued, averaging 0.3 percent overthe past six years, which, given high population growth (3.3 percent on average),translates into an average annual decreasein per capita income of 2.9 percent.
The main constraints sustained economic
and social development include: oil dependence and poor oil revenue management;
insecurity; vulnerability to climate change;
political unrest; institutional instability;
weak governance and transparency; poor
trade networks; weak human capital investment; and a large infrastructure deficit.

Recent developments
Chad’s economy was expected to recoverin 2022, following a 1.2 percent contraction in 2021 (-4.3 percent in per capita terms), on the back of higher global
oil prices (averaging $99.8/bbl in 2022)
coupled with increased oil production.
However, this recovery was dampened
by floods and a volatile security environment with GDP growth estimated at
2.2 percent (-0.9 per capita), and nonoil GDP growth at 1.3 percent. Industry
on account of the oil sector was themain contributor to growth (4.1 percentage points [ppts]), followed by agriculture (0.6 ppts), which experienced inadequate rainfall distribution and severe
floods. The value of exports increased by
54.9 percent due to high oil prices, leading to a current account surplus of 1.9
percent of GDP in 2022, versus a 6 percent deficit in 2021.
Inflation increased from 1 percent in 2021
to 5.8 percent in 2022 driven by high global
prices in food and energy resulting from
Russia’s invasion of Ukraine, and foodsupply restrictions due to the security situation. Food inflation, averaging 12.2 percent in 2022, also suffered from weak domestic agricultural production.
Chad declared a national food emergency
in June 2022. The situation was worsened
by unprecedented floods during the leanseason, which affected over 340,000 people
and destroyed 2,700 hectares of crops andfarming land. Food insecurity currently affects 2.1 million people (12.1 percent of the
population). Cereal production for2022-2023 is estimated at 2.9 million tons
with a gross deficit of 443,950 tons. The extreme poverty rate (US$2.15/ day per capita, 2017 PPP) is expected to have increasedby 2.4 percentage points in 2022, reaching
38.7 percent, implying the number of extreme poverty increased by almost 625,000
people to reach 6.8 million.
Chad's monetary and exchange rate policies
are managed by the regional Central Bank
(BEAC), which continued to tighten its
monetary conditions in 2022 to contain inflationary pressures and support the external viability of the exchange rate arrangement. The BEAC raised its policy rate in

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

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

Percent of GDP
6

Poverty rate (%)

4Real GDP per capita (constant LCU)

100

4500009040000080

350000

2

70

0

60

30000025000050-220000040150000

30

-4
-6

20

100000

10

50000

0

-8
2020

2021

Fiscal balance

2022

2023

Current account balance

2024

0
2011

2025

2013

2015

2017

2019

International poverty rate
Upper middle-income pov. rate

Real GDP growth

Source: World Bank.

Source: World Bank. Notes: see Table 2.

MPO

18

Apr 23

2021

2023

2025

Lower middle-income pov. rate
Real GDP pc

September 2022 from 4.0 to 4.5 percent, its
second increase in 2022. The BEAC also reduced its weekly liquidity injections from
XAF 160 billion in April 2022 to XAF 50 billion in December 2022.
The fiscal balance, including grants,
reached a surplus of 4.5 percent of GDP
in 2022 (non-oil fiscal deficit was 7.4 percent of GDP), due to the one-year lag in themain component of oil-revenue tax collection and lower capital expenditure. Total
public debt is estimated to have dropped
to 49.6 percent of GDP by end-2022. Chadbecame the first country to reach an agreement under the G20 Common Framework(CF) in November 2022 with its official andlargest private creditors.

OutlookIn 2023, growth will increase to 3.2 percent(zero per capita growth) with 2.4 percent
non-oil GDP growth, as oil prices moderate in the global markets. While significant

government investments are expected,
government consumption will be constrained. Assuming ongoing global recovery in international trade, moderate oil
prices and increased government investment, economic growth is expected to remain relatively constant over 2024-25. Inflation is expected to fall slightly to 5.2 percent in 2023, declining to 3 percent in 2025,
as food inflation gradually decreases
thanks to government measures addressing food insecurity.
Oil-sector driven growth is not expected
to lead to poverty reduction without significant structural reforms, as there are
few linkages between the extractive sector
and the livelihoods of poor and vulnerable groups. Moreover, the continued security restrictions and the low coverageof social protection programs will limit
the pace of poverty reduction. Extreme
poverty is expected to decrease to 34.4
percent in 2025, in line with moderate
growth in the agriculture and services
sectors and declining inflation. However,with rapid population growth, the total

TABLE 2 Chad / Macro poverty outlook indicators

number of poor declined by only 81,000
people to 6.7 million.
Reflecting significantly higher oil prices in
2022 and more controlled current spending, the fiscal surplus is projected to expand to 6.1 percent of GDP in 2023 (witha non-oil fiscal deficit of 6.5 percent ofGDP), before gradually decreasing to an
average 4 percent of GDP over 2024-25 asoil prices ease. Total public debt is projected to drop to 36.4 percent of GDP
by end-2025. The current account is expected to deteriorate over the medium
term (from -1.8 percent of GDP in 2023
to an average -4.6 percent of GDP over2024-25) owing to the projected decline inoil prices and increased imports to support growing capital investment.
This outlook is subject to significant uncertainty and downside risks, namely: dampening and volatile oil prices; increased political instability surrounding the politicaltransition and 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

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
2.2
2.1
-1.5
-6.8
5.0
2.0

2023f
3.2
1.0
-1.6
16.5
5.1
4.8

2024f
3.4
2.5
-3.2
3.2
3.9
1.6

2025f
3.1
2.6
-1.8
2.6
3.9
2.8

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-1.6
3.9
-0.1
-7.0

-1.2
6.2
-4.6
-4.4

2.2
2.0
4.1
0.7

3.2
2.2
4.5
2.8

3.4
1.6
2.1
6.2

3.0
1.7
2.0
5.2

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

3.5
-7.8

1.0
-6.0

5.8
1.9

5.2
-1.8

4.0
-4.7

3.0
-4.5

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

1.7
20.7
49.9
3.4

-2.2
16.3
52.1
-0.6

4.5
19.9
49.6
5.9

6.1
22.5
43.4
7.8

4.1
19.4
40.0
5.3

3.8
19.5
36.4
5.3

32.4
64.3
88.6

36.3
69.0
90.7

38.7
70.9
91.9

37.1
69.9
91.3

35.9
68.3
90.4

34.4
66.2
89.1

2.8
2.2

2.9
2.1

3.2
2.1

3.3
2.0

3.3
2.0

3.3
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.
a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
b/ Projection based on microsimulation model that accounts for differences in sectoral growth, food and nonfood inflation.

MPO

19

Apr 23

COMOROS

Key conditions andchallenges

Table 1

2022

Population, million

0.8GDP, current US$ billion

1.3

GDP per capita, current US$

1577.8International 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

64.2

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 Comoros’ recovery has been hindered by Russia’s invasion of Ukraine.
For the fourth consecutive year, growth
remained below pre-Cyclone Kenneth
levels. Low-income households have been
affected by rising prices, which reachedrecord levels in 2022. As the impact of
the war lessens, growth is expected torecover slightly in 2023 and 2024, marginally reducing poverty. Debt is projected to increase substantially, but itshould remain sustainable.

The COVID-19 pandemic and the war in
Ukraine have emphasized the Comoros’
external and structural challenges. Geographical characteristics predispose theComoros to low exports and a high dependency on imports – about 70 percent offood is imported. The resulting structural
trade deficit is primarily financed by remittances and proceeds from the arrival of thediaspora during grand marriage celebrations. Consumption, supported by remittances, is the main driver of growth. The
contribution of investment and productivity is constrained by the poor investment
environment. Labor participation, particularly by women, is low compared withpeer countries. Moreover, given poor economic outcomes, poverty levels remain
high, estimated at 39.0 percent in 2022.
Slow economic growth and weak revenue
administration capacities are hindering
domestic revenue mobilization. Low tax
revenues (7.6 percent of GDP in 2012-21)
affect the government’s capacity to deliver public services. Moreover, fiscal rigidity remains a major constraint with thewage bill absorbing 53 percent of domestic revenues, while public investment efficiency is below peers’ levels. The country remains at high risk of debt distress,
with debt at 32.7 percent of GDP in
2022 – nearly twice the value in 2017.
With a medium debt-carrying capacity,
the debt profile deteriorated following

the contracting of a large non-concessionalloan with a short maturity in 2018-20. Since
then, the debt service to exports ratio andthe debt service to revenue ratio have been
exceeding their thresholds. The country’s
vulnerability to climate change and natural disasters could further slowdown theeconomic recovery, given structural andinstitutional fragilities.

Recent developments
Rising global food and fuel prices negatively affected the Comoros’ economy lastyear, highlighting its vulnerability to external shocks. Growth has been below potential for the fourth consecutive year. The expected strong recovery in 2022 was thwarted by sluggish consumption in both theprivate sector and government, although
the high number of arrivals of the diaspora
to celebrate grand marriages in the third
quarter of 2022 significantly contributed totourism service exports.
Inflation levels in 2022 set a record, reaching
12.5 percent for the year. By December 2022,
headline inflation had surged to 20.6 percent year-on-year, driven by high foodprices. As poor households tend to allocatea larger share of their expenditure to food,they are expected to bear the brunt of theshock. To contain rising domestic prices, thecentral bank tightened its monetary stanceby conducting liquidity-absorbing operations (US$ 2.4 million in July-September2022). These included increasing obligatory
reserve requirements to 15 percent in June
2022 and increasing the minimum debit and

FIGURE 1 Comoros / Selected macroeconomic imbalance
indicators

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

Percent of GDP
60

Poverty rate (%)

Percent of GDP
0

50
40
30
20
10
0
2018

2019

2020

Debt
Fiscal Balance (rhs)20212022e 2023f

2024f

Real GDP per capita (constant LCU)

80

550000-1

70540000

-2

60

-3

50

-4

40

-5

30

-6

20

-7

10

-8

0

2025f

5300005200005100005000004900004800002014

Current Account Balance (rhs)

2016

2018

2020

International poverty rate
Upper middle-income pov. rate

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

Source: World Bank. Notes: see Table 2.

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20

Apr 232022

2024

Lower middle-income pov. rate
Real GDP pc

credit interest rate by 2.5 percentage points
since August 2022.
Tax measures adopted by the government
to help cushion households from rising
prices and the underperformance of stateowned enterprises led to a significant decline in government revenues andwidened the fiscal deficit from 2.7 percent
in 2021 to 3.9 percent in 2022. Containment
measures led to a decline in government
expenditure by 1.2 percentage points of
GDP between 2021 and 2022, but thesewere insufficient to offset the decline ingovernment revenues (2.4 percentage
points). State-owned enterprises are increasingly using commercial loans andhave weakened financial conditions due tothe business cycle and structural problems.
As a result, public guarantees have increased significantly, as evidenced by theincrease in credit to the public sector from
1.6 percent of GDP in December 2021 to 2.5
percent in the third quarter of 2022.
On the external side, due to a higher import bill, the current account deficit morethan doubled to 6.1 percent of GDP in 2022

(from 2.9 percent in 2021) and external stability weakened, with reserve coverage decreasing to 7.6 months of imports at
end-2022 from 9 months at end-2021.

Outlook
Growth is expected to recover modestly
to 2.8 percent in 2023, remain subdued in
2024 at 2.9 percent, and then bounce backto 3.6 percent in 2025 after the electoral cycle. With easing inflationary pressures, therecovery is projected to be driven by higher private and government consumption.
Investment to complete the El Maarouf
project and the Galawa hotel, and to improve the port infrastructure in Mohéli,will also support the recovery. The fiscal
deficit is projected to narrow to 3.6 percent
of GDP in 2025, based on the assumptionsof a marginal increase in tax revenues andlower support to state-owned enterprises.
As the government completes major projects between 2023 and 2025, and the fiscal

TABLE 2 Comoros / Macro poverty outlook indicators

gap could amount to $26.6 million, public
debt is projected to reach a record level of
44.1 percent of GDP in 2025. The debt trajectory remains sustainable because of thelimited size and duration of the breaches,but sustainability is contingent on fiscal
consolidation and prudent debt management. Inflationary pressures are expectedto ease in 2023 thanks to the euro peg
system and the decline in global commodity prices. Despite the slow decline
in commodity prices, the current accountdeficit is projected to average 7.1 percent
of GDP in 2023, on the back of increased
domestic demand, which will fuel imports. The poverty rate therefore is expected to reach 38.4 percent in 2023 anddecline to its pre-pandemic level of 38.1
percent in 2025.
There are several downside risks to theoutlook, including a potential renewed impact from the war in Ukraine, increased
contingent liabilities, slow implementationof the recovery plan due to the electoral cycle, and substantial inflationary pressuresdue to supply disruptions.

(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

2020
-0.3
3.8
4.1
-14.4
-46.3
-9.3

2021
2.1
1.0
5.0
9.6
48.2
7.7

2022e
2.3
0.2
2.0
2.5
22.6
4.2

2023f
2.8
2.0
5.3
2.9
6.3
3.3

2024f
2.9
2.6
0.4
2.4
8.8
3.4

2025f
3.6
3.2
-7.4
3.0
14.3
2.6

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-0.8
4.4
-5.6
-2.2

2.0
3.4
-0.2
1.8

2.1
3.3
0.4
1.8

2.8
4.7
2.3
1.9

2.9
4.3
1.0
2.6

3.6
4.5
1.5
3.5

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

0.8
-2.0

0.0
-2.9

12.5
-6.1

8.0
-7.1

4.5
-7.6

1.7
-6.5

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

-1.0
18.2
22.0
-0.8

-2.7
16.1
25.9
-2.4

-3.9
13.7
32.7
-3.5

-5.5
14.7
36.0
-4.8

-5.4
14.9
40.7
-4.4

-3.6
14.6
44.1
-2.6

18.4
39.2
68.2

18.4
39.0
68.2

18.2
39.0
68.2

18.1
38.4
67.8

18.1
38.2
67.3

17.9
38.1
66.9

1.6
45.2

2.1
44.7

1.8
44.2

2.4
44.3

3.1
44.6

3.6
45.2

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.
a/ Calculations based on 2015-EESIC. Actual data: 2014. Nowcast: 2015-2022. Forecasts are from 2023 to 2025.
b/ Projection using neutral distribution (2014) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU.

MPO

21

Apr 23

DEMOCRATIC
REP. OF CONGO
Table 1

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 is highly concentrated in theextraction of copper and cobalt, whichconstitute over 80 percent of exports(40 percent of which headed to China).
With its agricultural potential untapped,
DRC is a net food importer, increasing
vulnerabilities to external shocks. Political instability, weak institutional capacity, poor governance, and recurring
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 high levels of poverty. Persistent structural constraints result in anunderdeveloped private sector and large
informal economy. Climate change adds
to these challenges.
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, peace and advancing structural reforms
that will attract investments and create
jobs. The need for the state to deliver more

2022

Population, million

99.0

GDP, current US$ billion

63.1

GDP per capita, current US$

637.8

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

Key conditions andchallenges

a

42.1

School enrollment, primary (% gross)

b

123.9

b

59.7

Total GHG emissions (mtCO2e)

681.7

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2012), 2017 PPPs.
b/ Most recent WDI value (2020).

DRC’s economy grew by 8.6 percent in
2022 as mining production expanded. Elevated prices of imported food and oil led tohigher inflation and a wider current account deficit despite rising exports. Capital
inflows added to foreign reserves and supported currency stability. Government
revenues improved, but the fiscal deficit
widened with increased security and infrastructure spending. Prospects for growthand poverty reduction are favorable, butvulnerable to commodity price shocks.

and better services to citizens while maintaining hard-earned macroeconomic stability highlights the crucial role of improving domestic revenue mobilization to
widen fiscal space.
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 the poorest 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
GDP growth picked up to 8.6 percent in
2022 driven by a strong mining sector,
which expanded by 20.8 percent, owing to capacity expansion and recovery
in global demand. Copper and cobalt
production increased by 33.3 and 24.0
percent, respectively, in 2022. However,
DRC faced an overall negative terms-oftrade shock due to the Russia’s invasionof Ukraine, and growth in non-mining
sectors was modest, slowing down to
3.0 percent in 2022 (2021: 4.5 percent).
On the demand side, growth was led
by public investment and exports, while
private consumption was constrained byhigher inflation.

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

Poverty rate (%)

10

120

8

100

6

Real GDP per capita (constant LCU)
18000016000014000080

4120000100000

60

80000

2
40

60000

0

40000

20

-2

20000

0

-4
2019

2020

Non-Mining

2021

2022

Mining sector

2023

2024

SSA growth

2014

2016

2018

International poverty rate
Upper middle-income pov. rate

GDP

Sources: Democratic Republic of Congo Statistical Authorities and World Bank.

MPO

0
2012

2025

Source: World Bank. Notes: see Table 2.

22

Apr 23

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

The current account deficit deteriorated
to 2.9 percent of GDP in 2022 as strong
export earnings could not compensate
rising food and fuel import bills. Average
inflation accelerated to 9.2 percent in
2022 and the Central bank opted for atight monetary policy to anchor inflation
expectations. Nevertheless, FDI and external financing contributed to build up
foreign reserves, reaching 7.9 weeks ofimports in 2022 (2021: 5.4 weeks), and to
exchange rate stability.
The fiscal deficit widened to 2.7 percent in 2022. Domestic revenues
peaked at 15.6 percent of GDP in 2022,
owing to favorable commodity prices
and digitalization of revenue collection
process. In turn, expenditures stood at
19.7 percent of GDP in 2022 due to
exceptional security spending and arrears repayments, in addition to wage
adjustments and fuel subsidies.
The latest World Bank projections put extreme poverty at 60.5 percent in 2023, a
1.4 percentage points decrease compared
to 2022. This decrease is due to favorable
economic performance, despite the negative effects of the war in Ukraine.

OutlookGDP growth is projected to decelerate to
7.7 percent in 2023 and 7.5 percent in
2025 with the end of the Kamoa-Kakula mine expansion in 2024. The mining
sector is expected to slightly decelerate,
while growth in non-mining sectors (services, manufacturing) gradually picks up,
doubling to 6.2 percent by 2025.
The fiscal deficit is expected at 2.1 percent
of GDP in 2023, driven by election-related
spending, before narrowing to 1.0 percent
in 2025. Despite rising imports of capital
goods, the current account deficit will narrow to a range of 1.0 percent of GDP in
2023-2025 given improved terms of tradeassociated with favorable commodity
prices. Further FDI inflows will contributeto building-up reserves and maintaining
exchange rate stability while the inflation
rate is expected to be brought back down
to its 7 percent medium-term target.
Extreme poverty is projected to further
decrease by 2.7 percentage points by2025 given favorable economic prospects,

TABLE 2 Democratic Republic of Congo / Macro poverty outlook indicators

despite the lasting negative effects of thepandemic, the insecurity in the east of
the country, and the war in Ukraine.
DRC’s economy remains vulnerable tocommodity price swings and growth performance of major trading partners whichmight be disturbed by geopolitical conflicts. The continued economic consequences of the war in Ukraine, throughrising global food costs and higher oil
prices, could exert stronger pressure on
fiscal deficit, 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 relatedrisks (floods, droughts) is substantial. Finally, an escalating war in the East andcontinued political uncertainty ahead of
the planned 2023 presidential elections,might delay reform efforts, worsen fiscal
imbalances and generate arrears. Given
persistent conflicts in the East, DRC’s immediate challenge is to strengthen security
and maintain political and 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

2020
1.7
-8.0
9.5
37.8
4.0
15.1

2021
6.2
1.6
11.8
21.8
19.9
21.7

2022e
8.6
0.8
25.1
25.5
23.8
24.5

2023f
7.7
4.2
9.2
7.8
15.8
9.1

2024f
7.6
3.8
1.7
10.9
6.0
6.0

2025f
7.5
2.5
-2.2
11.8
5.5
5.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

2.3
2.5
4.2
0.1

6.2
2.4
7.9
5.6

8.6
2.7
15.1
3.0

7.7
2.8
12.4
3.3

7.6
2.9
9.8
6.2

7.5
3.1
9.0
7.0

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

11.4
-2.3

9.1
-0.9

9.2
-2.9

8.5
-1.0

7.2
-0.9

6.8
-1.0

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

-1.2
9.2
22.9
-1.0

-0.8
13.8
23.9
-0.7

-2.7
16.9
25.1
-2.2

-2.1
17.0
23.3
-1.5

-1.0
16.5
23.1
-0.5

-1.0
16.3
23.1
-0.4

64.9
85.0
96.4

64.0
84.5
96.1

61.9
83.4
95.8

60.5
82.6
95.5

59.3
81.7
95.2

57.8
80.9
94.9

0.0
1.2

0.1
1.2

0.2
1.2

0.2
1.2

0.3
1.2

0.4
1.2

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.
a/ Calculations based on 2012-E123. Actual data: 2012. Nowcast: 2013-2022. Forecasts are from 2023 to 2025.
b/ Projection using neutral distribution (2012) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU.

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23

Apr 23

REPUBLIC OFCONGOTable 1

Key conditions andchallenges
2022

Population, million

5.8GDP, current US$ billion

14.6

GDP per capita, current US$

2520.2

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

63.8

Total GHG emissions (mtCO2e)

32.4Life 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).

Following a protracted recession that started in 2015, the Republic of Congo’s (ROC)
economy grew by an estimated 1.5 percent
in 2022. Higher commodity prices stemming from Russia’s invasion of Ukraine
are improving ROC's fiscal and external
positions, but high food inflation could
worsen food insecurity. Economic recovery
is expected to strengthen in 2023-2025.
Uncertainties related to oil prices and production, and spillovers from the war in
Ukraine are key risks to the outlook.

Between 2015 and 2021, Congo’s economy
contracted by -4.6 percent on average, witheconomic activity underperforming sincethe 2014-16 collapse in oil prices that led toa massive cut in public spending and investment and the accumulation of domestic arrears to private sector firms, impacting private investment. The protracted recession
led to a cumulative decline of real GDP by 28
percent and of GDP per capita by 40 percent
during 2014-2021. The country’s reliance onvolatile oil revenue and weak governance,
reflected in high levels of non-concessionalborrowing, led Congo’s debt to be classified
as “in distress” and unsustainable in 2017,with its debt-to-GDP ratio increasing from
42.3 percent in 2014 to 113.2 percent in 2020.
Higher oil prices, improved debt management, and debt restructuring agreements
helped restore debt sustainability in thesecond half of 2021, but ROC remains indebt distress due to external arrears. The
prolonged economic recession 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 increasingfrom 34.8 percent in 2015 to 52.0 percent in
2021. Furthermore, human capital development lags that of peer countries. The impact of the war in Ukraine is exacerbating
socio-economic challenges, including foodinsecurity, partly due to ROC’s high dependence on food imports. Diversifying

the economy and sustaining economic
growth are among key challenges. The National Development Plan for 2022-2026 andincreased oil revenues offer a good opportunity to transform ROC’s economy and boost
inclusive and sustainable development to
reduce the country’s vulnerability tovolatile oil prices and unsteady production.

Recent developments
Driven by the non-oil sector, economic activity in Congo is estimated to have increased by 1.5 percent in 2022, compared
to a contraction of 2.2 percent in 2021.
Non-oil sector growth, estimated at 3.4
percent in 2022, was spurred by the complete removal of COVID-19 restrictions,the clearance of government domestic arrears, which provided liquidity to domestic banks and firms, and to a certain extent,
public investment spending. Oil production on the other hand continued to fall,decreasing by 3.6 percent in 2022 percent,y-o-y, due to delayed investment and maturing oil fields. ROC’s fiscal and external
positions improved. High oil prices led toa significant increase in government revenues, which together with a more moderate increase in government spending,resulted in a budget surplus of 6.8 percent of GDP in 2022. However, the nonoil primary balance deteriorated primarily due to fuel subsidies, which increased
from 1.3 percent of GDP in 2021 to 3.6
percent in 2022. Higher export receipts
strengthened the current account surplus
to 18.2 percent of GDP in 2022.

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
8

Poverty rate (%)

Real GDP per capita (constant LCU)

100

1400000

6

90

4

80

2

70

1000000

060

800000

-2

50

-4

40

600000-630400000

-8

20

-10

10

1200000

200000

0

-12
2019

2020
Oil GDP

2021e

2022e
Non-Oil GDP

2023f

2024f

0
2011

2025f

2013

2015

2017

2019

International poverty rate
Upper middle-income pov. rate

Real GDP

Source: World Bank.

Source: World Bank. Notes: see Table 2.

MPO

24

Apr 23

2021

2023

2025

Lower middle-income pov. rate
Real GDP pc

The banking sector remains solvent, butvulnerability to non-performing loans(NPLs) remains high. Bank deposits andcredit to the private sector were up as ofend-September 2022 (y-o-y) but the NPL
to gross loan ratio has been around 19
percent over the past year, which is highby international standards. In 2022, theBank of Central African States (BEAC)
continued to tighten its monetary policy
to contain inflationary pressures and support the external viability of the exchange
rate arrangement. The BEAC increased
the policy rate in September 2022 (to 4.5
percent), its second increase in 2022.
Moreover, the BEAC decreased its weekly
liquidity injections from CFAF 160 billion
in April 2022 to CFAF 50 billion in December 2022.
The poverty rate increased slightly in
2022 to an estimated 52.5 percent in 2022.
While overall inflation remained contained at 3.0 percent in 2022, existing
supply chain bottlenecks and the effectsof the war in Ukraine are pushing up
food prices in ROC, with food inflation
averaging 6.2 percent (y-o-y) in 2022,
which is likely to affect the poorer segments of the population more as they

typically spend a higher share of theirhousehold budget on food.

Outlook
The Congolese economy is expected tocontinue to recover gradually from its recent protracted recession. ROC’s GDP is
projected to grow at 3.5 percent in 2023
and to average 3.6 percent in 2024-25. Oil
sector growth (expected to average 3.8 percent in 2023-25) will be driven primarily
by the resumption of investments by oil
companies. Non-oil sector growth (expected to average 3.7 percent in 2023-25) willbe spurred by growth in agriculture andservices, and the implementation of structural reforms on the supply side, and by
the continued clearance of government arrears, and the gradual increase in social
spending and public investment on the demand side. Overall inflation is expected toremain close to BEAC’s 3.0 percent target
over the medium term, but food inflation
is expected to continue to outpace overall
inflation. The poverty rate is expected tomarginally decrease to 52.0 percent in 2023

TABLE 2 Republic of Congo / Macro poverty outlook indicatorsand to an average of 51.2 percent in2024-25, consistent with projected growth
in GDP per capita. The fiscal balance is expected to remain positive, fueled by highoil prices, increased oil production and fiscal discipline. In line with the 2023 budget
law, the non-oil primary balance is set to
improve, partly driven by the reduction in
direct oil subsidies to energy SOEs and theincrease of fuel retail prices. Although debt
vulnerabilities remain elevated (with ahigh level of non-concessional debt stockand domestic arrears), ROC’s debt-to-GDP
ratio will decline to 78.8 percent by 2025
due to improved debt management, fiscal
discipline, and significant oil revenues.
The current account surplus will decline asincreased investments will lead to an increase in imports, partially offsetting highoil exports receipts.
Risks to the outlook are tilted to thedownside and include volatile oil prices
and unsteady oil production, an intensification of the war in Ukraine and related spillovers, weaker-than-expected global demand, renewed supply chain bottlenecks, a further tightening of global orregional financial conditions, 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

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

2021
-2.2
8.5
16.9
9.5
-12.2
2.5

2022e
1.5
6.7
-2.0
8.3
-0.9
4.8

2023f
3.5
6.0
3.2
11.5
4.4
10.6

2024f
4.3
6.0
3.8
8.5
6.2
10.3

2025f
2.8
5.8
3.3
7.0
0.9
5.2

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-5.1
4.5
-3.7
-9.2

-2.2
1.5
-7.9
3.9

1.5
3.1
-1.7
3.5

3.5
3.3
4.4
3.3

4.3
3.9
5.8
3.8

2.8
4.3
1.2
3.9

Inflation (Consumer Price Index)

1.4

2.0

3.0

3.2

3.1

3.0

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

0.9
2.4

10.9
3.8

18.2
3.8

9.7
4.2

4.2
4.7

2.1
5.0

-2.4
21.6
113.2
-0.6

1.4
23.4
102.2
3.4

6.8
31.4
93.8
9.1

4.2
27.5
87.9
6.7

3.5
26.7
82.5
5.9

2.6
26.2
78.8
5.1

50.2
73.3
91.6

52.0
74.5
92.2

52.5
74.8
92.3

52.0
74.5
92.2

51.3
74.0
92.0

51.2
74.0
91.9

2.4
14.0

2.5
14.1

2.6
14.3

2.7
14.6

2.8
15.0

2.8
15.3

Fiscal Balance (% of GDP)
Revenues (% 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.
a/ Calculations based on 2011-ECOM. Actual data: 2011. Nowcast: 2012-2022. Forecasts are from 2023 to 2025.
b/ Projection using neutral distribution (2011) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU.

MPO

25

Apr 23CÔTE D'IVOIRE
Table 1

2022

Population, million

28.2

GDP, current US$ billion

70.1

GDP per capita, current US$

2487.9International 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

98.2

b

59.0

Total GHG emissions (mtCO2e)

57.1

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 (2021); Life expectancy(2020).

Although growth rebounded fromCOVID-19 in 2021, adverse spillovers
from Russia’s invasion of Ukraine andglobal monetary tightening emphasize
macroeconomic imbalances. Real growthis estimated at 6.7 percent in 2022 (4 percent per capita) with limited poverty reduction due to higher food prices. Annual
inflation reached 5.2 percent in 2022 – adecade high increase given price volatility
and deteriorating terms of trade. The outlook hinges on robust revenue mobilization, debt management and structural reforms to rebuild fiscal buffers.

Key conditions andchallenges
After being one of the fastest growing
economies in SSA for almost a decade –with real GDP growth averaging 8.2 percent over 2012–19 (5.7 percent in per capita
terms) – the global crises brought about by
COVID-19 and war in Ukraine, have underlined the need for continued structuralreforms to move towards the objective of
doubling GDP per capita by 2030. Productivity growth has remained flat since 2017.
Leveraging private investment, greater
capital deepening, reducing allocative inefficiencies through pro-competition policies, improving human capital, as well as
increasing resilience to climate risks would
create a more resilient and sustainablegrowth path.
Downside risks predominate in the shortterm. The war in Ukraine increases commodity price volatility, worsening externalbalances of net commodity importers, suchas Côte d’Ivoire, while increasing energy
and food inflation. Tightening global financial markets, despite early signs ofmonetary policy normalization in advanced economies, put additional pressure
on fiscal vulnerabilities and require active
debt and fiscal management. Regional insecurity and climate-related factors could
also dampen the outlook. In the medium
term, the rollout of the National Development Plan will depend on adequate financing, premised on greater domestic revenue
mobilization and private investment.

Recent developments
Amid the global turmoil, the Ivorian economy has started to decelerate, posting an estimated 6.7 percent real GDP growth in 2022
(4.0 percent per capita), down from the 7 percent registered in 2021. Growth was driven
by private consumption, supported by increases in public sector wages and public investment. Industry, including construction,and services were the main supply-side
growth motors, contributing 1.5 and 4.7 percentage points, respectively. Construction
and retail trade indices increased by 21.2
percent and 11.9 percent y-o-y, respectively.
Inflation averaged 5.2 percent in 2022, up
from 4.2 percent in 2021, on account ofhigher food (+8.9 percent), housing, water,energy (+5.7 percent) and transport (+6.4
percent) prices. Regional security-related
disruptions, the war in Ukraine-induced
commodity price spike, and the depreciation of the CFAF against the US dollar
passed-through via imported and local
prices. Price caps on key food staples andfuel subsidies contained further upward
pressure with core inflation contributing
2.7 percentage points to headline inflation.
To counter inflation across WAEMU countries, the Central Bank of West African
States (BCEAO) raised policy interest rates
by a cumulative 75 basis points in 2022 (to2.75 percent for liquidity calls and 4.75 percent for the marginal lending facility).
The trade balance turned negative at -2.6
percent of GDP in 2022, widening the current account deficit from 4.1 percent in 2021,
to an estimated 6.5 percent in 2022, owing to

FIGURE 1 Côte d'Ivoire / Budget balance and change inpublic debt

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

Percent

Poverty rate (%)

10

100

1.80

8

90

1.60

6

80

1.40

4

70

2

60

0

50

Real GDP per capita (constant million LCU)

1.20
1.00
0.80

40

-2

0.60

30

-4
-6
-8
2015

2017

2019

2021

Budget balance (%GDP)
WAEMU fiscal rule

2023

20

0.40

10

0.20

0

2025

0.00
2008 2010 2012 2014 2016 2018 2020 2022 2024

Change in debt (%GDP)

International poverty rate
Upper middle-income pov. rate

Source: MFMOD and World Bank staff estimates.

Source: World Bank. Notes: see Table 2.

MPO

26

Apr 23Lower middle-income pov. rate
Real GDP pc

sustained infrastructure related imports,
higher import prices and declining export
demand and prices.
Containing inflationary pressures has beenachieved largely through fiscal policy, withexpenditures of around 1.6 percent of GDP(including 0.6 percent of GDP in revenue
forgone due to implicit fuel subsidies), lifting the fiscal deficit to a decade-high 6.8 percent of GDP in 2022. The hike resulted also
from infrastructure spending (at 6.8 percent
of GDP), and high interest payments. As aresult, public and publicly guaranteed debt
increased, to 56.9 percent of GDP, from 52.1
percent of GDP in 2021. The aborted Eurobond operation in 2022 was replaced bymore expensive commercial debt set to increase interest payments in the short-term,
unless reprofiled.
The extreme poverty incidence (less than
$2.15 a day per capita in PPP) is expected tohave increased to 12.3 percent in 2022, 0.6
percentage points higher than in 2021. The
expansion of services and industry (6.7 and
8.2 percent real growth in 2022), which employ 46.7 and 14.1 percent of the labor force,
respectively, were drivers of poverty reduction. However, the increase in food prices
offset the effects of economic growth onpoverty(withouttheeffectsoffoodinflation,
weestimatethatpovertywouldhavefallen).

Outlook
Economic activity should decelerate slightly in 2023 on the back of continued global
headwinds subduing net exports, clouding
private investment expectations, and fueling uncertainty around inflationary expectations. Growth is however expected to remain strong over the medium-term, projected to average 6.5 percent between
2024-2025, driven by domestic demand,
continued high public investment increasingly complemented by private investment if pro-competitive market reforms
continue and structural reforms alignedwith macroeconomic stability deepen.
The fiscal deficit should converge towards
the regional target of 3 percent by 2025,
stabilizing debt at about 56 percent of
GDP. However, this hinges on a credible
revenue mobilization strategy. Delaying
fiscal adjustment towards the regional fiscal deficit target could exacerbate debt sustainability risks, while increasing regional
financing needs, reducing FX reserve
buffers, and elevating inflationary risks.
Inflation should decelerate from 2023 andgradually converge below 2 percent, as
global commodity prices ease. BCEAO will

TABLE 2 Côte d'Ivoire / Macro poverty outlook indicators

likely need to continue tightening in 2023
in line with other major central banks, as
FX reserves have declined, and inflation
remains well above the target range of 1-3
percent. Any delays to fiscal adjustments
towards the regional fiscal deficit target
could exacerbate debt sustainability risks
in some countries and put additional pressure on the regional financial sector.
Despite the deceleration in economic
growth in 2023, poverty is expected to fall to
12 percent driven by the industry and services sectors, and the reduction in inflation,
especially among food items (expected tofall from 8.9 percent in 2022 to 4.8 percent in2023). Poverty reduction should continue inthe medium term despite the negative headwinds, reflecting higher employment in industry and services. Extreme poverty(US$2.15 2017 PPP) is expected fall to 11.4
percent by 2024 and to 11.0 by 2025.
Heightened market uncertainties and tightmonetary policy will continue driving up
costs of external and domestic debt, increasing debt vulnerabilities due to rollover risks
in the short-term, aggravating tensions between rebuilding fiscal space and sustaining strong growth. Increasing domestic revenue mobilization, efficient public spending, and prudent borrowing remain crucial
to ensure macroeconomic stability.

(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

2020
1.7
4.7
2.5
26.8
10.7
6.1

2021
7.0
3.5
8.6
8.6
10.6
13.4

2022e
6.7
3.3
8.0
9.8
10.2
6.8

2023f
6.2
3.7
7.0
8.5
8.4
6.4

2024f
6.5
3.9
2.7
10.6
8.8
6.8

2025f
6.5
4.3
2.3
9.7
9.2
7.6

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

1.3
8.9
-1.6
-0.2

7.0
2.7
7.4
8.6

6.7
5.1
8.1
6.8

6.2
-0.4
10.1
7.0

6.5
1.4
10.0
6.7

6.5
11.1
4.1
6.1

Inflation (Consumer Price Index)

2.4

4.2

5.2

3.5

1.8

1.7

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

-3.1
1.1

-4.0
1.5

-6.5
1.3

-5.6
1.7

-5.0
2.2

-4.1
1.9

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

-5.4
14.6
48.1
-3.6

-5.0
15.6
52.1
-3.0

-6.8
15.0
56.9
-4.5

-5.2
15.9
56.6
-2.6

-4.1
16.2
56.3
-1.8

-3.0
16.4
56.0
-0.9

11.2
38.2
72.9

11.7
38.8
74.2

12.3
39.2
73.4

12.0
38.5
72.1

11.4
37.4
70.8

11.0
36.4
69.4

3.7
25.7

3.8
27.8

3.1
29.2

3.4
30.6

3.3
31.7

3.1
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.
a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
b/ Projection based on microsimulation model that accounts for differences in sectoral growth, food and nonfood inflation.

MPO

27

Apr 23

EQUATORIALGUINEA
Table 1

2022

Population, million

1.7

GDP, current US$ billion

14.4

GDP per capita, current US$

8577.1

School enrollment, primary (% gross)

a

61.8

a

60.7

Total GHG emissions (mtCO2e)

15.6Life expectancy at birth, years

Recent developments

Key conditions andchallenges

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

Equatorial Guinea’s economy expandedby an estimated 2.9 percent in 2022,
driven by the rebound in the hydrocarbon sector. The fiscal and external balances improved thanks to an increase inoil production and prices. Barring new
substantial hydrocarbon discoveries andprogress in structural reforms, growthis projected to turn negative. Further
increases in international food prices,
lower-than-expected oil production andprices, and a further tightening of global
financial conditions represent downside
risks to the outlook.

Equatorial Guinea’s oil-dependent economy has been in recession over most of thepast decade amid maturing oil fields andlow investment. GNI per capita has been
declining since 2014, averaging -9.7 percent per year in 2014-2021 and estimated at$US 5,150 in 2021 (58 percent lower thanits peak level in 2008). While the country isclassified as upper-middle-income, insufficient social spending, a weak social protection system, and poor public service delivery have hampered progress towardshared prosperity and poverty reduction.
Public expenditure on education, health,and water sectors combined is estimatedto represent only 1.9 percent of GDP. Limited social spending explains poor development outcomes with net primary school
enrollment rate of 43.5 percent, well belowthat of the average upper middle-income
country (95.4 percent). Life expectancy atbirth is low at only 59 years.
The economy’s reliance on the capital-intensive hydrocarbon sector has provided
few opportunities for job creation, andthe country’s business environment is
not conducive to investment and private
sector development. Hydrocarbon production is expected to decline in the next
years as most of the country’s largest oilfields are reaching maturity, adding urgency to the government’s objective todiversify the economy and change thecurrent growth model.

After seven consecutive years of recession, the Equatoguinean economy is estimated to have recorded positive growthof 2.9 percent in 2022 (from -2.8 percent
in 2021), mainly driven by the reboundof the hydrocarbon sector (14.2 percent
growth in 2022H1 compared to 2021H2).
The economic rebound was lower thanpreviously projected due to an incident
in the Zafiro offshore platform – thelargest crude oil production platform inEquatorial Guinea – in September 2022,
which led to a drop in hydrocarbon production of 15.2 percent in 2022Q4 (q-oq). Growth was also supported by higher public demand and growth in thetelecommunications, transport, and construction sectors.
A stronger-than-expected rebound in oil
production in the first half of the year
and more favorable oil prices boosted
government revenues and improved thefiscal balance in 2022 to 3.8 percent ofGDP, compared to 2.8 percent of GDP
in 2021. While fiscal revenues exceededbudgeted levels by 200 percent as of September-2022, they dropped in the fourth
quarter of the year amid the incident in
the Zafiro offshore platform. Higher hydrocarbon export earnings narrowed thecurrent account deficit in 2022 which isestimated to have reached 0.8 percent of
GDP in 2022, compared to a deficit of 2.3
percent of GDP in 2021.
Inflation is estimated to have increased
from 1.8 percent in 2021 to 4.9 percent in

FIGURE 1 Equatorial Guinea / Hydrocarbon production andrevenues

FIGURE 2 Equatorial Guinea / Non-income poverty
indicators

Percent
25

Percent
250

Percent
5

20

0

15

-5

200

EqG relative to regional average
EqG relative to MIC average

150
100
10

-10

5

-15

0

-20

50
0
Maternal mortality
Malnutrition
Mortality rate
ratio (modeledprevalence, height for attributed to unsafe
estimate, per 100,000
age (modeledwater, unsafe
live births)
estimate, % of children sanitation and lack ofunder 5)
hygiene (per 100,000
population)2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Hydrocarbon Revenues (in % of GDP, lhs)
Hydrocarbon Production (Growth, rhs)
Sources: Equatorial Guinea Ministry of Mines and Hydrocarbons and World Bank.

MPO

Source: World Bank.

28

Apr 23

2022, driven by higher food prices following Russia’s invasion of Ukraine. While therise in food prices has likely impacted foodsecurity and poverty in Equatorial Guinea,
data to track poverty remain scarce. The
results of the National Household Survey
II –fieldwork ending in August 2023 – willbe critical in this regard.
In 2022, the Bank of Central African
States (BEAC) continued to tighten its
monetary policy to contain inflationarypressures and support the external viability of the exchange rate arrangement.
The BEAC increased the policy rate in
September 2022 to 4.5 percent, its second
increase in 2022. Moreover, the BEAC
decreased its weekly liquidity injections
from CFAF 160 billion in April 2022 to
CFAF 50 billion in December 2022.
In 2022, the government committed tosettling domestic arrears using 90 percentof the IMF SDR allocation and government bonds, which should reduce theshare of non-performing loans and improve the liquidity and solvency of thebanking sector. The government has
cleared US$ 102 million of domestic arrears by 2022H1.

OutlookEquatorial Guinea is expected to re-enter
recession in 2023 (with a negative growthof 3.7 percent) on the back of lower hydrocarbon production and domestic demand.
Without significant diversification efforts
or discoveries of new hydrocarbon reserves, the projected decline in hydrocarbon production combined with the slow
progress in structural reforms are projected to lead to an average negative growth of
4.6 percent in 2024-2025.
The government is expected to continue its
fiscal consolidation efforts amid a projected decrease in hydrocarbon production.
The decline in public spending is expected
to compensate for the decrease in government revenues over the medium term. As a

TABLE 2 Equatorial Guinea / Macro poverty outlook indicators

result, the fiscal position is projected to deteriorate slightly but still reach a surplus of
2.1 percent of GDP in 2023, and then narrow further in 2024-25 (average surplus of
0.6 percent of GDP). The current accountbalance is projected to deteriorate gradually over the medium term to an average of-1.6 percent of GDP over 2023-2025, on theback of declining export earnings.
Risks to the outlook are tilted to thedownside. A rise in food prices amid
a protracted war in Ukraine would increase food insecurity, especially for themost vulnerable, and possibly cause social tensions. Lower oil prices would further reduce fiscal space over the medium
term amid declining oil production, albeit
this risk could be attenuated by the endof China’s zero-COVID policy. A further
tightening of global financial conditions
could impact investment flows. Delays inaddressing governance issues, and banking sector instability could also hinder
further private investment, including into
new oil or gas fields.

(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

2020
-4.2
2.2
-3.2
-64.5
-4.9
-10.8

2021
-2.8
2.2
-5.0
-27.5
2.0
8.1

2022e
2.9
2.2
18.1
-35.0
0.4
3.9

2023f
-3.7
3.7
-11.8
-0.5
-4.4
-1.0

2024f
-6.0
2.4
-13.5
-15.0
-10.1
-6.5

2025f
-3.1
0.9
-9.8
-5.0
-6.3
-6.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-4.2
-6.3
-4.4
-3.8

-2.8
9.7
-3.2
-2.9

2.9
-7.5
2.5
4.1

-3.7
2.0
-6.5
0.4

-6.0
2.2
-17.9
11.6

-3.1
2.0
-10.0
4.3

Inflation (Consumer Price Index)

5.8

1.8

4.9

3.5

2.2

2.3

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

-10.4
3.7

-2.3
5.5

-0.8
4.7

-2.8
4.3

-1.2
4.3

-0.9
4.8

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

-1.7
14.1
48.4
-0.4

2.8
16.6
46.3
3.9

3.8
21.0
33.0
5.1

2.1
15.7
36.0
3.2

0.6
12.8
34.9
1.8

0.7
12.2
36.6
1.9

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

-6.5
30.0

10.3
28.0

2.6
24.2

-4.1
24.8

-5.4
22.0

-1.7
21.1

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

Apr 23

ERITREA

Key conditions andchallenges

Table 1

2022

Population, million

3.7

GDP, current US$ billion

2.4

GDP per capita, current US$

647.4

School enrollment, primary (% gross)

a

68.6

a

67.1

Total GHG emissions (mtCO2e)

7.2Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ WDI for School enrollment (2019); Life expectancy(2020).

After rebounding to 2.9 percent in 2021,
GDP growth moderated to 2.5 percent in
2022, impacted by sluggish global demand. A convergence to pre-pandemic
growth trends over the medium term isanticipated, helped by the ongoing recovery in China. Inflation would moderatefrom 2023 as commodity prices decline.
Low global growth, climate vulnerabilities, and geopolitical tensions cloud the
medium-term outlook. National accounts
and poverty statistics have not been produced over the last decade.

With the lifting of UN sanctions in
November 2018, Eritrea emerged froma decade of international isolation.
During that period, the government
followed a self-sufficiency policy. As
a result, large state-owned enterprises
dominate the economy and, outside
the mining industry, the private sector
is virtually non-existent. Zinc, copperand gold account for over 90 percent
of exports, underscoring the country’s
heightened
exposuretoexternal
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. The financial sector is small
and underdeveloped. The country is
one of the most vulnerable and least
adapted to climate change in Sub-Saharan Africa, with frequent weather
shocks posing a heavy burden for the
economy and rural livelihoods.
The COVID -19 crisis hit Eritrea amid
a hiatus in its reengagement with development partners, leaving it without
much needed external funding. In addition, informal cross-border trade wasaffected by the conflict in northern
Ethiopia. However, Eritrea’s isolation
moderated the magnitude of the initialexternal shock.

The emergency conditions that prevailedin Eritrea over the past decade led tosevere data production capacity constraints. National accounts data are limited to unofficial GDP estimates produced by the Ministry of Finance thatare not endorsed by the government. Inflation estimates cover only the capitalcity, Asmara, and full balance of payments accounts are missing. The last
population census in Eritrea took place
more than 25 years ago, and little is
known about poverty. Data from 1996/
97, covering only urban areas, suggestthat about 70 percent of the population
lived in poverty.

Recent developments
Real GDP slowed from 2.9 percent in
2021 to 2.5 percent in 2022, impacted byweak demand in major trading partners,
especially China. Headline inflation averaged 7.4 percent, fueled by rising international commodity prices stemming frompandemic-related value chain disruptions
and Russia’s invasion of Ukraine, in addition to the continued closure of theEthiopian border since April 2019. Highinternational prices of wheat and fertilizers, along with severe drought conditions,placed acute strain on the food security ofvulnerable populations.
The current account surplus narrowed to
13 percent of GDP in 2022 from 14 percent
in 2021, affected by the rising prices of oil
and wheat, despite the partial compensation from higher prices of zinc exports.

FIGURE 1 Eritrea / Evolution of total public debt

FIGURE 2 Eritrea / Primary and overall fiscal balances

Percent of GDP
300

Percent of GDP
15

250

10
200

5

150
100

0

50

-5

0
2019

2020

Domestic debt

2021

2022e
External debt

2023p

2024p

-10

2025p

2019
2020
2021
Overall fiscal balance

Total public debt

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

2022e
2023p
2024p
Primary fiscal balance

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

Apr 23

Notwithstanding such large surpluses, international reserves are estimated ataround 3 months of imports. High global
zinc prices supported fiscal revenues in
2022, reducing the fiscal deficit to 5.6 percent of GDP from 5.8 percent in 2021. Public debt is estimated at around 239.8 percent of GDP, of which nearly 80 percent is
owed to domestic banks, and the country
is in debt distress.
Eritrea remains mostly isolated but has
begun to reengage with development
partners and revitalize some bilateral relations. In June 2022, Eritrea and South
Sudan signed an agreement to establish
direct flights between Asmara and Juba
to promote business, trade, and tourism.
Following a visit by the Kenyan president to Asmara in December 2022 todiscuss trade and regional security, theKenyan and Eritrean governments
agreed on February 9, 2023, to permanently abolish visa requirements fortheir citizens, with the aim of strengthening bilateral relations and advancing
regional integration.

OutlookReal GDP growth is projected to growby 2.7 percent in 2023, bolstered by therecovery in China, and continue at justbelow 3 percent over the medium term,
consistent with its pre-pandemic trend.
As the international prices of fuel, wheat,and other cereals begin subsiding, inflation is expected to decrease to 6.4 percent
in 2023, before stabilizing at around 4.2
percent over the medium term, which
would provide some respite to poor
households. A recovery in agricultural
output would also support households’
consumption over the medium term, whileconstruction work associated to mining
projects would continue driving capital expenditures. The current account surplus is
expected to widen to 14.1 percent in thenear term reflecting the decrease in imported commodity prices after sharp increases in 2022, but should narrow modestly over the medium term as the prices

TABLE 2 Eritrea / Macro poverty outlook indicatorsof zinc and other Eritrean mineral exports
also drop. Steady remittances should also
continue to support households’ incomes.
The fiscal deficit is expected to narrow progressively over the medium term, underpinned by a gradual fiscal consolidation,
while the strong growth in nominal GDP
should reduce the public debt-to-GDP ratios. Nevertheless, fiscal and domestic debt
outcomes and the outlook for public finances remain uncertain given the frequent data revisions due to reporting lags
driven by widespread manual processes.
Significant downside risks cloud the horizon. Weak global growth and further disruptions from COVID-19 could dampen
growth in China, weakening external demand for Eritrean exports. Eritrea’s continued involvement in the northern Ethiopia
conflict could attract renewed international sanctions, while the escalation of regional geopolitical tensions could dampen Eritrea’s nascent efforts to break its isolation.
Finally, severe climate vulnerabilities thatburden Eritrea could worsen in coming
years, posing high risks to food security.

(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

2020
-0.5
-1.9
16.4
152.2
-4.9
-3.5

2021
2.9
3.0
14.0
39.1
31.0
21.6

2022e
2.5
3.6
5.7
13.1
9.2
11.0

2023f
2.7
4.0
3.6
11.8
5.1
5.3

2024f
2.9
4.3
3.7
14.6
3.7
4.1

2025f
2.8
4.1
3.5
10.6
4.1
4.3

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-0.5
-0.5
-0.7
-0.1

2.9
4.5
1.4
5.3

2.5
1.6
3.2
1.3

2.7
3.5
2.9
1.6

2.9
3.7
3.0
2.1

2.8
3.2
3.1
1.8

Inflation (Consumer Price Index)

5.6

6.6

7.4

6.4

4.1

4.3

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

14.4
1.4

14.0
1.4

13.0
1.3

14.1
1.2

12.4
1.2

11.1
1.1

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

-6.5
24.9
260.6
-5.0

-5.8
26.7
241.7
-4.2

-5.6
27.0
239.8
-4.2

-4.8
27.6
219.4
-3.7

-4.0
28.5
212.6
-2.9

-3.3
29.3
198.4
-2.2

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

1.2
13.1

2.1
13.2

2.5
13.4

2.7
13.7

2.8
14.2

2.9
14.7

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

Apr 23

ESWATINI

Key conditions andchallenges

Table 1

2022

Population, million

1.2

GDP, current US$ billion

4.3

GDP per capita, current US$

3569.9International poverty rate ($2.15)

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

a

54.6

School enrollment, primary (% gross)

b

114.5

b

59.7

Total GHG emissions (mtCO2e)

2.7Life 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).

GDP growth slowed to an estimated 0.4
percent in 2022, partly reflecting the impact of inflationary pressures on domestic
demand and weak performance in agriculture. The fiscal deficit increased between
FY21-22 and FY22-23, while the current
account balance recorded a deficit for the
first time since FY10-11, reflecting lower
Southern African Customs Union(SACU) revenues. Economic growth isprojected to rebound to 3.0 percent in
2023, supported by higher SACU revenues, which should lead to a small decrease in poverty rates.

Economic growth remains constrained bypersistent social and political uncertainties
and slow progress in implementing business and structural reforms, which undermine private investment and economic diversification. Investment declined after theend of apartheid as firms relocated toSouth Africa and it has not recovered
since, declining from an average of 11 percent of GDP in the early 1990s to an average of 6 percent over the past decade.
The government’s dependence on volatile
SACU revenues continues to lead to substantial fluctuations in fiscal policy and public investment over time. Moreover, this dependence deepens Eswatini’s reliance on
South Africa. Eswatini has little discretionover monetary and exchange rate policies
due to the country’s membership in the
Common Monetary Area, which pegs thelilangeni to the South African rand.
Unemployment and poverty are high in
Eswatini partly due to weak job creationin the formal economy. The 2021 labor
force survey puts the unemployment rate
at 33.3 percent, the highest in over a
decade. An estimated 32 percent of the
population lived below the US$2.15/day(2017 PPP) international poverty line in
2022, while 55 percent of the population
was under the lower-middle-income
country poverty line (US$3.65/day, 2017
PPP). High inequality (54.6 percent in2016) could fuel social tension.

Recent developments
Real GDP growth slowed to an estimated
0.4 percent in 2022 from 7.9 percent in 2021.
The low growth reflects weak performancein the agriculture and agro-processing subsectors, mainly the sugar industry, whichwere affected by higher input costs, aboveaverage rainfall, arson attacks, and labor
unrest. Furthermore, higher inflation andsupply disruptions emanating from Russia’s invasion of Ukraine constrained bothdemand and supply. Transport and storage,
and public administration also underperformed. Nevertheless, faster growth wasrecorded in electricity, tourism, professional, administrative, and support services.
Annual inflation increased from 3.7 percent in 2021 to 4.8 percent in 2022, largely
driven by energy, food, and transport
prices, reflecting the impact of the war in
Ukraine. In response, between January andDecember 2022, the central bank increased
the discount/repo rate by a cumulative 275
basis points to 6.5 percent. It further increased this rate by 25 basis points in February 2023. Transport and food inflation
disproportionately affect the poor, who
spend a higher share of their resources onthese items. The combination of slow economic growth and high inflation led to aslight increase in the estimated poverty
rate in 2022.
The fiscal deficit reached an estimated 5.5
percent of GDP in FY22-23 from 4.6 percent
of GDP in FY21-22, driven by an increase inwages and security spending as well as a decline in SACU revenue. Public debt reached

FIGURE 1 Eswatini / Current account balance and SACU
revenues

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

Percent of GDP
14

Poverty rate (%)
100

45000

12

90

40000

80

35000

10

Real GDP per capita (constant LCU)

70

8

60

6

50

30000
25000
20000

40

4

15000

30

2

20

10000

0

10

5000

0

-2
2018

2019

2020

Current account202102009 2011 2013 2015 2017 2019 2021 2023 2025

2022 Est. 2023 Proj.

International poverty rate
Upper middle-income pov. rate

SACU revenue

Sources: Eswatini Ministry of Finance and World Bank staff projections.

Source: World Bank. Notes: see Table 2.

MPO

32

Apr 23Lower middle-income pov. rate
Real GDP pc

a peak of 45 percent of GDP in 2022, as thegovernment increased external borrowing
in the aftermath of the pandemic and theshocks emanating from the war in Ukraine.
The current account balance recorded an
estimated deficit of 1.3 percent of GDP in
2022 for the first time since the FY10-11 fiscal crisis. The trade balance remained insurplus despite a faster increase in imports
than exports. The relatively fast increasein imports was largely driven by higher
prices of food, fuel, and electricity. Gross
official reserves declined in 2022 as importcover stood at 2.5 months of imports compared with 3.5 months in 2021.

OutlookReal GDP growth is projected to rebound to
3.0 percent in 2023, supported by higher
SACU revenue, which will provide additional fiscal space for an expansionary fiscal
policy. On the demand side, the projected

increase in government expenditure will
boost economic activity, including the beginning of major capital projects such as the
Mkhondvo-Ngwavuma dam. The wholesale and retail, construction, and public administration sectors are all expected to benefit from higher SACU revenue and public
spending. Tourism is expected to continue
recovering. However, significant externaland domestic risks, including slower global
growth, unfavorable weather conditions,and social and political uncertainty may affect the growth outlook. Inflation is projected to increase to 5.7 percent in 2023 due tothe expected gradual transmission of higher
imported prices to local prices and the increase in administered prices.
The fiscal deficit is projected to decline to
2.3 percent of GDP in 2023 and stabilize
around this level in the medium term.
SACU revenue is projected to increase
from 7.8 percent of GDP in FY22-23 to 14.4
percent of GDP in FY23-24 This increase
will finance higher capital expenditure aswell as election- and security-related

TABLE 2 Eswatini / Macro poverty outlook indicators

spending. About 1.8 percent of GDP of
SACU revenue will be allocated to fundthe SACU Revenue Stabilization Fund, tobe used to mitigate future unexpected
shocks. In the medium term, adherence tothe government’s three-year Fiscal Adjustment Program is critical to contain fiscal
deficits and preserve debt sustainability.
The current account balance is projected torecord a surplus in 2023, partly reflecting
higher SACU revenues. The trade balanceis expected to remain in surplus as exports
are expected to increase, boosted by a recovery in sugar production and moderating import prices.
Poverty based on the lower-middle-income country poverty line (US$3.65/day,2017 PPP) is projected to decline slightly
from 55.2 percent in 2022 to 53.2 percent in
2025. While the projected economic recovery will have a positive impact on households, such improvement will be constrained by the negative impact of higher
food and energy prices on lower-income
households, at least in the short term.

(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

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
0.4
2.2
-2.3
3.1
6.0
6.8

2023f
3.0
3.9
8.6
2.2
3.5
6.0

2024f
2.9
3.6
1.7
2.7
2.6
3.0

2025f
2.7
3.5
0.0
1.0
2.4
2.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-1.4
-7.5
-9.7
5.4

7.9
2.5
15.4
4.1

0.4
1.6
-1.0
1.2

3.0
1.9
2.3
3.6

2.9
3.1
3.1
2.7

2.7
3.0
3.9
1.9

Inflation (Consumer Price Index)

3.9

3.7

4.8

5.7

5.4

5.3

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

6.5
-0.1

1.3
-0.7

-1.3
-0.8

2.1
-0.8

1.1
-0.8

0.6
-0.8

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

-4.6
29.4
41.6
-2.4

-4.6
25.1
42.4
-2.9

-5.5
24.9
45.4
-2.4

-2.3
30.1
41.8
0.6

-2.4
28.1
37.8
0.0

-1.1
27.5
34.9
1.2

35.2
57.4
77.7

31.9
55.0
76.6

32.1
55.2
76.7

31.1
54.2
76.3

30.6
53.6
75.8

29.9
53.2
75.4

-0.1
35.1

1.5
36.2

-0.1
36.0

0.9
36.5

1.3
37.1

1.4
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.
a/ Calculations based on 2016-HIES. Actual data: 2016. Nowcast: 2017-2022. Forecasts are from 2023 to 2025.
b/ Projection using neutral distribution (2016) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU.

MPO

33

Apr 23

ETHIOPIA

Key conditions andchallenges

Table 1

2022

Population, million

123.5

GDP, current US$ billion

131.8

GDP per capita, current US$

1067.3

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

106.0

b

65.4

Total GHG emissions (mtCO2e)

198.0Life expectancy at birth, years

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

Strongagricultureandservicesoutputresultedinhigher-than-expectedGDPgrowthestimatedat6.4percentinFY22.Butgrowth
remainslowerthanpre-COVID-19levels
andtheeconomyremainsvulnerabletoshockssuchasglobalfoodandsupplydisruptions. Fiscalandexternalbuffersarenearlyexhausted,posingarisktomacroeconomic
stability,whilepovertyandinequalityare
elevated.Astheseshocksabate,andaspeace
enduresinnorthernEthiopia,anopportunityisemergingtorestoremacroeconomic
balanceandrevivereformstoaccelerate
growthandpovertyreduction.

The government’s 2019 Homegrown Economic Reform Program aimed to shift theeconomy from state-led growth and investment toward greater private sector
participation and market orientation. The
program emphasized growth in energy, logistics, and telecommunications; greater
competition; higher exports; and fewer
market distortions. A critical priority wasestablishing a competitive foreign exchange market to boost competitivenessand reduce input shortages in the economy. Implementation of the reforms, however, has been uneven. Multiple shocks(COVID-19, persistent droughts, internal
conflicts, and global commodity priceshocks) have increased economic costs, exacerbated macroeconomic distortions, andheightened vulnerabilities. This has greatly slowed reform progress and severely affected lives and livelihoods. Already acutefood insecurity has worsened due to global
food and energy price shocks, disruptions
to grain supply due to Russia’s invasionof Ukraine, and below-average local crop
production. Given the deteriorating humanitarian conditions in Ethiopia due tothe combination of climate shocks, disease
outbreaks, armed conflict, and the socioeconomic impacts of COVID-19, about 28.6
million people – around one-fourth of thecountry’s population – need humanitarianassistance in 2023, an increase of about 2.7
million from 2022.

FIGURE 1 Ethiopia / Gross foreign exchange reserves

4,000

120
100

3,000

2.0

80

2,500

1.5

2,000
1,500

60
40

1.0

1,000

20

0.5

500
0
Jul-16

Official growth estimates for FY22 (6.4 percent) were higher than expected due tostrong contributions from services andagriculture. Industrial growth, however,slowed as worsening foreign exchange
shortages, the conflict in the northern partof the country, and the suspension of preferential US market access hurt manufacturing and construction activities.
External financing pressures intensified in
FY22. Costlier fuel, fertilizer, and food imports and a sharp fall in official development assistance increased the current account deficit to 4 percent of GDP from 2.9
percent in FY21. The larger current accountdeficit and higher debt-service costs
sharply reduced official foreign exchange
reserves, which fell to just 2.5 weeks of imports by the end of 2022. This shortage has

In millions
140

2.5

3,500

Recent developments

FIGURE 2 Ethiopia / Number of poor

Months of imports
3.0

Million US$
4,500

As progress continues in implementing apeace agreement between the federal government and the Tigray People’s Liberation Front, there is a renewed opportunity
to revive the economic reform agenda. The
government is expected to soon launch arevised version of the reform program,which is expected to set out an agenda to
reduce macroeconomic imbalances, remove exchange rate and other market distortions, and advance much-needed structural reforms to increase Ethiopia’s longterm economic growth potential. A strong
focus on protecting the poorest from potential adjustment costs is critical to ensurethat reforms are effective and sustainable.

0
0.0
Jul-17
Jul-18In million US$

Jul-192015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Jul-20Jul-21
Jul-22In months of imports

Int. pov. rate
Lower mid.-inc. pov. rate

Source: National Bank of Ethiopia.

Source: World Bank.

MPO

34

Apr 23Upper mid.-inc. pov. ratecontributed to a spike in parallel market
premiums, which have remained above 80
percent since October 2022.
Despite a sharp fall in public capitalspending, the continuing decline in revenue collection (8.1 percent of GDP in FY22
compared with 10.2 percent in FY21) increased the fiscal deficit to 4.2 percent of
GDP (from 2.8 percent in FY21). With lessexternal financing available, the fiscal
deficit was mainly domestically financed– including 1.3 percent of GDP in direct
monetary financing. Public debt levels
dropped in FY22 as the disbursement of
external loans remained constrained andas the increase in domestic borrowing fell
short of inflation.
Direct monetary financing is the main driver of inflation, which remained high at
33.9 percent in January 2023. Overlapping crises – the war in Ukraine, persistent droughts, and a surge in global foodand fuel prices – exacerbated the alreadyhigh inflation. Staple food prices remain
well above average and are especiallyhigh in conflict and drought-affected areas. Higher nonfood inflation from thephased removal of fuel subsidies, wider
parallel market premiums, and looser fiscal policies also contributed to inflation.

The poor, who are net consumers of food,remain at high risk of falling into extreme
poverty and food insecurity. Poverty reduction is stalling and about 0.43 million
people are expected to have fallen intopoverty in 2022.

Outlook
Growth is expected to remain relatively strong at 6 percent in FY23 as theeffects of recent multiple domestic andexternal shocks dissipate. Higher crop
production in the north (contingent on
enduring peace), and the abatement of
external price and supply shocks, arelikely to moderate inflation and poverty risks. Swift implementation of critical macroeconomic and structural reforms in the forthcoming Homegrown
Economic Reform 2.0 could lead toeven higher growth in FY23 and the
medium term. The most significant
downside risk is the resumption ofsignificant conflict which could complicate implementation of reforms andforeign exchange inflows from development assistance and investment.

TABLE 2 Ethiopia / Macro poverty outlook indicators

Fiscal pressures are expected to persist in
FY23 but abate over the medium term
due to revenue reforms to strengthen value-added tax and excise collections, including introducing new tax sources(such as property taxes). These are expected to support fiscal consolidation andease budget financing pressures. Foreignexchange reforms will be critical to restoring productivity-led growth by removing
price distortions, improving resource allocation, and alleviating external payments
risks. Debt treatment under the G-20
Common Framework and the resumptionof official external flows will also be critical to ease Ethiopia’s external financing
pressures. Contingent on the implementation of reforms, inflation, which willremain high through FY24, is expected
to fall over the medium term as supply
bottlenecks ease and fiscal and monetary
policies are tightened.
The stagnation in poverty reduction is driven by armed conflict, persistent droughts
in lowland regions, the war in Ukraine,and high inflation. Further shocks could
push millions more into poverty and increase spatial inequalities. Accelerating reforms to rebuild fiscal and social buffers
will be critical to mitigating this risk.

(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

2019/20
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
6.4
4.5
1.5
11.0
11.7
10.8

2022/23f
6.0
5.6
1.1
5.9
8.8
2.7

2023/24f
6.6
5.9
3.0
6.7
9.1
3.6

2024/25f
7.0
6.4
10.1
7.1
9.7
8.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

6.1
4.3
9.6
5.2

6.3
5.5
7.3
6.3

6.4
6.0
4.8
7.9

6.0
6.3
2.3
8.2

6.6
6.5
3.2
8.8

7.0
6.7
3.6
9.3

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

19.9
-4.1

20.2
-2.7

33.7
-4.0

34.6
-3.1

32.6
-3.3

10.4
-2.9

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

-2.8
11.7
56.5
-2.4

-2.8
11.2
56.6
-2.2

-4.2
8.3
54.4
-3.6

-3.4
7.8
49.6
-2.8

-2.7
8.3
41.3
-2.2

-2.1
9.1
35.0
-1.7

24.8
61.3
89.0

24.5
60.8
88.7

24.3
60.3
88.5

24.0
59.9
88.2

23.7
59.4
88.0

23.4
58.8
87.7

2.2
15.3

2.8
15.2

2.8
15.1

2.5
14.8

2.5
14.6

2.4
14.3

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.
a/ Calculations based on 2010-HICES and 2015-HICES. Actual data: 2015. Nowcast: 2016-2022. Forecasts are from 2023 to 2025.
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.

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35

Apr 23

GABONKey conditions andchallenges

Table 1

2022

Population, million

2.4

GDP, current US$ billion

22.0

GDP per capita, current US$

9214.6

International 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

107.9

b

66.5

Total GHG emissions (mtCO2e)

22.0Life expectancy at birth, years

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

Gabon’s economy rebounded in 2022,
supported by good performances in sectors such as oil, manganese, and wood.
High commodity prices contributed tofiscal and current account surpluses,
and to a declining public debt-to-GDP
ratio. Nevertheless, persistent poverty
rates and increased vulnerability causedby rising food prices pose strong risks,
especially if structural reforms promoting green, diversified, and inclusive
growth fail to materialize.

Gabon has traditionally registered weak oilbased long-term growth, that left per capita
income stagnant over the past two decades.
Modest productivity growth, especially inagriculture, has hindered poverty reduction. Incentivized by the government’s
strategy to diversify the economy, launchedin 2010, significant new investments are underway, such as in iron extraction (Belinga
agreement signed in August 2022, with
about CFAF 20 billion of initial investments
expected) and liquified gas (an important
initiative to reduce oil-related emissions, it
is expected to add to the country’s strong
record of carbon-absorption efforts). Greenand blue growth policies promoting sustainable fisheries and timber industries arealso being implemented. As Gabon moves
to sell credits for 90 million tons of carbon
emissions, ensuring transparency and accountability will be key for society at large
to benefit from forest conservation. Whileefforts are being made to improve resource
revenue management, with Gabon rejoining EITI in 2021 (first report due by April
2023), these need to be stepped up to reduce
fiscal vulnerabilities.
Yet, Gabon faces severe development challenges that stand in the way of accelerating
poverty reduction. Governance inefficiencies hamper the state’s ability to channel
resource-derived revenues into muchneeded investments in its young and fastgrowing population, which suffers frompoor employability. To transform its natural endowments into faster and more inclusive growth, stronger efforts are needed to build human capital and reduce obstacles to trade, access to finance, and entrepreneurship. Structural reforms to improve tax collection, governance, andpublic investment management would
help secure the funds needed to tackle
deficiencies in human development, particularly in education, social protection,and healthcare. Equally important are investments to improve infrastructure.
Landslides in December 2022 blocked thecountry’s only railway for weeks, disrupting manganese and wood shipments andshowcasing the urgent need of investments in transportation.

Recent developments
Gabon’s economy grew by an estimated
3.1 percent in 2022, up from 1.5 percent
in 2021, driven by oil, manganese,wood, and services sectors, with pandemic-related restrictions lifted in early2022. On the demand side, growth was
mainly driven by commodity exports
and private investment.
Higher oil prices resulting from Russia’s
invasion of Ukraine, combined with increased production amid less strictive
OPEC+ quotas, benefited Gabon’s fiscal
and external balances. Oil revenues andimproved tax collection, notably thanks totax expenditure rationalization measures,
resulted in a fiscal surplus (3.0 percent of
GDP in 2022). However, the cost of fuel

FIGURE 1 Gabon / Public debt, fiscal and current accountbalances

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

Percent of GDP
90

Poverty rate (%)

Percent of GDP
30

80

25

70

20

60

15

50

2.58

35

2.56

2.50
2.48
2.46

40

5

30

0

15

20

-5

10

10

-10

5

0

-15
2014

2016

Public debt (lhs)
Current account balance (rhs)

2018

2020

2022e

2.52

25
20

2012

2.54

30

10

2010

Real GDP per capita (constant million LCU)

40

2.44
2.42
2.40

0

2024f

2.38
2017

Fiscal balance (rhs)

2019

2021

International poverty rate
Upper middle-income pov. rate

Sources: Official government data and World Bank calculations.

Sources: World Bank. Notes: see Table 2.

MPO

36

Apr 232023

2025

Lower middle-income pov. rate
Real GDP pc

subsidies increased, despite the removal ofsubsidies for industrial consumers in June
2022. Meanwhile, booming exports andlower imports resulted in a current accountsurplus (25.1 percent of GDP in 2022).
Public debt continued to decline in 2022.
While debt remains sustainable, the continuous accumulation of arrears highlights the need to improve public financial management. In February 2023 Fitch
Ratings classified Gabon as B- with apositive outlook, thanks to expected IMFsupported reforms.
Thanks to the recovery, poverty decreased slightly in 2022, but inflationarypressures continued to impact the poorand the middle class; food inflation
reached 8.8 percent in December 2022 (yo-y). Vulnerability increased; almost 37
percent of households reported experiencing high food prices in July 2022. Despite having tax exemptions and pricecontrols, Gabon closed 2022 with a 4.3
percent inflation rate, above the CEMAC
target rate. To contain inflation and support the exchange rate peg, the Bank ofCentral African States (BEAC) increased
the policy rate to 4.5 percent in September 2022 and decreased weekly liquidity

injections to CFAF 50 billion in December
2022. Credit to the private sector grewby 25.9 percent by end-September 2022,
pushed by private investments and more
prudent debt policy.

Outlook
Improved growth prospects in China are
expected to benefit Gabonese exports, especially oil, manganese, and wood.
Growth is projected to average 3.0 percent
in 2023-2025, driven by extractives but also
agriculture (especially rubber and oilpalm), services, and public works, pushed
by higher public spending in view of theupcoming elections.
The fiscal balance is expected to remain
positive, supported by revenue mobilization and elevated commodity prices, alongwith stable public debt. Nevertheless, reliance on a few commodities highlights
risks brought by the exposure of Gabon’strade and fiscal balances to volatile global
prices. In the case of oil, lower prices,changes in OPEC+ quotas, and the natural
decline in the oil wells’ capacity could

TABLE 2 Gabon / Macro poverty outlook indicatorscompromise fiscal revenues, as well as future exports. Weakening fiscal consolidation efforts could exacerbate fiscal fragility,
due to the removal of the public sector hiring freeze in 2022 and the increase in capital expenditures needed to carry out investments announced in the government’s
strategic plan, due for 2025. Gradually declining oil prices are indeed expected totranslate into a reduced current accountsurplus over the years.
Growth prospects and economic diversification will depend on the implementation of a strong reform agenda, which
could be stalled in the near term by highoil prices and the upcoming elections. A
weakening reform momentum, especially if it hinders actions to tackle the accumulation of arrears, could compromise
access to external financing. Furthermore,risks to debt sustainability could be exacerbated under global tightening conditions. In addition, poverty and unemployment remain sources of tension. While
the share of Gabonese living on less than
US$6.85 per day is expected to remain
stable at around 32.4 percent in 2023, it
would remain higher than the pre-pandemic poverty rate (31.2 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

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

2022e
3.1
-0.2
1.8
11.1
7.3
10.4

2023f
3.1
1.0
0.4
1.9
8.3
4.0

2024f
3.0
2.5
-0.8
0.2
5.9
1.7

2025f
3.0
0.1
2.2
3.2
2.9
1.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-1.9
5.9
-2.2
-2.8

2.9
10.2
3.1
1.6

3.1
6.4
4.8
1.5

3.1
6.7
4.0
1.9

3.0
6.8
3.3
2.1

3.0
7.1
2.6
2.4

Inflation (Consumer Price Index)

1.6

1.1

4.3

3.2

2.5

2.2

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

-6.0
9.6

-4.7
7.5

25.1
5.5

21.4
5.6

23.1
5.2

21.7
5.2

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

-2.1
17.6
77.4
1.2

-1.9
15.8
60.7
0.9

3.0
18.6
52.0
5.4

2.1
19.2
51.9
4.9

2.6
18.6
45.5
5.1

2.4
18.6
39.5
4.5

2.9
9.3
33.1

2.9
9.4
33.6

2.8
9.1
32.9

2.7
8.8
32.4

2.5
8.6
32.0

2.5
8.3
31.4

3.8
15.5

4.0
16.1

3.7
16.8

-0.7
15.9

0.4
15.3

0.7
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.
a/ Calculations based on 2017-EGEP. Actual data: 2017. Nowcast: 2018-2022. Forecasts are from 2023 to 2025.
b/ Projection using neutral distribution (2017) with pass-through = 1 (High (1)) based on GDP per capita in constant LCU.

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37

Apr 23

THE GAMBIA
Table 1

Key conditions andchallenges
2022

Population, million

2.7

GDP, current US$ billion

2.2

GDP per capita, current US$

801.1

International poverty rate ($2.15)

a

17.2
a

47.0

a

80.6

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

a

38.8

School enrollment, primary (% gross)

b

102.7

b

62.6

Total GHG emissions (mtCO2e)

3.3Life expectancy at birth, years

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

Economic growth was steady at 4.3 percent
in 2022, driven by improved agriculture
production, public consumption, and infrastructure investments. Downside risks
to the positive medium-term outlook stemfrom persistent pressures on import prices
and exports, largely due to the war in
Ukraine and a slowing global demand, andclimatic shocks. Consequently, poverty is
estimated to have increased reflecting weak
per capita growth and high food prices.

The Gambia has made progress in macroeconomic stabilization but needs tostrengthen the foundations for higher andmore equitable growth. Structural constraints continue to impair the expansionof the productive base and the diversification of the economy from low-value-added
tourism and groundnut production. Low
domestic revenue collection limits the provision of public goods and services andhampers fiscal and debt sustainability. The
weak business environment and institutional challenges limit private sector development, hindering job creation andeconomic transformation. Over-relianceon declining-productivity agriculture,along with increasing environmental
degradation and climate vulnerabilities,
contribute to food insecurity. These factors lead to low capital accumulation,
weak productivity, and limited structuraltransformation of the economy resulting
in high poverty rates and curtailing human capital development.
These weaknesses are exacerbated by several downside risks that could negatively
affect the medium-term growth outlook.
Risks of political instability, as suggested
by an attempted coup d’état in December
2022, could reverse hard-won progress inmacroeconomic management and negatively affect efforts to boost domestic revenue mobilization and streamline current
expenditures, undermining investment,

economic growth, and poverty reduction.
Persistent pressures on the balance of
payments due to the prolonged war in
Ukraine, could trigger severe shortages of
essential imports and a further decline inforeign exchange reserves, putting pressure on the domestic currency and inflation- especially in food prices. Fiscal risks
remain substantial given state-owned enterprises (SOEs) contingent liabilities andthe high dependence on external grant financing, which accounted for 31 percent
of total revenue over the period
2017-2022, while tax revenue averaged
just 10.7 percent of GDP over the same
period. The fiscal response to the impactsof the war in Ukraine came at a highcost, with about 2.2 percent of GDP in
subsidies, underscoring the fiscal vulnerabilities to external shocks.

Recent developments
Despite the spillovers from the war in
Ukraine, real GDP increased by 4.3 percent in 2022 (1.8 percent per capita) driven by improved agriculture production,higher public consumption, and infrastructure investments. High inflation
dampened private demand, averaging
11.5 percent (year-on-year), with foodand non-food inflation at 14.5 percent and8.6 percent, respectively.
Rising food prices undermine the pace ofpoverty reduction. Poverty is expected tohave increased to 20.3 percent in 2022 from
18.4 percent in 2021, using the international poverty line of $2.15 (in 2017 PPPs). The

FIGURE 1 The Gambia / Fiscal deficit, current accountdeficit, and public debt

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

Percent of GDP
100

Poverty rate (%)

Percent of GDP
16

70

10

40

8

50

6

40

2022e

Public domestic debt
Current Account Deficit (rhs)

2023f

2024f

10000

20

5000

10

0
2021

15000

30

2
2020

20000

60

4

20

25000

80

12

60

30000

90

14
80

Real GDP per capita (constant LCU)

100

0

2025f

0
2010

2012

2014

2016

2018

International poverty rate
Upper middle-income pov. rate

Public external debt
Overall fiscal deficit (rhs)

Sources: The Gambian authorities and World Bank estimates.

Source: World Bank. Notes: see Table 2.

MPO

38

Apr 23

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

sharp increase in poverty is largely due
to weaker growth in per capita GDP, andhigh prices eroding the purchasing powerof households.
The fiscal deficit deteriorated to 4.8 percent
of GDP in 2022, due to lower domestic revenues and higher expenditure, driven byincreased spending on infrastructure projects and on wages as part of a civil service
reform agenda. Increased subsidies to mitigate the pass-through of higher importprices dampened tax revenues. The total
debt stock remains relatively unchanged at
83.9 percent of GDP in 2022, and the Gambia remains at high risk of debt distress.
The current account deficit (CAD)widened to 14.6 percent of GDP in 2022,
reflecting a wider trade deficit and lower
remittances, which declined by 4.5 ppts to34.2 percent of GDP. The CAD was financed through FDI, donor support, external borrowing, and partially by international reserves which declined from 7
months of imports in 2021, to 5.1 months
in 2022, along with a nominal exchange
rate depreciation of 15.6 percent (year-onyear). Monetary policy was tightened byraising the policy rate by 1 ppt in May,

September, and December 2022 to 13 percent, to curb inflation.

OutlookGDP growth is projected to reach 5.5 percent in 2023-25, driven by increased activity in all sectors, recovery in private demand and resilient public demand.
Growth projections are below pre-pandemic levels of 6.2 percent in 2019, reflecting the lingering effects of the overlapping
crises. Inflation is expected to remain highin 2023 before declining to 7.3 percent in2024-2025, reflecting global uncertainty
and high commodity prices with a protracted war in Ukraine.
Although stronger projected growth inagriculture and the expansion of cashtransfers are expected to have a positiveeffect on poverty reduction, these gains
will be tempered by continued high foodprices. The international poverty rate is
expected to increase by 1.5pp in 2023
and remain high at nearly 22 percent
through 2025.

TABLE 2 The Gambia / Macro poverty outlook indicators

Pressures on the balance of payments are
expected to ease only moderately due tothe spillovers from the war in Ukraine andcontinued high global commodity prices.
The CAD is expected to remain high, at
12.2 percent of GDP in 2023 before narrowing to 9.4 percent in 2024-25, reflecting
a decrease in investment-related imports
and robust export growth, especially intourism. Monetary policy is expected to remain tight, so as to contain persistently
high inflation.
The fiscal deficit is projected to narrow to
2.1 percent of GDP over 2023-25 supportedby the phasing-out of war and pandemicrelated spending, the completion of major
infrastructure projects, and domestic revenue mobilization efforts, including improved tax and customs administrations.
Public debt is projected to decrease to 73
percent of GDP in 2023-25, but The Gambia will remain at high risk of debt distress.
Overall, fiscal risks will remain high – from
SOEs contingent liabilities, the end of thedebt-service deferrals negotiated withsome creditors in 2024, and climatic andother external price shocks – unless further
structural reforms are adopted.

(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

2020
0.6
-1.0
20.1
26.7
-20.0
6.0

2021
4.3
3.5
-7.9
22.2
5.7
13.3

2022e
4.3
3.3
2.6
18.0
-0.4
10.9

2023f
5.0
4.0
3.5
15.5
14.7
15.0

2024f
5.5
4.1
3.6
10.8
16.0
11.0

2025f
5.8
4.1
3.6
12.2
16.0
11.8

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

0.6
11.0
8.2
-5.1

4.3
4.7
10.4
2.1

4.3
6.9
6.1
2.7

5.0
7.0
6.6
3.6

5.5
5.3
6.4
5.2

5.8
5.1
6.1
6.1

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

5.9
-3.7

7.4
-8.0

11.5
-14.6

11.1
-12.2

8.4
-10.0

6.1
-8.7

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

-2.2
22.7
85.1
1.0

-4.6
16.8
83.8
-1.6

-4.8
17.8
83.9
-2.8

-3.2
19.2
77.7
-1.0

-2.0
19.5
73.6
0.9

-1.0
20.6
66.8
1.5

17.3
47.0
80.6

18.4
48.6
81.9

20.3
51.2
84.1

21.9
52.7
84.9

22.0
52.7
85.0

21.9
52.6
84.6

5.9
20.1

4.3
20.4

3.2
20.9

2.9
21.5

2.9
22.0

2.8
22.6

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.
a/ Calculations based on 2020-IHS. Actual data: 2020. Nowcast: 2021-2022. Forecasts are from 2023 to 2025.
b/ Projection based on microsimulation model that accounts for differences in sectoral growth, food and nonfood inflation.

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Apr 23

GHANA
Table 1

2022

Population, million

33.5

GDP, current US$ billion

72.8

GDP per capita, current US$

2175.5International poverty rate ($2.15)

a

25.2
a

48.8

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

64.1

Total GHG emissions (mtCO2e)19.9Life expectancy at birth, years

Recent developments

Key conditions andchallenges

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

Ghana is in a deep macroeconomic crisis.
Public debt is being restructured to restore fiscal and debt sustainability,
growth has slowed down considerably, inflation is exceptionally high, the cedi has
weakened significantly and banking sector vulnerabilities have magnified. Poverty reduction is believed to have slowed.

Ghana is in a deep macroeconomiccrisis. Since the onset of COVID-19,
Ghana has experienced a growth slowdown and worsening macroeconomic
imbalances that have now reached crisis proportions. Pre-existing vulnerabilities (large fiscal deficits and external financing needs, significant energy
and financial sector costs) were compounded by the COVID-19 shock, resulting in loss of access to the international capital market and, by late2022, unsustainable public debt burdens. Meanwhile monetary financingof the deficits compounded inflationary pressures from currency depreciation, as the cedi lost over 40 percent
of its value against the USD.
The authorities have sought IMF supportand reached a staff-level agreement (SLA)in December 2022. Ghana is seeking athree-year arrangement under the Extended Credit Facility (ECF) of about US$3
billion. With a view to restoring public
debt sustainability, the authorities haveannounced a comprehensive debt restructuring, implemented a moratorium on external official bilateral and commercial
debt repayments, requested debt treatment under the G20 Common Framework, and committed to an ambitious fiscal consolidation plan. They completed adomestic debt exchange (DDE) programin February 2023.

GDP growth is estimated to have slowed to
3.2 percent in 2022, down from 5.4 percent in
2021. Growth declined to 3.5 percent yearon-year over 2022Q1-Q3. The slowdown affected mostly the non-extractive sectors, as
the recovery in gold exports supported extractives growth. Agriculture slowed to 4.4
percent and services to 4.7 percent, from 8.7
percent and 10 percent, respectively, in
2021Q1-Q3. High inflation and interest
rates depressed private consumption andinvestment. Government demand was
weakened by lack of access to capital markets and high debt service obligations.
The 2022 fiscal deficit was well above target. The overall fiscal deficit (on a cash basis) reached 9.9 percent of GDP against atarget of 6.7 percent. The primary deficit
reached 2.8 percent of GDP, well above the0.5 percent target. The slippage was mostly
on the expenditure side: total expenditurereached 25.6 percent of GDP, against a 20.4
percent target driven by higher compensations of employees, interest payments andhigher project loan disbursements (impacted by the cedi depreciations).
Inflation accelerated throughout the year. In
2022, average CPI inflation was 31.9 percent,(up from 10 percent in 2021), and reached54.1 percent in December (y-o-y). The Bankof Ghana (BOG) responded by increasing
the monetary policy rate from 14.5 to 28 percent over the year. However, these efforts
were undermined by the government’s extensive use of its overdraft facility with BOG(estimated at 6.7 percent of GDP in 2022).

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 (%)

Real GDP per capita (constant LCU)

90

20

6000

80

15

5500

70

10

60

5

5000

50

0

4500

40

-5

30

-10

4000

20

-15

3500

10

-20
2020

2021

Gov. cons.
Inventories
Statistical disc.

2022

2023

Exports
Private cons.
GDP

2024

2025

0

3000
2012

GFCF
Imports

2014

2016

2018

International poverty rate
Upper middle-income pov. rate

Sources: Statistical Service and World Bank.

Source: World Bank. Notes: see Table 2.

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40

Apr 23

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

The balance of payments recorded a large
deficit in 2022, despite improvements inthe current account. The current accountdeficit narrowed due to a higher trade surplus driven by oil exports receipts. However, significant portfolio reversals and reduced FDI led to a capital outflow of 3 percent of GDP. Overall, the balance of payments recorded a deficit of 5 percent ofGDP, from a surplus of 1.9 percent in 2021.
As a result, international reserves fell to
US$5.6 billion (2.5 months of import) in
December 2022 from US$9.1 billion (4.2months of import) a year earlier; while useable reserves fell to less than 1 month ofimport cover. After remaining stable in
2021, the Cedi lost over 40 percent of its
value against the US dollar in 2022.
Banking sector vulnerabilities have increased as a result of the cedi depreciationand the impact of the DDE. The bank-wide
capital adequacy ratio (CAR) stood at 16.6
percent in December 2022, above the regulatory minimum of 13 percent, but down from
19.6 percent in December 2021 reflecting
rapid growth in risk-weighted assets. Implementation of the DDE will impact
Ghana’s financial sector due to the heavy
exposure of banks, insurance companies
and pension funds to government debt. It isestimated that 42.1 percent of government
domestic debt is held by these entities.
Poverty reduction slowed. The “international poverty” rate is estimated at 20.5 percent in 2022. Currency depreciation, increased price of electricity and water, and anincrease in the VAT have driven up the costof living, particularly for food. This placesconsiderable strain on household budgets,
especially for the poor who devote morethan half of their budget to food. Rural farmers were also affected by increases in theprices of fertilizer and other inputs.

Outlook
Growth is expected to decelerate further
in 2023 as macroeconomic weaknesses andcontractionary fiscal and monetary policies
dampen aggregate demand. Growth is expected to slow further to 1.6 percent in
2023 and remain muted in 2024, before returning toward its potential. Non extractives growth is expected to be low compared to the COVID-19 pandemic and 2014
crisis periods, with agriculture affected byhigh input prices and a disease affecting
cocoa trees. Extractives growth is expected

TABLE 2 Ghana / Macro poverty outlook indicators

to be robust thanks to new gold mines anda recovery in small-scale mining. Goingforward, the authorities will need to complement their incipient macroeconomic
stability program with growth-enhancing
structural reforms such as improving thebusiness environment and promoting export competitiveness, transitioning to thedigital economy to boost productivity, andinvesting in resilient public infrastructure
to adapt to the impact of climate change.
The outlook is challenging. Risks to theoutlook include delays in external debt restructuring and the IMF program, increased financial sector vulnerabilities,
and the realization of contingent energy
sector liabilities.
International poverty is projected to decline slowly from 20.5 to 19.5 percent by
2025, consistent with a muted outlook on
growth for the country and high inflation.
In the shorter term, poverty is expected
to increase slightly, due to the cumulative
effects of increases in electricity and water tariffs, rising food prices and an increase in VAT. The revised electricity tariffs could be less regressive and reducepoverty if a portion of the increased revenues were targeted to the poor in theform of cash transfers.

(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

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

2022e
3.2
3.2
-6.2
15.0
9.4
13.0

2023f
1.6
1.2
-4.8
10.0
13.1
15.1

2024f
2.9
2.6
13.0
3.8
13.3
14.8

2025f
4.8
5.3
2.0
10.1
14.7
16.3

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

0.8
7.3
-2.5
0.7

5.3
8.4
-0.8
9.4

3.1
0.4
5.7
2.3

1.5
1.0
2.9
0.6

2.9
2.3
4.2
2.1

4.9
4.4
5.3
4.9

Inflation (Consumer Price Index)

10.4

10.0

31.5

45.4

22.2

11.5

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

-3.2
1.6

-3.7
2.0

-2.3
2.0

-2.9
2.1

-1.9
2.8

2.4
3.3

-14.7
14.1
74.4
-8.4

-11.4
15.3
76.6
-4.1

-9.9
15.6
89.1
-2.8

-6.4
17.3
94.7
0.0

-8.8
17.8
90.8
0.5

-7.5
18.3
89.7
1.0

21.8
43.0
74.0

20.9
41.5
72.9

20.5
41.0
72.3

20.6
41.1
72.4

20.3
40.7
72.1

19.5
39.8
71.1

24.6
136.5

13.3
126.7

10.5
118.3

10.7
111.8

12.7
105.5

13.0
100.2

Fiscal Balance (% of GDP)
Revenues (% of GDP)aa,bDebt (% 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.
a/ Fiscal and debt forecasts do not factor in the impact of the ongoing Debt Restructuring (DR) as the process is yet to conclude.
b/ Starting from 2022, public debt numbers include, in addition to central government debt, explicitly guaranteed (and certain implicitly guaranteed) SOE debt, cocobills issued
by Cocobod, and reconciled domestic arrears to suppliers.
c/ Calculations based on 2016-GLSS-VII. Actual data: 2016. Nowcast: 2017-2022. Forecasts are from 2023 to 2025.
d/ 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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Apr 23

GUINEA

Key conditions andchallenges

Table 1

2022

Population, million

13.9

GDP, current US$ billion

21.1

GDP per capita, current US$

1519.6

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

59.3

Total GHG emissions (mtCO2e)45.7Life 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 recovery of non-mining
activity will boost growth to 5.6 percent
in 2023, but poverty rates will increase,and the fiscal deficit widen to 2.6 percent
of GDP as capital spending rises. Mining-related FDI sustains current accountdeficits and medium-term growth. Downside risks include delays to the politicaltransition and structural reforms. Extreme poverty will decline in 2024, as
food prices moderate and agricultural andservice growth strengthens.

Growth was robust over 2018-22, averaging 5.2 percent (2.6 percent per capita) driven by the mining sector (bauxite, gold),and supported low fiscal deficits (1.5 percent on average). However, weak mining
sector linkages to the rest of the economy,
including through employment, mean economic growth does not translate into proportional poverty reduction and sharedprosperity. The national poverty rate declined from 48.5 percent in 2014, to 43.7
percent in 2018-19, equivalent to a growthelasticity of poverty of only 0.47. Annualized consumption growth of the bottom
40 percent of the population was negative,
suggesting that growth was not pro-poor;
about 32 percent of the population suffered deprivation in access to education,
health, and basic infrastructure in 2018. A
rapid phone survey in September-October
2022 reported 9 percent of households being unable to access medicines when needed, due to scarcity following the onset of
Russia’s invasion of Ukraine.
Guinea’s exports are concentrated in a few
products (bauxite and gold), exposing current and fiscal accounts to commodity
price volatility. The recent mining boom
and high inflation affect the competitiveness of other sectors, through a real appreciation of the local currency, hampering
economic diversification. Guinea has low
human capital levels, weak institutional
capacity, and widespread gender gaps in

FIGURE 1 Guinea / Debt, fiscal deficit, inflation

Percent of GDP

education, earnings, agricultural productivity, and political representation.
Challenges and risks are substantial. Major structural constraints include weak
tax revenue mobilization, an underdeveloped financial sector, and large infrastructure gaps. Recent progress throughdigitalizing economic and governmenttransactions has expanded mobile financial accounts, helped bolster economic
activity during the pandemic, andstreamlined tax collection; yet further
digital expansion and structural reforms
are needed to spur diversification andinclusive growth. Guinea is at moderaterisk of external debt distress with somespace to absorb shocks and must maintain prudent borrowing that maximizes
concessional financing.

Recent developments
Growth accelerated to 4.7 percent in 2022
(2.2 percent per capita) due to a strong
mining sector, largely unaffected by the
war in Ukraine, while non-mining recovery was slowed by global fuel and fertilizer
price shocks and domestic political instability. External price pressures were partially offset by the Guinean franc appreciation vis-à-vis the US dollar, the government’s repayment of central bank advances earlier in the year, and general nonreliance on central bank financing. Inflation persisted but decelerated from 12.6
percent in 2021 to 12.1 percent in 2022. Extreme poverty incidence is estimated at
15.8 percent in 2022, up 0.7 percentage

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

Percentage change

45

Poverty rate (%)

14

40

7.00

90

12

6.00

80

35
10

30

Real GDP per capita (constant million LCU)

100

70

5.00

60

4.00

25

8

20

6

40

3.00

4

30

2.00

50

15
10

20

5
0
2020

2021

Debt (lhs)2022 e2023 fFiscal deficit (rhs)2024 f

2

10

0

0

1.00
0.00
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

2025 f

International poverty rate
Upper middle-income pov. rate

Inflation (CPI, rhs)

Source: World Bank.

Source: World Bank. Notes: see Table 2.

MPO

42

Apr 23Lower middle-income pov. rate
Real GDP pc

points from 2021, as the rapid phonesurvey indicated that 94 percent of thepoorest 40 percent reported being worried about not having enough food (upfrom 91 percent during the early monthsof the pandemic).
The fiscal deficit (including grants) narrowed to 0.9 percent of GDP in 2022, from
1.8 percent in 2021, reflecting a decline incurrent expenditures and energy subsidies
that outweighed an increase in capital expenditures. Tax revenues fell a percentage
point to 11 percent of GDP, due to weak
tax administration and low mining revenue relative to the sector’s value-added.
Subsidies (electricity and petrol) remained
high, at 4 percent of GDP, due to low electricity tariffs and higher hydropower generation, though petrol pump prices wereincreased mid-year. Debt-to-GDP decreased from 40.4 percent in 2021, to 35.2
percent in 2022, due to repayment of domestic bonds and securitized debts. The
current account deficit deteriorated from
2.1 percent of GDP in 2021, to 7.1 percent
in 2022, due to a smaller trade surplus.
Mining-related FDI, the main source of external financing, remained stable at 10.5
percent of GDP in 2022. Estimated international reserves declined slightly in 2022, to

2.5 months of import coverage, while thecurrency appreciated in real terms.

OutlookMining-related (foreign direct) investment will continue to drive growth andas non-mining sectors recover, growth isprojected to accelerate to 5.7 percent on
average in 2024–2025, still below potential of around 5.7 percent. Commensurately, extreme poverty, estimated at 15.8
percent in 2023, is projected to decline
to 14.6 percent in 2025 as agriculture
recovers and inflation eases. Given thelimited poverty impact of mining-driven
growth, redistribution mechanisms fromthe mining sector to vulnerable populations and more generalized productivity
gains in other sectors will be requiredfor inclusive growth. Public investments
to improve roads, agricultural productivity, human capital, and urban and local development could support non-mining growth. Better provisioning of fertilizer could further improve agricultural
productivity, though higher prices may
dampen earnings. Poor quality transport

TABLE 2 Guinea / Macro poverty outlook indicators

infrastructure is likely to keep foodprices high, reducing household purchasing power and thereby undermining
poverty reduction.
The current account deficit is projected to
improve to 6.6 percent of GDP in 2023 andto an average 3.1 percent in 2024-2025, reflecting an increasing mining-related trade
surplus that outweighs net outflows for
non-factor services and transfers and higher imports of intermediate goods and food.
The fiscal deficit is expected to increase in
2023 to 2.6 percent of GDP, due to increased capital spending. But fiscal space
would be rebuilt as recent tax administration reforms, including digitalized tax declarations and payments, start bearing fruit.
Inflation is expected to remain high yet to
decline gradually to 10 percent in 2023,
and average 9 percent in 2024-2025.
Risks are tilted to the downside. Politicaltransition uncertainties, following thecoup d’état in 2021, could slow implementation of reforms to strengthen governance and financial performance of the
public electricity utility, potentially reducing private investment and slowing social
spending. On the upside, mining-related
FDI inflows could increase, reflecting
planned new projects.

(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

2020
4.9
-2.4
4.4
4.8
77.0
57.0

2021
4.3
0.6
16.8
3.1
10.8
3.8

2022e
4.7
7.6
-22.4
16.1
14.8
16.7

2023f
5.6
1.0
19.2
20.6
18.3
20.2

2024f
5.8
4.7
22.1
18.1
15.6
20.3

2025f
5.6
4.7
6.7
27.9
15.6
20.3

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

4.0
-1.1
11.3
1.4

4.3
3.9
4.9
4.0

4.7
3.1
8.6
2.4

5.6
4.0
7.7
4.6

5.8
5.0
6.9
5.2

5.6
5.0
5.9
5.6

Inflation (Consumer Price Index)

10.6

12.6

12.1

10.0

9.0

8.7

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

-10.7
10.7

-2.1
10.5

-7.1
10.5

-6.7
9.3

-3.9
8.9

-2.3
9.8

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

-3.2
14.0
47.1
-2.3

-1.8
13.5
40.4
-0.7

-0.9
12.5
35.2
-0.1

-2.6
13.0
35.7
-1.5

-2.5
14.0
36.6
-1.5

-2.2
14.8
36.2
-1.3

13.4
47.3
87.2

15.1
50.8
88.8

15.8
52.6
90.0

15.8
52.5
89.8

15.5
51.6
89.3

14.6
50.0
88.4

4.0
9.9

4.3
10.0

3.8
10.2

3.7
10.4

3.7
10.7

3.7
11.0

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.
a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
b/ Projection based on microsimulation model that accounts for differences in sectoral growth, food and nonfood inflation.

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GUINEA-BISSAU
Table 1

2022

Population, million

2.1

GDP, current US$ billion

2.0

GDP per capita, current US$

936.6

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

Key conditions andchallenges

a

34.8

School enrollment, primary (% gross)

b

118.7

b

60.0

Total GHG emissions (mtCO2e)4.4Life 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).

Poor cashew exports and high inflation
slowed growth to 3.5 percent in 2022,
causing the pace of poverty to increase.
Salary overspending, energy costs andlower tax revenues limited fiscal consolidation as debt levels increased. Mediumterm growth may improve as infrastructure investments come online, but theoutlook is subject to downside risks fromcontinued inflationary pressures, shocks
to the cashew sector, political instability,
fiscal risks, and climatic shocks.

Exports of raw cashew nuts, which accountfor 90 percent of merchandise exports, determine economic performance. Cashew
production is dispersed among smallholder
farmers, whose income supports overall
economic activity. Poverty remains widespread, with high levels of inequality andincreasing rural-urban disparities. Humandevelopment indicators remain among thelowest in the world, and low access to basic
services contributes to exclusion and marginalization. Despite a gradual recovery of
the economy post-pandemic, rising foodand fuel prices stemming from Russia’s invasion of Ukraine are a concern, especiallyfor the poor who spend nearly 60 percent of
their income on food.
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. Access to credit is limited, andthe functioning of markets is underminedby the absence of public investments in basic economic services and public goods. Infrastructure is in a poor state, but there
have been recent investments to improvethis, mostly donor financed.
Political economic factors limit the transparency of the SOE sector in Guinea-Bissau. This is especially the case with thenational utility company EAGB, which

accrued substantial public debt throughgovernment guaranteed letters of credit,
worth 0.7 percent of GDP, to cover arrears in the energy sector. A lack of transparency in the SOEs makes identifying
contingent liabilities difficult, which increases the fiscal risk in a country withvery little debt absorption capacity for
additional shocks. High non-performing
loans continue to make the banking sector
another possible contingent liability.

Recent developments
Economic activity slowed to 3.5 percent in
2022 (1.3 percent in per capita terms) from
6.4 percent in 2021. On the supply side,
growth was driven by agriculture and government infrastructure investment stimulated the construction sector. On the demand side, inflationary pressures caused
private consumption growth to decelerate.
Inflation reached 7.8 percent (y/y) in 2022,
driven by food and energy inflation as aspillover from the war in Ukraine, after
reaching 3.3 percent (y/y) in 2021. This followed an average of 1 percent between
2015 and 2020.
A cashew campaign marred by problems,
including shipping and fuel shortages affecting domestic haulage, and low international demand, meant exports reached just
177 thousand tons in December, from an
overall production of 235 thousand tons.
Combined with an increase in oil and foodimport prices, the current account deficit(CAD) widened to 8.5 percent in 2022,
from 3.1 percent in 2021.

FIGURE 1 Guinea-Bissau / Evolution of main
macroeconomic indicators

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

Percent, percent of GDP
8

Poverty rate (%)

Real GDP per capita (constant LCU)

100

50000069045000048040000027035000060

30000050

25000040

200000

0
-2
-4

30

150000-620

100000

-8

10

50000

0

-10
GDP growthFiscal balance020102014 2015 2016 2017 2018 2019 2020 2021 2022e 2023f 2024f 2025f

2012

2014

2016

International poverty rate
Upper middle-income pov. rate

Current account balance

Source: Ministry of Finance and World Bank.

World Bank. Notes: see Table 2.

MPO

2018

44

Apr 23

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

The fiscal deficit (including grants) fell only
marginally, from 5.5 percent to 5.2 percent
of GDP, slowed by low cashew exports
translating into less revenue, and an overspend on salaries in the first half of the year,
the realization of liabilities to EAGB, androad infrastructure investments, which increased debt to 80.2 percent of GDP.
To counter inflation across WAEMU
countries, the Central Bank of West
African States (BCEAO) raised policy interest rates by a cumulative 75 basis
points in 2022 (to 2.75 percent for liquidity calls and 4.75 percent for the marginal lending facility). BCEAO will likely
need to continue tightening in 2023 inline with other major central banks, andas foreign exchange reserves decline, andinflation remains well above the target
range of 1-3 percent. Furthermore, delaying fiscal adjustments towards the regional fiscal deficit target of below 3 percent of GDP by 2025 could exacerbate
debt sustainability risks in some countries, while increasing regional financing
needs, reducing FX reserve buffers, andelevating inflationary risks.

Using the international poverty line of$2.15 (in 2017 PPPs), poverty increased to21.9 percent in 2022, up from 20.4 percent
in 2021. The sharp increase in poverty(1.4pp increase in 2022; compared to a
3.4pp decline in 2021) is partly due toweaker growth in per capita GDP, highfood prices and low cashew prices.

OutlookReal GDP growth is projected to be 4.5
percent over the medium term (2.3 percent per capita), due to higher forecasted
cashew production and prices, and asroad and energy infrastructure investments come online. Inflation is expected
to decelerate to reach 2 percent by 2025,
as the spillover from the war in Ukraine
dissipates. The outlook is subject to substantial downside risks stemming frompolitical instability, climate shocks, uncertainty surrounding the fiscal consolidation, notably from EAGB, and non-performing loans in the financial sector.

TABLE 2 Guinea-Bissau / Macro poverty outlook indicators

The CAD will improve to 2.2 percent of
GDP in 2023 as inflationary pressure eases
and cashew exports increase. External financing needs will continue to be met byconcessional loans and an IMF program
crowding in grants.
The authorities are committed to an ambitious medium-term fiscal consolidation,
which includes enhanced management offiscal risks, notably from SOEs, revenue
mobilization, and control of the wage bill.
The fiscal deficit is projected to decline to
3.3 percent by 2025 with the public debt-toGDP ratio expected to fall to 69.8 percent,as the government’s fiscal consolidation
efforts bear fruit.
The poverty rate is expected to decline inline with higher agricultural growth andlower inflation, falling by 1.3pp in 2023
to 20.6 percent and reaching 18.3 percent
by 2025. Rising food prices will remaina concern, especially for the poor. Ongoing reforms, and price controls on basic
food items (rice, sugar, and wheat flour),are expected to partly cushion the negative distributional effects of inflation, butraise fiscal risks.

(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

2020
1.5
-9.6
10.1
1.5
-12.4
-15.5

2021
6.4
9.2
10.8
2.3
13.0
7.4

2022e
3.5
5.0
16.6
11.3
-20.0
9.5

2023f
4.5
2.5
9.3
-2.1
32.8
8.5

2024f
4.5
2.5
-2.6
18.4
7.0
6.2

2025f
4.5
2.5
12.2
4.5
7.0
6.2

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

1.5
3.2
1.1
0.4

6.4
5.4
5.6
7.5

3.5
5.4
7.1
1.0

4.5
5.1
4.4
4.0

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)

1.5
-2.5

3.3
-3.1

7.8
-8.5

5.0
-2.2

3.0
-3.0

2.0
-3.9

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

-8.8
14.0
69.8
-7.3

-5.5
19.0
76.9
-4.0

-5.2
18.2
80.2
-3.7

-4.2
19.4
78.1
-2.0

-3.9
18.0
73.1
-1.9

-3.3
18.0
69.8
-1.5

23.8
57.9
87.0

20.4
55.3
86.4

21.9
57.1
86.9

20.6
55.1
85.8

19.9
53.8
84.7

18.3
51.0
82.2

1.1
8.0

1.2
8.2

1.1
8.5

1.2
8.7

1.1
9.0

1.2
9.3

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.
a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
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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Apr 23

KENYAKey conditions andchallenges

Table 1

2022

Population, million

54.0

GDP, current US$ billion

115.7

GDP per capita, current US$

2141.0International 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

a

40.8

School enrollment, primary (% gross)

b

77.3

b

62.7

Total GHG emissions (mtCO2e)

89.2Life 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).

Kenya’s recovery remains strong despite
multiple shocks, but high inflation andprolonged drought slowed down poverty
reduction. Growth is projected to remain
above pre-covid average. Fiscal consolidation to address emerging fiscal and debt
risks while safeguarding social spending
remains a top priority to address fiscal,
external, and social challenges facing
Kenya. The private sector is prioritized
to play a bigger role in the economy
coupled with investment in climatesmart agriculture.

Kenya has demonstrated an impressive
record of economic growth and resiliencein the past but increasingly faces looming
challenges. Decades of public-investmentled growth led to rapid debt accumulationthat cannot be sustained. The economy’s
strong post-pandemic recovery is not generating enough jobs to sustain and accelerate poverty reduction. The private sector
faces major challenges from a weak business environment. FDI is low. Climate
shocks disrupt output and threaten livelihoods. Building resilience will requirelarge investments, e.g., in climate-smart
agriculture. The successive shocks fromthe global pandemic, regional drought,
commodity price volatility, and tighteningof credit markets have both exposed andexacerbated underlying vulnerabilities in
the Kenyan economy.
Making GDP growth more inclusive is
Kenya’s top priority. Economic growth ofthe past two decades improved living standards and reduced poverty from 36.7 percent in 2005 to 27.2 percent in 2019 (basedon $2.15 a day poverty). The COVID-19
pandemic, however, sharply increased
poverty in urban areas, and the post-pandemic recovery was interrupted by a severe drought across many parts of Kenya
and a spike in food prices. Kenya faces persistent regional differences in the incidenceof poverty. The share of workforce in nonfarm wage jobs remains at 30 percent.

Kenya will see its largest ever youth cohorts joining the workforce over the next
decade. Translating this into a demographic dividend through earning opportunities
and sustained structural transformation isa key priority for Kenya.
Shifting towards more sustainable andinclusive growth requires transforming
the government’s role in the economy toenable the private sector to expand andcreate jobs. Weak regulatory and business conditions hamper the private sector’s potential. The economy faces market distortions, a lack of level-playing
field in many sectors, and inefficient
SOEs. Small enterprises lack access to finance and further limit the private sector’s contribution to growth.

Recent developments
Kenya’s recovery remained strong despite
domestic political uncertainty in the run
up to the August 2022 elections, downturnin the international financial cycle, andglobal commodity shocks. Real GDP grewby an estimated 5.0 percent in 2022, driven
by increases in services and industry(Table 2) and underpinned by a pickup in
private sector credit, improved investor
confidence, high international prices for
Kenya’s commodity exports, and a recovery in tourism. Agricultural output, however, continued to contract amid one of themost severe droughts on record. High frequency monitoring of households showsa rise in food insecurity, most severely inrural and Arid and Semi-arid Lands

FIGURE 1 Kenya / GDP growth and contributions to real
GDP growth

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

Percent, percentage points
12

Poverty rate (%)

9Real private consumption per capita (constant LCU)

100

16000090

14000080120000

70

6
3
0

60

100000

50

80000

40

60000

30
-3

40000

20

20000

10
-6
2020Q1
2020Q3
Agriculture
Taxes

2021Q12021Q3
Industry
GDP growth02022Q12022Q3Services

0
2015

2017

2019

International poverty rate
Upper middle-income pov. rate

Sources: World Bank and Kenya National Bureau of Statistics.

Source: World Bank. Notes: see Table 2.

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46

Apr 23

2021

2023

2025

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

(ASAL) as farmers plant fewer crops andthe prices of agricultural inputs rise.
Increased exports of tea, manufactures,
tourism, and transport services contributed to reducing the current accountdeficit to 4.9 percent of GDP in 2022.
Kenya’s foreign exchange reserves, however, declined to around four months of imports cover as global financing conditions
reduced net inflows in the capital and financial accounts.
International commodity price shocks
and the prolonged regional drought
pushed the inflation rate above the Central Bank of Kenya’s (CBK) upper boundof 7.5 percent in 2022 leading CBK to
increase the policy rate by a cumulative
175 basis points between May and November 2022. It retained the rate at 8.75
percent in January 2023. Inflation peakedat the end of 2022, declining marginallyto 9.2 percent in February 2023 as foodprice inflation subsided.
The newly elected government has maintained the pace of fiscal consolidation in
FY2022/23. Strong growth in revenue, rationalization of non-priority spending,and unwinding of subsidies have createdfiscal space and enabled the government
to safeguard social spending. The revised

fiscal deficit for FY2022/23 is estimated at
5.7 percent of GDP, lower than 6.2 percent budgeted earlier.

OutlookReal GDP is projected to grow at 5.2 percent on average in 2023–25, increasingly
driven by the private sector. Improved investor confidence and credit to the private
sector—helped by reduced domestic borrowing by the government—will be key
drivers of private investment and GDP
growth in the medium term. The continued rebound in tourism exports and remittances, along with a stabilization of commodity prices, will maintain the current
account deficit in a range of 5.0 to 5.5 percent of GDP. The outlook also assumes an
end to the drought.
This outlook assumes continued government commitment to the multi-year fiscal
consolidation leading to a primary fiscal
surplus and positive public savings in
FY2024/25 (Table 2). The government projects revenue growth from rationalizing tax
exemptions and broadening of the tax basewhile strengthening tax administration and

TABLE 2 Kenya / Macro poverty outlook indicatorscompliance. Controls on government recruitment, remuneration and benefits anda push for strengthening of public investment management and procurement will
constrain expenditure growth.
Real per capita incomes are expected togrow, and poverty is expected to resume
its pre-pandemic downward trend, declining by around half a percentage point eachyear. The $2.15 poverty rate is expected tofall from 26.6 percent in 2022 to 26.0 percent in 2023, below its pre-crisis level of
27.2 percent (2019).
The outlook is subject to elevated uncertainty. Lower than anticipated growth inEurope could undercut ongoing recovery in exports, tourism, and remittances.
There are also risks from further tightening of financial conditions if inflation in advanced economies remains elevated. Spending pressures (e.g., if consumption subsidies are reintroduced)
and failure to achieve fiscal consolidation would exacerbate Kenya’s debt
vulnerabilities. Upside risks are mostly
linked to faster-than-expected normalization in global financing conditions
and lower international fuel and foodprices, which would strengthen Kenya’s
external balances.

(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

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
5.2
5.2
4.9
7.0
10.3
9.0

2023f
5.0
5.0
4.8
7.7
7.4
8.3

2024f
5.2
5.1
4.1
8.4
7.8
8.3

2025f
5.3
5.1
3.9
8.8
7.6
8.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

0.4
4.6
3.3
-1.8

7.1
-0.2
7.2
9.5

5.2
-1.6
4.7
7.5

5.0
3.8
4.9
5.4

5.2
4.2
5.1
5.6

5.3
4.2
5.3
5.7

Inflation (Consumer Price Index)

5.3

6.1

7.6

7.8

5.8

5.5

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

-4.8
0.5

-5.5
0.0

-4.9
0.5

-5.0
0.8

-5.5
0.9

-5.5
0.9

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

-7.8
16.3
66.0
-3.9

-7.2
16.8
67.9
-2.6

-6.0
17.6
66.1
-1.4

-5.1
17.8
63.5
-0.5

-4.2
18.1
60.9
0.1

-3.8
18.1
58.2
0.4

28.1
58.4
84.0

27.2
57.6
82.8

26.6
56.9
81.9

26.0
56.4
81.2

25.4
55.8
80.3

24.9
55.3
79.5

9.3
32.0

7.7
32.7

3.2
33.3

2.8
34.0

3.7
34.6

4.3
35.0

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.
a/ Calculations based on 2013-, 2018-, and 2015-IHBS. Actual data: 2015. Nowcast: 2016-2022. Forecasts are from 2023 to 2025.
b/ Projection using point to point elasticity at regional level with pass-through = 1 based on private consumption per capita in constant LCU.

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LESOTHO

Key conditions andchallenges

Table 1

2022

Population, million

2.2

GDP, current US$ billion

2.3

GDP per capita, current US$

1045.9International poverty rate ($2.15)

a

32.4
a

54.7

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

108.4

b

54.7

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 (2019); Life expectancy(2020).

Lesotho’s economy expanded by a modest
1.8 percent in 2022 due to domestic political uncertainties and external shocks. GDP
growth is projected to accelerate to about
2.3 percent in 2023, driven by the construction sector and public investment.
The outlook is subject to downside risks
emanating from global geopolitical tensions, climate change, and the war in
Ukraine. Poverty is expected to remain at
about 33 percent in the near term, using theinternational poverty line.

Lesotho’s economy expanded by a modest average of 1.9 percent between 2017 and 2021 due
to increasing pressure on the budget, the
COVID-19 pandemic, growing climate risks,and political uncertainty. The war in Ukraine
hasexertedpressureonfoodandenergyprices,leadingtomonetarypolicytighteningandnegatively affecting households’ budgets. Due toLesotho’stradelinkswithSouthAfrica,several
exporting sectors have been affected by the
weakeconomicperformanceofitsneighbor.
A new government came into power in November2022.Itskeypriorityistosecureinclusive and sustainable growth by increasing
private sector participation and strengtheninggovernanceandinstitutions.
Lesotho continues to face multifaceted socioeconomic challenges. Unemployment
was high even before the pandemic, estimated at 22.5 percent (strict definition) and
38.3 percent in 2019 (expanded definition
to include discouraged job seekers). As aresult, over a third of the population was
estimated to live on less than US$2.15 per
day (2017 PPP) in 2022. Additionally, inequality is high by global standards with
the Gini index at 44.9 (2017 data).

Recent developments
Lesotho’s economy grew by 1.8 percent in
2022, following a 1.6 percent rebound in

2021. The main growth drivers were construction, mining, manufacturing, business services, and public administration.
The agricultural sector has also contributed positively due to good seasonalrainfalls and the subsidization of inputs,
leading to increased harvests.
Annual inflation averaged 8.3 percent in
2022 compared with 6 percent in 2021. The
main reasons were the transmission fromhigher international food and energy
prices to domestic prices and the hikes inadministered prices domestically. The current account deficit widened from 1.4 percent of GDP in 2021 to 2.4 percent in 2022,
primarily due to higher imports of goods
and services, with limited exports growth.
The fiscal deficit deteriorated to 7.5 percent
of GDP in 2022 compared to 4.2 percent
in 2021. The increase in expenditures was
driven by a rise in both recurrent expenses
and capital spending, while revenue declined due to lower Southern African Customs Union (SACU) receipts. The public
debt stock is estimated to have declined
slightly to 58.6 percent of GDP in 2022,
from 59.1 percent in 2021, mainly due tothe redemption of a 7-year and a 10-year
Treasury bond.
Given the limited recovery in 2022, poverty
remained high, with 34.7 percent of the population estimated to be living on less than
US$2.15 per day (2017 PPP). Other factors –such as rising food prices and climate
shocks – put additional pressure on vulnerable households. Despite recent growth in
the agricultural sector, food security remains a challenge, particularly among therural population, owing to high rainfall
variability. Estimates suggest that between

FIGURE 1 Lesotho / Real GDP at factor costs

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

Percentage change
15

Poverty rate (%)

Real GDP per capita (constant LCU)

90

11000

80
10

10500

70
60

5

10000

50

9500

40

0

30
-5

9000

20

8500

10
-10
2020

2021

2022

Agriculture
Services

2023

2024

0

2025

8000
2017

Industry
GDP at Factor Cost

2019

2021

International poverty rate
Upper middle-income pov. rate

Sources: WDI and World Bank staff estimates.

Source: World Bank. Note: See Table 2.

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48

Apr 232023

2025

Lower middle-income pov. rate
Real GDP pc

October 2022 and March 2023, about
320,000 people (22 percent of the population) in rural areas were experiencing a foodsecurity crisis – an increase from 15 percent
between July and September 2022.

OutlookReal GDP is projected to grow by 2.6 percent in 2023, with a faster expansion of 3.1
percent in 2024 and 3.3 percent in 2025.
Construction and public investment are
projected to drive the country’s economic
expansion, especially the implementationof Phase II of the Lesotho Highlands Water
Project. The services sector is also expected to contribute to growth, benefitingfrom the positive spillovers from the construction subsector and higher domestic

demand. Furthermore, the diamond industry is expected to recover on the backof higher prices and stronger demandamid declining global supply. The agricultural sector is also expected to contribute modestly to growth depending on
the weather conditions.
The annual inflation rate is expected to
decline gradually, to average 5.6 percent
in the medium term, as food and fuelprices moderate. The fiscal position is
projected to improve to a surplus of 1.7
percent of GDP in 2023 from a deficit of
7.5 percent of GDP in 2022. This turnaround is mainly explained by the surge
in SACU revenue, which will increaseby about 40.7 percent between 2022 and2023. Other tax revenues are also expected to improve in the medium term
due to more effective tax collection. The
government expects to control the public

TABLE 2 Lesotho / Macro poverty outlook indicators

sector wage bill (accounting for about
40 percent of total expenditure), whileslightly increasing capital spending. The
public debt-to-GDP ratio is expected to
decline from 59 percent of GDP in 2022
and stabilize at 55.3 percent of GDP in
the medium term. The current accountdeficit is expected to widen moderately
in the medium term and average 0.9 percent of GDP due to the anticipated increase in imports of raw materials for theconstruction activities associated with the
Lesotho Highlands Water Project.
Poverty rates are expected to decline but
increases in food and energy prices as wellas an uncertain economic environment
may constrain the budgets and livelihoodsof lower-income households. The US$2.15
per day (in 2017 PPP terms) poverty rate is
projected to fall from 34.7 percent in 2022
to 32.6 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

2020
-5.6
6.9
19.7
-46.3
-17.2
-0.6

2021
1.6
-6.7
-5.3
1.6
5.1
-0.4

2022e
1.8
9.1
2.4
14.8
36.7
22.5

2023f
2.6
3.6
5.0
40.8
2.2
10.3

2024f
3.1
3.6
1.1
42.9
2.2
10.3

2025f
3.3
3.6
-1.6
38.0
2.2
10.3

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-5.6
8.7
-12.2
-4.4

1.6
-16.0
4.7
1.9

1.8
72.3
36.0
-11.9

2.6
2.4
5.0
1.6

3.1
2.4
5.0
2.3

3.3
2.4
5.0
2.7

Inflation (Consumer Price Index)

5.0

6.0

8.3

6.5

5.2

5.0

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

-2.8
1.3

-1.4
1.2

-2.4
1.2

0.7
1.3

-1.5
1.3

-2.0
1.3

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

4.2
48.3
51.2
5.1

-4.2
49.4
59.1
-3.2

-7.5
39.1
59.0
-6.6

1.7
48.7
56.5
2.4

-0.9
44.3
56.5
-0.2

0.4
42.2
53.0
1.1

35.8
58.4
83.6

35.2
58.0
83.4

34.5
57.0
82.6

33.3
55.7
81.7

32.1
54.4
80.9

31.0
53.2
79.8

-2.6
28.4

0.8
27.7

1.6
27.6

1.6
27.7

1.6
27.9

1.4
28.1

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.
a/ Calculations based on 2017-CMSHBS. Actual data: 2017. Nowcast: 2018-2022. Forecasts are from 2023 to 2025.
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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Apr 23

LIBERIA

Key conditions andchallenges

Table 1

2022

Population, million

5.3

GDP, current US$ billion

4.0

GDP per capita, current US$

754.5

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

77.5

b

60.9

Total GHG emissions (mtCO2e)

17.0Life 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).

Liberia’s economy grew by 4.8 percent
in 2022, following a strong rebound in
2021. Growth is expected to slow to 4.3
percent in 2023, reflecting global slowdown and uncertainties surrounding
Russia’s invasion of Ukraine and the2023 elections. The medium-term
macroeconomic outlook nonetheless remains positive. The poverty rate is expected to decline moderately reaching
33.8 percent by 2025.

Liberia is highly vulnerable to both domestic and external shocks. Given its relianceon commodity exports (mainly iron ore,gold, and rubber), the economy is exposed
to fluctuations in global commodities
prices. Most Liberians rely on subsistence
agriculture, forestry, and artisanal fisheries
for livelihood in rural areas, and on lowproductivity services (mainly commerce
and transport) in urban areas. In recent
years, the country has made notable
progress on economic management, maintaining macroeconomic stability throughprudent monetary and fiscal policies.
Growth has rebounded since 2021 after
two consecutive years of contraction andinflation has been brought down to single
digits from 27 percent in 2019 despite elevated external price pressures.
Low levels of human and physical capitaland overall productivity continue to impede development. For instance, Liberia
has a human capital index of only 0.32, only 7 percent of the country’s overall road
network is paved, and just about 30 percent of the population has access to electricity. Investments in human and physical capital have been prioritized under
the government’s medium-term development strategy for 2018-2023, the Pro-Poor
Agenda for Prosperity and Development,
but fiscal space to address these fundamental development constraints is limited
by low domestic revenue mobilizationand declining external grants. Boosting
domestic resource mobilization to makespace for investment and fostering an enabling business environment for private
investment are among the main policy
challenges that must be addressed.

Recent developments
Liberia’s economy expanded by 4.8 percent in 2022 despite global headwinds(from the war in Ukraine, high global inflation, and depressed demand in advanced
economies). The expansion was driven bymining (specifically gold) and a relatively
good agricultural harvest. Growth in the
agricultural sector accelerated to 5.9 percent, from 3.3 percent in 2021, on the backof increased rice and cassava production.
Thanks to increased gold production, industrial output grew by 10.4 percent in
2022: while iron ore production remained
stable, gold output surged by 49.1 percent, year-on-year. From 3.0 percent in
2021, services growth slowed to 2.8 percent, reflecting a slowdown in construction services and hospitality.
Average inflation slowed to 7.6 percent in
2022, down from 7.8 percent in 2021, even as
headline inflation increased from 5.5 percent in December 2021 to 9.2 percent in December 2022. Food prices declined by 1.6
percent thanks to relatively good agriculture harvests, whereas non-food inflation
reached 10.6 percent, primarily due to energy prices. The Central Bank of Liberia kept
reserve requirements unchanged in 2022
while maintaining a relatively restrictive

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)
1000

5

900
100

4
3

800
700

80

600

2

60

1

500
400

0

40

-1
-2

300
200

20

100

-3

0

-4
2020
Agriculture

2021

2022e
Industry2023f
Services

2024f

02007 2009 2011 2013 2015 2017 2019 2021 2023 2025

2025f

International poverty rate
Upper middle-income pov. rate

Real GDP growth

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

Source: World Bank. Notes: see Table 2.

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50

Apr 23Lower middle-income pov. rate
Real priv. cons. pc

monetary policy stance. The policy rate washeld at 20 percent from January to July before being cut to 15 percent in August as inflation remained in single digits. Robust
GDP growth and moderate inflation haveboosted private consumption per capita.
Liberia’s international poverty rate
(US$2.15 person/day PPP) decreased by 0.5
percentage points to 35.5 percent in 2022.
The fiscal position worsened in 2022. The
deficit rose to 5.2 percent of GDP in 2022, up
from 2.4 percent in 2021. This was partly due
to the decline in grants (by 2.9 percentage
points of GDP) and lower-than-expectedroyalties from iron ore due to delayed expansion of the Arcelor Mittal mining project. On the expenditure side, grants andsubsidies increased by 0.9 percentage
points of GDP to 3.0 percent. With a debt-toGDP ratio of 53.4 Liberia is assessed to be atmoderate risk of external debt distress andhigh risk of overall debt distress.
Liberia's current account balance improved in 2022, thanks to booming gold
exports. The current account deficit narrowed to 15.5 percent of GDP, down from
17.8 percent in 2021. Despite robust foreign
direct investment (7.4 percent of GDP in2022), the financing of the current accountdeficit was challenging as project grant disbursements declined (from 5.9 percent of

GDP in 2021 to 4.6 percent of GDP) while
the net disbursement of loans decreased
from 13.9 percent of GDP in 2021 to 2.4
percent of GDP in 2022. Thus, the overallbalance of payment showed a deficit of
1.1 percent of GDP, covered by drawing
from the international reserves which declined to US$644 million (3.5 months ofimport cover) in 2022, from $700 million(4.0 months of import cover) in 2021. The
drawdown of reserves also enabled theLiberian dollar to appreciate by 8.0 percent against the dollar between 2021 and2022. Commercial banks were typically incompliance with prudential capital andliquidity requirements in 2022. By December 2022, the share of non-performing
loans (NPL) fell from 22.9 percent to 16.4
percent of all loans.

Outlook
Growth is expected to taper off to 4.3 percent in 2023 before reaching an averageof 5.6 percent over 2024-25 as the country
benefits from tailwinds for mining andstructural reforms in key enabling sectors
such as energy, trade, transportation, andfinancial services. Inflation is projected to

TABLE 2 Liberia / Macro poverty outlook indicators

increase to 7.8 percent in 2023 and moderate gradually to 5.5 percent by 2025 inline with global projection of energy andfood prices.
The fiscal deficit is projected to narrow to
4.6 percent of GDP in 2022 and further tounder 4.0 percent in the medium term as
the authorities strengthen expenditurecontrols. The 2023 draft budget targets a
decline in the fiscal deficit to 2.6 percent of
GDP. The current account deficit is expected to hover around 18 percent in the medium term, as import growth remains high,driven by robust aggregate demand andpersistent high global food and fuel prices.
The poverty rate is expected to stagnate in
2023 and decline moderately in the medium term as economic growth takes off andinflation moderates.
Besides the fluctuations in commodity
prices, the main risks to the outlook
are uncertainties associated with the 2023
elections. The outlook may be hamperedby fluctuations in prices of major imports
and exports, but election-related spending pressures could undermine the viability of the current fiscal framework. In
anticipation of the 2023 elections, businesses might delay investment decisions,and this could further slow the pace ofeconomic recovery.

(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

2020
-3.0
3.8
0.8
-5.5
-1.4
11.7

2021
5.0
4.7
0.2
-7.9
14.7
1.8

2022e
4.8
3.3
-5.7
9.4
7.7
3.1

2023f
4.3
2.1
-10.7
9.8
9.8
2.3

2024f
5.5
4.0
7.4
2.0
13.6
5.5

2025f
5.6
4.0
9.5
-1.0
13.6
4.7

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-2.9
2.4
0.2
-8.6

4.8
3.3
13.3
3.0

5.4
5.9
10.4
2.8

4.3
2.9
4.6
5.7

5.5
4.9
7.1
5.2

5.5
5.3
6.5
5.3

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

17.0
-15.6

7.8
-17.8

7.6
-15.5

7.8
-17.2

5.8
-18.1

5.5
-18.6

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

-3.7
29.9
55.8
-2.4

-2.4
27.2
53.2
-1.6

-5.2
23.5
53.4
-4.3

-4.6
23.0
55.4
-3.6

-3.3
22.9
54.5
-2.5

-3.5
22.6
53.0
-2.7

37.0
70.1
92.8

36.0
69.3
92.5

35.4
69.1
92.3

35.5
69.1
92.3

34.6
68.2
92.1

33.8
67.4
91.8

0.6
6.8

3.2
6.6

3.1
6.4

3.1
6.1

3.1
5.9

3.1
5.7

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.
a/ Calculations based on 2016-HIES. Actual data: 2016. Nowcast: 2017-2022. Forecasts are from 2023 to 2025.
b/ Projection using neutral distribution (2016) with pass-through = 0.7 (Low (0.7)) based on private consumption per capita in constant LCU.

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51

Apr 23MADAGASCAR
Table 1

Key conditions andchallenges

2022

Population, million

29.6

GDP, current US$ billion

14.9

GDP per capita, current US$

504.9

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

65.2

Total GHG emissions (mtCO2e)39.6

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 (2019); Life expectancy(2020).

Growth is estimated to have weakened in
2022, mainly due to natural disasters andthe indirect effects of Russia’s invasion of
Ukraine. Although growth is projected torecover to an average of 4.7 percent over2023-25, risks remain tilted to the downside. These include the severity of recurrent natural disasters, a deterioration in
the global environment, and social andpolitical volatility in the event of a reversal of the reform agenda. Poverty remains
elevated and on the rise in urban areas.

Madagascar is one of the poorest countries in the world, with high levels of
inequality and unemployment. Progressin achieving the development objectives
articulated in the Plan Emergence Madagascar remains slow and Madagascar
continues to face major economic andsocial challenges, exacerbated by external shocks. In addition, low productivity, driven by poor structural transformation, is hampering growth. Although
the COVID-19 pandemic and multiple
climate shocks have exacerbated Madagascar’s fragility, a recovery in the mining, services, and construction sectors
raised economic growth to 5.7 percent
in 2021, following a contraction of 7.1
percent in 2020. Poverty remains elevated and on the rise in urban areas, reflecting the impact of rural-urban migration, the lack of job opportunities in thecities, and a decline in the productivityof private enterprises.
Beyond the need to strengthen resilience(including through improving budget execution of social spending), accelerating
growth and reducing poverty will require
urgent reforms supporting private investment, trade, connectivity, and access tobasic services – all of which face deep
governance and institutional challenges.
Moreover, efforts to gradually transition
the monetary policy framework to interest rate targeting are supported, among

others, by the implementation of the
securities repurchase operations law ofDecember 2021 to encourage longerterm interbank loans, and the narrowing of the interest rate corridor to stabilize the short-term interest rate on
the money market.

Recent developments
Following a strong rebound in 2021,
growth decelerated to an estimated 3.8
percent in 2022, reflecting the impact of repeated natural disasters compounded by adeteriorating global context. In early 2023,
two severe tropical storms hit Madagascar,
submerging many roads and flooding anddestroying schools and health centers.
Moreover, recent evidence indicates that
repeated cyclones increased the poverty
rate among affected households.
Rising basic necessity prices – exacerbated by the impact of the war in
Ukraine on the prices of imported
products – fueled inflation, whichreached 11.4 percent year-on-year in
January 2023. Inflation began to rise in
mid-2022 following the government’s
decision to raise fuel prices at thepump by an average of 34 percent(gasoline: 44 percent, diesel: 44 percent, and oil: 14 percent). Rising foodand fuel prices eroded households’
purchasing power, exacerbating already high poverty levels, especiallyin urban areas. Although the inflation
hike in recent months was mainly due
to supply shocks, the Central Bank of

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, percentage points
30

Poverty rate (%)

Real GDP per capita (constant LCU)

100

20

82000080000095

7800001090076000085-1074000072000080700000-20
75

680000

-30
2000

2004

Gov. cons.
Inventories
Statistical disc.

2008

2012

2016

Exports
Private cons.
GDP

2020

70

2024

6600002010

GFCF
Imports

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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52

Apr 23

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

Madagascar has consistently raised interest rates to contain inflation expectations and second-round effects. Between January and October 2022, thecentral bank increased the interest rateby a cumulative 290 basis points, from
7.2 percent to 10.1 percent.
The fiscal deficit rose from 2.8 percent of
GDP in 2021 to an estimated 3.1 percent
of GDP in 2022 reflecting the government´ssettlement of its liabilities to oil distributors related to the implicit fuel price subsidy. In addition, customs duties assessed(but not paid) on oil continued to berecorded in the central government's budgetary transactions with an offset on the
expenditure side and thus did not contribute to deficit reduction.
The current account deficit increased toan estimated 5.6 percent of GDP in 2022
(from 5 percent of GDP in 2021), as arecovery in mineral exports was offset
by higher imports of refined petroleum
products, food, and intermediate goods.
Gross international reserves declined, but
remained broadly adequate, from 5.9
months of imports in 2021 to 5 months ofimports in 2022.

OutlookReal GDP growth is projected to improveto 4.2 percent in 2023 and to accelerate toabout 5 percent in 2024-25, mostly boosted
by a recovery of the mining industry coupled with the gradual reopening of air traffic, especially with South Africa. Primarysector output is expected to increase by anaverage of about 3 percent per year over2023-25, from a decade high of 5.9 percent
in 2019, reflecting the adverse effects of climate change. The industrial sector is expected to remain the main driver ofgrowth due to an increase in mining activities despite decelerating key commodity
price projections.
Moreover, the sluggish outlook projected
in 2023 for Madagascar’s main trade partners, notably the euro area and the UnitedStates, would slow down export demandfor Madagascar’s key agricultural products and textiles, as will a slower-than-expected recovery in tourist arrivals, evenwith the easing of entry procedures. In addition, restrictive policies implemented in

TABLE 2 Madagascar / Macro poverty outlook indicators

the vanilla sector (including price control)
is expected to decelerate the prospect ofexport earnings. Madagascar’s poverty is
projected to remain elevated at 79.4 percent in 2024-25 (based on an international
poverty line of US$2.15 per person perday, in 2015 PPP).
The fiscal deficit will improve in 2023 andbeyond as a result of an agreement withoil distributors to clear their overdue taxes
and the government implementing
planned reforms for more efficient spending and domestic revenue mobilization.
Moreover, the gradual increase in capital
expenditure from 5.1 percent of GDP in
2021 to 5.9 percent in 2025 reflects the implementation of the government’s priority
projects, most of which are financed by external concessionary sources.
Risks remain tilted to the downside, including the recurrence of natural disasters
and the indirect effects of the war in
Ukraine. Moreover, prolonged weak budget execution in health and education
spending, along with reversals in reform
agenda, could also lead to social and political volatility, especially ahead of the 2023
presidential elections.

(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

2020
-7.1
2.2
24.3
-10.3
-36.6
-16.6

2021
5.7
3.0
0.2
12.7
55.0
12.7

2022e
3.8
2.5
-8.0
-19.1
27.5
19.8

2023f
4.2
2.5
12.8
2.0
3.6
2.0

2024f
4.8
2.8
6.7
4.0
5.0
2.7

2025f
5.1
3.0
6.8
5.8
5.0
3.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-9.4
-1.4
-29.5
-6.9

6.5
-1.6
19.7
7.3

3.7
0.9
10.9
3.1

4.3
2.3
8.6
3.9

4.8
3.1
8.9
4.3

5.2
3.6
9.1
4.7

Inflation (Consumer Price Index)

4.2

6.2

8.2

8.5

8.0

7.7

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

-4.8
1.8

-5.0
1.7

-5.6
2.0

-6.2
1.5

-5.7
1.9

-5.5
2.1

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

-4.0
12.8
49.6
-3.2

-2.8
11.4
53.5
-2.2

-3.1
12.1
57.1
-2.4

-1.6
13.5
53.4
-0.7

-2.8
12.1
52.3
-2.1

-2.9
12.3
52.5
-2.4

81.5
92.9
98.3

80.9
92.5
98.2

80.6
92.4
98.1

80.2
92.1
98.1

79.7
91.9
98.0

79.1
91.7
97.9

-2.1
14.8

-0.1
15.2

0.5
15.5

8.2
17.1

0.9
17.5

1.3
18.0

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.
a/ Calculations based on 2012-ENSOMD. Actual data: 2012. Nowcast: 2013-2022. Forecasts are from 2023 to 2025.
b/ Projection using neutral distribution (2012) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU.

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53

Apr 23

MALAWI

Key conditions andchallenges

Table 1

2022

Population, million

20.4

GDP, current US$ billion

11.9

GDP per capita, current US$

581.1

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

63.7

Total GHG emissions (mtCO2e)

20.3Life 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).

With lower agricultural output, erraticelectricity supply, forex shortages affecting importation of raw materials and highglobal commodity prices, GDP growthdeclined to 0.9 percent in 2022. Economic
growth is projected to increase only
slightly to 1.4 percent in 2023 with theimpacts of Tropical Cyclone Freddy on
the South negating anticipated improvements in agricultural performance. In
light of persistently elevated inflation,
poverty rates are expected to remain high.

Malawi’s overreliance on rainfed and primary agriculture limits the economy’s potential for inclusive growth. Output is disrupted by changing weather, flooding, andthe unreliable supply of fertilizer. Policies
that distort agricultural markets discourage investments that could boost productivity, exports, and foreign exchange needed to finance essential imports.
Growth remains vulnerable to internaland external risks. Volatile agriculture
growth driven by the occurrence of disruptive weather patterns and erratic electricity supply emanating from delays in
the repair of the Kapichira hydropower
plant continues to undermine economic
growth. This has been compounded bypersistent forex shortages constraining
the importation of raw materials for production. Weak governance and policy implementation are creating additional challenges for the business environment.
Export recovery remains weak. With imports expected to significantly recover fromthe slump in 2022, this will continue to strain
the current account balance, exacerbating
the foreign exchange reserves accumulation
efforts. The limited efforts to address thewidening exchange rate premium will also
exert additional pressures on reserves.
The government is still implementing an expansionary fiscal policy and growing statutory spending consumes almost all revenue.
This creates significant challenges for fiscal

FIGURE 1 Malawi / Fiscal deficit and public debt

Percent of GDP
12

consolidation. The government’s recourse
to high-cost domestic borrowing, due tolimited external financing, exerts additionalpressure on public debt, which the November 2022 Debt Sustainability Analysis rates
as in distress. With debt restructuring negotiations progressing slowly, there is a riskthat public debt may rise further.
Recurrent weather shocks, including a
drought in 2016 and cyclones in 2019, 2022
and again recently in March 2023, havecontributed to high vulnerability and foodinsecurity. This has been compounded byhigh population growth and weak economic dynamism. As a result, incomes remain low and stagnant, with the share ofpeople living below $2.15 a day increasingfrom 66 percent to 70 percent in one decade.

Recent developments
A series of exogenous shocks in 2022 delayed the country’s recovery from the
COVID-19 pandemic. Tropical cyclones
disrupted agriculture and electricity generation. High global commodity prices reduced raw materials imports. Economic
growth declined to 0.9 percent in 2022
from 2.8 percent in 2021.
The pass-through of high global commodity prices, compounded by the devaluation of the Malawi kwacha in May
2022, pushed domestic inflation upwards,
peaking at 26.7 percent in October 2022
and again in February 2023 (year-onyear), the highest rate since 2013. To contain the effect of inflation, the Reserve
Bank of Malawi increased the policy rate

FIGURE 2 Malawi / Actual and projected poverty rates andreal GDP per capita
Poverty rate (%)

Percent of GDP
80
70

10

60
8

Real GDP per capita (constant LCU)

120

390000110

380000370000

100

50

6
4
2
0

3600009040350000

30

80

20

70

10

60

0

34000033000032000050

3100002010

Fiscal Deficit (lhs)

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

Apr 23

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

to 18 percent in October 2022. Pressureson the official exchange rate remain significant, with the premium increasing to over
50 percent as of end of March 2023.
Despite good revenue performance, there
has been limited progress toward fiscal
consolidation in FY2022/23. By the end of
the third quarter (December 2022), revenue amounted to 11.6 percent of GDP.
Expenditure totaled 18.3 percent of GDP
driven by higher spending on interest,
wages and salaries, and goods and services. Consequently, the fiscal deficit
widened, reaching 6.7 percent of GDP for
the first nine months of the year. High
deficits have constrained fiscal space, inturn reducing expenditure to support
poverty reduction aims.
Forex shortages and rising global commodity prices resulted in a significant import compression, narrowing the current
account deficit to 3.2 percent of GDP.
Gross official reserves remained low, with
import cover at less than one month at
the end of 2022.
High domestic food prices for maize andother staples continue to exert pressure on
household incomes, pushing many intopoverty. In turn for 2022, the proportion ofpeople living on less than $2.15 a day has
increased slightly to at 71 percent.

Outlook
Malawi’s economy is projected to grow by
1.4 percent in 2023. This modest acceleration assumes gradual macroeconomic stabilization and resumed electricity generation at the Kapichira hydropower plant.
While some recovery in agriculture is expected, the impacts of Cyclone Freddy,
which hit Malawi in March 2023, as well as
disruptions in fertilizer distribution could
lower yields, especially in the Southern Region. Domestic food prices will likely remain relatively high, but global commodity prices are projected to continue easing,
contributing to a projected decline in inflation to 19.7 percent in 2023.
Fiscal consolidation efforts are challenged
by continued spending pressures and inparticular the high share of statutory expenditures. While revenue collection is
projected at 14.5 percent of GDP, expenditure is projected to decrease to 23.3 percent of GDP, driven by the wage bill and

TABLE 2 Malawi / Macro poverty outlook indicators

high debt servicing costs. The fiscal deficit
is projected to stagnate at 8.8 percent of
GDP in FY2023/24 from a likely outturn of
8.9 percent of GDP in FY2022/23.
Reliance on high-cost domestic borrowing will keep the government from reducing interest spending and keep public
debt high. Successful efforts to finalize
debt restructuring will be key to bolster
fiscal consolidation efforts and stabilize
the economy.
As imports are projected to significantly
pick up in 2023, a worsening current account deficit will continue straining foreign reserves and likely result in continued
forex shortages. Agricultural exports arealso expected to improve, albeit moderately. Consequently, the current accountdeficit is projected to widen further to 11.3
percent of GDP in 2023.
Malawi will remain vulnerable to external shocks. Flooding induced by Tropical Cyclone Freddy will negatively affectagricultural production and food security. High food prices will continue constraining food availability, especially fornet consumers. As growth remains low,
the poverty rate is likely to increase to 72
percent in 2023.

(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

2020
0.8
0.8
0.8
0.8
0.8
0.8

2021
2.8
2.6
-1.1
-0.2
2.9
0.4

2022e
0.9
0.6
4.3
-6.5
3.6
0.1

2023f
1.4
3.5
3.5
-7.3
4.6
5.8

2024f
2.4
3.6
-0.5
1.4
5.8
5.9

2025f
3.0
3.5
5.7
1.7
5.9
6.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

0.8
3.4
1.2
-0.5

2.8
5.2
1.9
2.0

0.9
-1.0
0.9
1.8

1.4
0.5
1.3
1.8

2.4
2.4
2.4
2.5

3.0
2.6
3.0
3.1

Inflation (Consumer Price Index)

8.6

9.2

21.8

19.7

16.8

14.3

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

-13.8
3.5

-14.3
0.8

-3.2
1.3

-11.3
1.3

-11.3
1.4

-11.7
1.4

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

-6.4
14.7
53.4
-3.4

-7.1
14.1
60.5
-3.3

-10.4
13.0
76.5
-5.2

-8.9
14.7
74.6
-2.3

-8.8
14.5
75.3
-2.3

-8.9
14.6
76.1
-2.3

70.7
89.4
97.4

70.6
89.4
97.4

71.3
89.5
97.5

71.7
89.7
97.5

71.8
89.7
97.5

71.7
89.7
97.5

1.7
7.1

1.6
7.0

1.4
7.0

1.5
6.9

1.5
6.8

1.5
6.7

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.
a/ Calculations based on 2019-IHS-V. Actual data: 2019. Nowcast: 2020-2022. Forecasts are from 2023 to 2025.
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

Apr 23

MALI

Key conditions andchallenges

Table 1

2022

Population, million

22.6

GDP, current US$ billion

20.5

GDP per capita, current US$

907.6

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

78.7

b

58.6

Total GHG emissions (mtCO2e)

48.1

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).

GDP growth fell to 1.8 percent in
2022 due to ECOWAS sanctions, highfood inflation, and parasite infestations
affecting cotton production. This led tonegative per capita income growth, a
3.2 percentage points increase in poverty incidence, while delaying fiscal consolidation. Economic growth is projected to rebound to 4 percent in 2023,
while the medium-term outlook is subject to significant downside risks fromthe political transition, insecurity, andclimate-related shocks.

Mali’s economy has experienced little
structural change over the last three
decades. Agriculture and low-productivity
services dominate the economy and employment, while manufacturing remains
limited and concentrated in agro-industries and cotton ginning. Exports are dominated by gold and cotton, exposing the
economy to commodity-price and climatic
shocks. GDP growth per capita stagnatedduring the last decade limiting progress inpoverty reduction while human development indicators show mixed results.
Persistent insecurity and a weakened social
contract have emerged as key bottlenecks
for inclusive growth and, with the absenceof the State in remote areas, are increasingly
disrupting service delivery. Political instability has also become a significant constraint to growth with the coups in 2020 and
2021 and the six-month ECOWAS sanctionsin 2022 in response to the authorities’ decision to delay elections initially scheduledfor February 2022. The sanctions were lifted
in July 2022, after the transitional government agreed with ECOWAS on an elections
timetable over the period 2023-2024.

Recent developments
Despite the 6-month ECOWAS sanctions,real GDP growth reached 1.8 percent(-0.9 percent per capita) in 2022, highlighting the recovery of food agriculture (7.6
percent growth) from exceptionally low
2021 levels as well as the resilience of gold
mining (0.5 percent growth) and trade andtelecommunications. In contrast, export
agriculture – cotton production – declined
29 percent, reflecting parasite infestations
and the combined effects of the ECOWAS
embargo and Russia’s invasion of Ukraine
on fertilizer costs and availability.
Inflation increased to 9.7 percent in 2022,
driven by food inflation which accelerated
to 13.9 percent as a result of persistent insecurity forcing farmers’ displacements, the
ECOWAS sanctions disrupting trade networks, and elevated global food prices.
As a result, the extreme poverty rate is expected to have increased to 19.1 percent in
2022, a 3.2 percentage points increase compared to 2021. The relative incomes of poor
households deteriorated, exposing them tofood insecurity, especially in the centerand north. From January to June 2022,
about 1.5 million Malians (77 percent of
those targeted) benefited from food assistance. Population displacement continues,
particularly in the border areas with Burkina Faso and Niger, with over 370,000 registered displaced persons as of April 2022.
Despite the deteriorating terms of trade,
the CAD narrowed to 7 percent of GDP in
2022 as net imports were kept artificially
low due to the ECOWAS sanctions disrupting regional trade and suspending regional financial transactions during thefirst half of 2022. Merchandise exports (-3.5
percent y/y) and imports (-15.1 percent y/y) declined significantly during the first
three quarters of 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

270000100

26000080

25000060

24000040

23000020220000

4
2
0
-2
-4
-6
-8
-10
2017

2018

2019

2020

2021

2022

2023

2024

2025

0

2100002006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Current Account Balance (% of GDP)
Fiscal balance (% of GDP)GDP growth 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

Apr 23Lower middle-income pov. rate
Real GDP pc

To counter inflation across WAEMU countries, the Central Bank of West African
States (BCEAO) raised policy interest rates
by a cumulative 75 basis points in 2022
(to 2.75 percent for liquidity calls and 4.75
percent for the marginal lending facility).
BCEAO will likely need to continue tightening in 2023 in line with other major central banks, as foreign exchange reserves
have declined, and inflation remains well
above the target range of 1-3 percent. Furthermore, delaying fiscal adjustments towards the regional fiscal deficit target of
below 3 percent of GDP by 2025 could exacerbate debt sustainability risks in somecountries, while increasing regional financing needs, reducing FX reserve
buffers, and elevating inflationary risks.
The fiscal deficit stabilized at an elevatedlevel of 5 percent of GDP in 2022. After declining due to the sanctions, tax revenues
recovered during the second half of 2022,
and increased by 1 percent on the year despite fuel tax expenditures (foregone fuelexcise and oil customs revenue at 1.9 percent of GDP). Meanwhile, wages (8 percent
of GDP) and security (6.2 percent of GDP)

spending increased in 2022, crowding out
public investment (4.3 percent of GDP).
With limited access to external financing,
the fiscal deficit was mainly financed
through expensive domestic borrowing on
the regional market. Public debt rose to55.2 percent of GDP in 2022, while the riskof debt distress remains moderate.

Outlook
Growth is expected to rebound to 4 percent in 2023, and an average of 4.5 percent
over 2024-25, supported by a continued recovery of agriculture and services. Annual
inflation is projected to fall to 5 percent
in 2023 due to the recovery of food agriculture and to normalize towards the midpoint of the regional target range (2 percent) by 2025. Consequently, extreme
poverty incidence measured against the international poverty line (2.15$PPP a day
per capita) is expected to increase to 19.6
percent in 2023 before slightly decreasing
to 18.8 percent in 2025.

TABLE 2 Mali / Macro poverty outlook indicators

The CAD will decline to 6.2 percent
of GDP in 2023, gradually narrowing
to 4.7 percent of GDP by 2025 as fuelprices and supply constraints ease.
The fiscal deficit is projected to stabilize at 4.9 percent in 2023 with tax administration measures improving revenue but could further increase if projected external grants (0.4 percent ofGDP) do not materialize. The fiscal
deficit is expected to gradually converge to the WAEMU ceiling of 3 percent by 2025, while public debt will
increase to 55.9 percent by 2025.
The outlook is subject to multiple downside risks. Further delays in the electoral
timetable could trigger another round of
economic sanctions and further reduce
external grants and loans that support development spending in the budget. Otherrisks relate to intensified insecurity, lower
appetite for Mali’s bonds on the regional
market, and climatic shocks. Furthermore,a slowdown in global growth, higher inflation, and monetary tightening internationally could lead to higher financing
costs for Mali.

(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

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
9.1
5.0
4.0

2025f
5.0
4.4
2.1
7.8
5.0
4.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-1.1
-4.8
-0.1
1.4

3.0
1.4
1.0
5.1

1.8
1.7
3.0
1.5

4.0
5.0
6.0
2.4

4.0
5.0
4.0
3.3

5.0
5.0
4.0
5.4

Inflation (Consumer Price Index)

0.5

4.0

9.7

5.0

2.5

2.0

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

-2.2
3.1

-10.0
5.5

-7.0
4.4

-6.2
3.2

-5.5
3.1

-4.7
2.9

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

-5.4
20.7
47.3
-4.2

-5.0
22.2
51.9
-3.6

-5.0
19.5
55.2
-3.5

-4.9
20.7
55.1
-3.1

-4.0
22.2
55.6
-2.0

-3.0
21.4
55.9
-1.1

14.6
46.9
79.5

15.9
48.5
80.2

19.1
52.1
82.7

19.6
52.3
83.0

19.5
52.4
83.0

18.8
52.0
82.6

2.4
14.7

3.1
15.6

3.2
16.2

3.7
16.8

4.4
17.6

4.8
18.6

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.
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 based on microsimulation model that accounts for differences in sectoral growth, food and nonfood inflation.

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Apr 23

MAURITANIA
Table 1

Key conditions andchallenges
2022

Population, million

4.9GDP, current US$ billion

10.4

GDP per capita, current US$

2117.6

International 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

94.3

b

64.5

Total GHG emissions (mtCO2e)

14.4

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).

In 2022, growth is estimated at 5.2 percent, up from 2.4 percent in 2021, driven by gold production and an exceptional agricultural output. The sharp increase in food and energy prices led to a
deterioration of the current account andfiscal balances and record-high inflation.
Poverty is expected to have increased,amid food insecurity. Medium-term
growth is expected to pick up with theonset of gas production.

Mauritania recovered strongly from the
COVID-19 pandemic but has been facing
the fallout of Russia’s invasion of
Ukraine. High oil and food prices formost of 2022 caused inflation to spike,increased food insecurity and poverty,
and contributed to the deterioration of
the external balance. The country remains
very dependent on extractives, making it
vulnerable to international price movements. The fiscal balance turned into a
deficit for the first time since 2017 as
the government took measures to mitigate the high cost of living and fuel subsidies increased substantially.
Despite the uncertainty related to the war
in Ukraine and the elections in 2023 and2024, the medium-term outlook is positive mainly due to the onset of gas production, but subject to downside risks.
Risks include delayed onset of gas production, weaker global commodity markets, global disruptions that keep foodand fuel inflation high, or failure of structural fiscal reforms to reach the poor
through investments and social protection. Mauritania is exposed to recurring
cycles of droughts and recent floods that
impact agricultural output and household incomes. Regional insecurity in the
Sahel also remains a risk. Poverty is associated with climatic conditions — i.e.,
if rains are scarce pastoral households
are more likely to fall into poverty, andpoverty rates in this group can increaseby 27 percent. Households with smaller
herds are especially vulnerable. Counterfactual simulations using the 2019 household survey suggest a one percentage
point (pp) increase in poverty during irregular rainy seasons.

Recent developments
Growth is estimated at 5.2 percent in 2022
(2.5 percent in per capita terms), close to
the pre-COVID-19 level, but below potential. Growth was mainly driven by the primary sector thanks to good rainfall. Headline inflation averaged 9.5 percent (y/y) resulting from high global food prices. Prices
decelerated in November and December
supported by a good harvest and tightening monetary policy.
Good performance in the primary sector
has not resulted in poverty reduction, due
to the counter-effect of high inflation. Poor
households mostly work in the primarysector and have been significantly affectedby increases in food prices (+15 percent).
Food insecurity remained high throughout
2022 and the US$3.65 in 2017 PPP poverty
rate is expected to have increased from
23.9 percent in 2021 to 26.5 percent in 2022.
Poverty likely affects rural areas more thanurban areas. Indeed, poverty is expected toincrease from 37 percent in 2021 to 40.4 inrural areas and respectively from 10 percent to 11.7 percent in urban areas. At least
176,000 additional people are expected tohave fallen into poverty, amounting to
1,335,000 poor in 2022.

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 of GDP
0
-2

6

-4

4

0

-10

40

-12

30

2017

2019

2021

2023p

50000
40000
30000
20000

20

10000

10

-18
2015

60000

-8

-16

-4

70

50

-14

-2

70000

60

-6

2

Real GDP per capita (constant LCU)

80

2025p

0

0
2008 2010 2012 2014 2016 2018 2020 2022 2024

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

International poverty rate
Upper middle-income pov. rate

Sources: World Bank.

Source: World Bank. Notes: see Table 2.

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58

Apr 23Lower middle-income pov. rate
Real GDP pc

In response to rising prices, the Central
Bank fulfilled all foreign exchange demands by banks, raised the policy ratefrom 5 percent to 7 percent in August
2022, and eased its gold purchases. Credit growth decreased from 20.3 percent (y/y) in July 2022 to 12.5 percent (y/y) in
December 2022.
The overall fiscal balance registered a
deficit of 3.5 percent of GDP in 2022,
compared to a surplus of 2.2 percent of
GDP in 2021. This reflects a sharp increase in fuel subsidies (2.9 percent ofGDP) and transfers and stronger capital spending which was partly offset
by higher revenues (excluding grants).
Grants decreased from 2.1 percent of
GDP in 2021 to 1.7 percent of GDP in
2022. The debt-to-GDP ratio remained
stable in 2022 around 49.2 percent. The
January 2023 joint WB/IMF Debt Sustainability Assessment suggests that the riskof overall and external public debt distress is moderate, down from high in theprevious DSA, thanks to a recent bilateral debt restructuring.

The current account deficit is estimated at
13.9 percent of GDP in 2022, up from 8.1
percent of GDP in 2021, due to high energy
and food import prices, and lower export
prices. International reserves decreased toapproximately US$1.6 billion at end-October 2022, from US$2.3 billion at end-2021.

OutlookIn 2023, growth is projected to decelerate
to 4.5 percent, driven on the supply side
by lower growth in the extractive industry,
notably the production of iron ore andgold, and lower agricultural output.
Growth will be supported by investments
and an improved net external position,
while private demand growth is projected
to decelerate, negatively affected by monetary policy tightening and the global economic slowdown. In 2024-2025, growth isprojected to average 6.2 percent (3.5 percent per capita) with the onset of gas production. Inflation is projected to gradually

TABLE 2 Mauritania / Macro poverty outlook indicators

moderate to 5 percent in 2025 as externalpressures subside.
Poverty is projected to further increasein 2023, to 28.6 percent, and reach 28.8
percent in 2025 as food price inflation
slowly decelerates and in line withmodest agricultural growth. The numberof poor is expected to increase by 50,000
people through 2025, partly due to demographic growth.
The fiscal deficit is expected to decrease
to 2.3 percent of GDP in 2023, supported
by lower current expenditures with the announced rationalization of fuel subsidies(-2.2 pp of GDP) while gradually increasing targeted cash transfers using the social
registry (+0.1 pp of GDP). The additional
fiscal space will enable an increase in public investment. Over the medium term, thefiscal deficit should narrow to 0.9 percent
of GDP in 2025 with the onset of gas production. The CAD is projected to improvewith normalization of oil and food prices
from 2023, a higher projected gold andiron-ore production, and the start of gas
exports 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

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
5.2
2.6
14.8
11.4
6.2
10.1

2023f
4.5
2.2
6.9
11.3
5.5
8.7

2024f
5.6
2.4
6.2
11.1
6.7
8.2

2025f
6.8
2.7
5.7
10.0
9.7
7.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-0.1
-2.6
2.5
-0.3

0.8
-3.6
-6.6
6.4

5.1
4.0
7.7
4.5

4.5
3.5
5.2
4.6

5.6
3.8
6.5
5.9

6.8
3.8
9.1
6.9

Inflation (Consumer Price Index)

2.4

3.6

9.5

8.0

6.0

5.0

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

-6.9
11.0

-8.1
10.6

-13.9
9.9

-10.1
8.0

-6.8
3.9

-4.5
3.6

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

2.2
20.4
55.8
3.1

2.2
21.3
49.1
2.9

-3.5
22.7
49.2
-2.7

-2.3
23.1
50.3
-1.7

-1.7
23.1
49.7
-1.2

-0.9
23.3
49.1
-0.3

5.9
26.4
67.9

5.3
23.9
64.4

6.0
26.5
68.1

6.9
28.6
70.3

7.1
29.1
70.6

7.0
28.8
70.2

3.4
31.1

2.8
31.3

2.9
31.6

3.0
32.1

3.4
32.7

0.0
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.
a/ Calculations based on 2014-EPCV. Actual data: 2014. Nowcast: 2015-2022. Forecasts are from 2023 to 2025.
b/ Projection based on microsimulation model that accounts for differences in sectoral growth, food and nonfood inflation.

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59

Apr 23

MAURITIUS

Key conditions andchallenges

Table 1

2022

Population, million

1.3

GDP, current US$ billion

12.7

GDP per capita, current US$

10062.7
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).

Growth is expected to decelerate to 4.7
percent in 2023 from 8.3 percent in 2022,
negatively impacted by lower global demand. Inflation will begin to ease after
reaching 10.8 percent in 2022, the highestin over a decade. Strengthening macrofiscal institutions and pursuing fiscal
consolidation will be essential to maintain debt sustainability. Addressing skill
shortages and developing knowledgebased sectors would support the transition to high-income country status overthe medium term. Poverty is falling again
after COVID-19 reversed recent gains.

Mauritius sustained spectacular growthsince its independence in 1968. It briefly
reached high-income country status in July 2020 (based on 2019 data), before
falling back into the upper-middle-income category in July 2021 as real GDP
plunged by 14.6 percentage points in 2020
amid the COVID-19 pandemic. Nevertheless, over the decade that preceded the
pandemic, several interrelated structural
challenges rendered the country’s growthtrajectory more fragile. These include
stagnating private investment, sustained
loss of export competitiveness, skills
shortages coexisting with high structural
unemployment, rising inequality, andmounting pressure on public financesfrom high and increasing social security
spending driven by the aging population,
leading to persistent fiscal deficits and a
growing public debt-to-GDP ratio.
The government’s swift response to the
COVID-19 shock was successful in controlling the public health emergency and protecting livelihoods, but came at a high fiscal cost. Public debt spiked despite a MUR
55 billion (12.3 percent of GDP) non-refundable transfer to the government fromthe Bank of Mauritius in FY2020/21, which
followed a previous MUR 18 billion transfer (3.5 percent of GDP) under the FY2019/20 budget. The central bank’s involvement
in fiscal policy, both directly and throughthe Mauritius Investment Corporation(MIC), has weakened the separation of
institutional mandates while increasing
contingent liabilities.
Disproportionately low labor market participation among young people andwomen remains a constraint on more inclusive growth. Over 50,000 young people
aged 16 to 24 are neither working nor
studying. Additionally, only 43 percent of
women actively participate in the labor
force, whereas the average for men is 68
percent. While 57 percent of women withhigher education participate in the labor
force, only 38 percent of those who completed primary school or less are active.
Women were disproportionately displaced
from the labor force by the COVID-19 pandemic and their return has been challenging for those with lower education levels.

Recent developments
GDP grew by an estimated 8.3 percent in
2022, supported by the strong tourism recovery despite headwinds from the Omicron variant wave and Russia’s invasion of
Ukraine. Arrivals totaled 997,290 in 2022,
up from 179,780 in 2021. The average stay
duration and spending by visitors also increased. Nevertheless, arrivals are still almost 30 percent below pre-pandemic levels. Total exports increased by 24 percent
in 2022 compared to 2021, whereas imports
increased by 36.1 percent, driving an increase in the current account deficit from
13.2 percent in 2021 to 14.2 percent in 2022.
Headline inflation rose from 4 percent in
2021 to 10.8 percent in 2022 – the highest in

FIGURE 1 Mauritius / General government balance anddebt

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

Percent of GDP
0
-2
-4
-6
-8
-10
-12
-14
-16
-18
-20
2013/14

Poverty rate (%)

2016/172019/202022/23f

Percent of GDP
100
90
80
70
60
50
40
30
20
10
0
2025/26f

Real GDP per capita (constant LCU)

25

500000450000204000003500001530000025000010200000150000510000050000

0General government balance (lhs)
Primary balance (lhs)
General government debt (rhs)02006 2008 2010 2012 2014 2016 2018 2020 2022 2024
Lower middle-income pov. rate
Real GDP pc

Sources: Statistics Mauritius, World Bank staff estimates.

Source: World Bank. Notes: see Table 2.

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60

Apr 23Upper middle-income pov. rateover a decade – driven by external supply
shocks stemming from the war in Ukraine,
which increased the prices of energy andfood products, of which Mauritius is a net
importer. Seeking to control inflation, thecentral bank hiked the key repo rate fivetimes between March and December 2022
by a cumulative 265 basis points, reaching
4.5 percent. Effective January 16, 2023, thecentral bank introduced a new monetary
policy framework with a flexible inflationtargeting regime, which is expected tostrengthen the effectiveness of monetary
policy by enhancing its transmission mechanism. Gross official international reserves
remain broadly adequate, standing at 16.1
months of imports in December 2022.
The fiscal deficit decreased from 19.1 percent of GDP in FY20/21 to 8 percent in FY21/
22 aided by the sale of public shares of Airport Holdings Ltd to MIC in December 2021
for MUR 13 billion (2.7 percent of GDP),
which helped lower the borrowing requirement. The recovery of GDP also prompteda strong rebound of tax receipts, while theunwinding of COVID-19 support measures
lowered public expenditures.
Poverty (upper-middle-income country
threshold of US$6.85 a day, 2017 PPP) fell

from 19 percent to 11 percent between 2012
and 2019. However, given the dramatic
contraction of GDP in 2020, poverty is projected to have increased by over 5 percentage points and fallen down to around 13
percent by 2022.

OutlookGDP growth is expected to decelerate to
4.7 percent in 2023, negatively impacted by the slowdown in global economic
growth, before converging to its longterm trend over the medium term. Inflation is expected to moderate progressively, tamed by tightening monetary conditions in major trading partners, while therollout of the new monetary policy framework should aid in anchoring domestic
inflation expectations.
The current account deficit is projected todecrease to 8.7 percent of GDP in 2023 ascommodity prices normalize and exports
continue to recover, gradually narrowing
over the medium term, assuming a continued recovery in tourism and efforts tostrengthen export competitiveness.

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(annual percent change unless indicated otherwise)

a

2020
-14.6
-15.3
-1.0
-25.8
-28.7
-28.6

2021
3.5
3.0
-1.8
13.9
11.6
7.7

2022e
8.3
3.5
2.6
6.0
37.0
22.9

2023f
4.7
3.1
-0.5
7.0
9.7
6.8

2024f
4.1
3.4
1.6
2.9
9.3
7.2

2025f
3.6
2.6
1.5
2.8
9.0
7.0

-14.1
-1.9
-19.7
-13.2

3.8
7.2
10.9
1.9

8.3
2.9
5.5
9.3

4.7
3.2
3.6
5.0

4.1
3.0
3.4
4.4

3.6
1.9
2.3
4.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)
Fiscal Balance (% of GDP)
Revenues (% of GDP)The fiscal deficit is expected to decrease
to 5.5 percent in FY22/23, aided by theunwinding of COVID-19 support measures, although the phasing in of theContribution Sociale Généralisée in FY23/
24 will cause a temporary rise. Public
debt should continue to gradually decrease to around 83.5 percent of GDP
over the medium term, assuming a progressive fiscal consolidation supported by
improved efficiency of public spending
and revenue collection, the sale of nonstrategic assets, and the introduction of
new revenue raising measures.
The outlook is subject to significant
downside risks. As the rebound of
tourism tapers off, growth could becomesluggish in the absence of dynamic new
growth sectors. Escalation of global
geopolitical tensions and new COVID-19
waves could further disrupt global supply chains, weighing down growth andfueling inflation. Strengthening macro-fiscal institutions and supporting fiscal discipline, including through pension reform, will be essential to maintain debt
sustainability and control contingent liabilities, providing the foundation to regain and sustain high-income status.

2.5

4.0

10.8

9.8

7.0

5.3

-8.8
-111.7

-13.2
31.3

-14.2
18.0

-8.7
29.6

-6.9
29.7

-6.3
29.6

-19.1
22.0
96.3
-16.3

-8.0
25.9
97.1
-5.2

-5.5
25.4
87.4
-3.1

-7.5
24.6
84.5
-5.3

-5.1
24.3
83.6
-3.1

-4.3
24.1
83.2
-2.3

2.3
16.5

2.1
15.3

1.7
12.9

1.5
11.4

1.2
10.1

1.1
9.1

-13.6
62.4

6.3
60.7

3.7
60.8

3.2
60.6

2.2
60.2

2.2
59.7

b

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.
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: 2018-2022. Forecasts are from 2023 to 2025.
d/ 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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Apr 23

MOZAMBIQUE
Table 1

Key conditions andchallenges

2022

Population, million

33.0

GDP, current US$ billion

17.9

GDP per capita, current US$

543.5

International poverty rate ($2.15)

a

64.6

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

a

a

83.1
54.0

School enrollment, primary (% gross)

b

118.4

b

61.2

Total GHG emissions (mtCO2e)

109.4

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).

Economic recovery has strengthened,
growth reached 4.1 percent in 2022, driven by strong export performance andservices, as mobility fully resumed.
Growth is expected to accelerate further
in the medium term, supported by liquefied natural gas (LNG) production andgood agricultural performance. As a result, poverty is projected to fall from 64.3
percent in 2022 to 60.6 percent by 2025.
However, medium-term prospects are
subject to substantial downside risks, including Russia’s invasion of Ukraine,natural hazards, and conflict in the north.

Economic growth slowed down in recent
years owing to multiple shocks, including
the hidden debt crisis, the escalation of
insurgency in northern Mozambique,tropical cyclones, and the COVID-19 pandemic. The country is endowed with richnatural resources, but widespread poverty and inequality, vulnerability to climate
shocks, and fragility and conflict pose
substantial development challenges. The
economy’s dual focus on labor-intensive,
low-productivity agriculture and capitalintensive extractives, with weak sectoral
links, constraints inclusive development.
About two thirds of the population remain poor, and inequality is among thehighest in Sub-Saharan Africa.
With over half a million people entering thelabor force but only 25,000 new formal jobs
each year, creating more and better jobs is apressing need for Mozambique. However,the private sector’s potential to create jobs
and transform the economy is hampered byregulatory bottlenecks, large infrastructure
deficits, and the high cost of credit. Lending
interest rates in Mozambique are among thehighest in Sub-Saharan Africa, reflecting athin financial sector, rising government domestic borrowing, and high credit risks. The
global economic slowdown and elevated inflation led to a further rise in the cost of credit, limiting growth opportunities outside extractives. Mozambique is at high risk of debt
distress, with the country lacking access tointernational capital markets, and concessional financing remains limited. The government’s capacity to finance development
is heavily constrained, worsened by wage,
pension, and debt-service costs that absorb
90 percent of total revenues.
Mozambique needs to diversify its sourcesof growth and jobs. Sustained, broadbased, and inclusive growth will requireraising agricultural productivity and accelerating economic transformation by bolstering the services sector and strengthening intersectoral links. Policy priorities include enhancing macroeconomic stability,
improving governance, strengthening resilience to shocks, and leveraging private
sector potential. In the short to medium
term, Mozambique needs to improve thebusiness environment, expand private financing, and enhance labor market performance. Supporting access to skilled labor
requires alleviating restrictions on the recruitment of foreign labor and encouraging knowledge transfer programs.

Recent developments
The economy is recovering from the pandemic, with growth increasing from 2.3
percent in 2021 to 4.1 percent in 2022. Services and agriculture performed well,thanks to higher farm productivity and thefull resumption of mobility. Increased external demand and prices for Mozambique’s key export commodities (notably,coal and aluminum) have supported therecovery further. However, inflation hit afive-year high as global fuel and food

FIGURE 1 Mozambique / Real GDP growth andcontributions to real GDP growth

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

Percent, percentage points
10

Poverty rate (%)

Real GDP per capita (constant LCU)

100

25000

90

8

80

6

70

4

60

20000
15000

50
2

40

10000

30

0

20

-2

5000

10

-4

0
2014
2016
Agriculture
Services

2018

2020e
Extractives
Tax

2022e

2024f
ManufacturingGDP02008 2010 2012 2014 2016 2018 2020 2022 2024
International poverty rate
Real GDP pc

Source: World Bank estimates.

Source: World Bank. Notes: see Table 2.

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62

Apr 23Lower middle-income pov. rate

prices surged, and adverse weather reduced domestic food production, disproportionally affecting the poor. In responseto the inflation hike, the Bank of Mozambique raised policy interest rates by 400
basis points to 17.3 percent in 2022. The
nominal and real effective exchange rates
remained stable, reflecting a comfortablesupply of foreign currency. Low per capita
income growth and high inflation have undermined poverty reduction, with thenumber of poor rising by half a million between 2021 and 2022.
Expenditure pressures persist owing tohigher spending associated with ongoingwage bill reforms, debt service, and socialtransfers. The overall fiscal deficit increased from 4.8 percent of GDP in 2021
to 5.9 percent in 2022. Revenue performance remains strong thanks to improved income tax collection, and coupled with the under-execution of capitalspending and budget support, moderated
fiscal pressures. Public debt has been declining, but domestic debt has continued
to rise, with the government resorting to
the expensive domestic debt market tocover financing needs.
The current account deficit (CAD) increased from an average of 23.6 percent of
GDP over 2017-21 to 36 percent in 2022,
reflecting LNG equipment imports, andhigher fuel and food import bills. The external financing gap was covered by WorldBank Development Policy Financing, International Monetary Fund credits, debt,
and a drawdown in reserves. Gross international reserves fell from US$3.3 billion
in 2021 to US$2.5 billion (equivalent to 3.4
months of non-megaproject imports), as
the central bank covered foreign currency
needs for fuel imports.

OutlookMedium-term prospects remain positive,
but downside risks are substantial. RealGDP growth is expected to accelerate, averaging 6.2 percent between 2023-2025 as
the offshore Coral South LNG terminal
reaches full capacity and the Area 1 LNG
project resumes. High commodity prices
will continue to favor export growth. As
international oil prices decline, inflation is
also projected to decline, averaging 7.4
percent between 2023 and 2025. Poverty is
projected to fall from 64.3 to 63.5 percent
between 2022 and 2023. Downside risks,
including a protracted war in Ukraine, acontinued rise in fuel prices, and natural
hazards, could lower medium-term GDP
growth to 4.5 percent.

TABLE 2 Mozambique / Macro poverty outlook indicators

As revenue grows, the fiscal deficit is projected to decline to an average of 3.8 percent between 2023 and 2025. In the shortterm, revenue increases will be underpinned by collections from LNG resource
revenue and increased grants. The fiscal
outlook also hinges on successfully implementing the fiscal consolidation program.
However, considerable challenges remain,
notably the upfront costs of the ongoingwage bill reform and elections in 2024. If
the wage bill continues to grow at the current pace, the overall fiscal deficit could
reach 5 percent of GDP in the medium
term. Unplanned fiscal financing needs
will likely be met by domestic financing,
adding to the high debt burden. The
country will remain at high risk of debt
distress, but debt is deemed sustainable
in a forward-looking sense.
The CAD is poised to increase, projected at29.3 percent of GDP in the medium term, as
LNG projects advance. Total imports ofgoods are expected to average 45 percent of
GDP over 2023-25, from 30 percent in
2019-21, largely due to LNG-related imports. Gas exports will partly offset this increase. Trade credits and foreign direct investment will continue to be the main financing sources for the CAD. Gross reserves
are expected to stay at the equivalent of 4months of imports, excluding megaprojects.

(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

2020
-1.2
-2.2
-19.1
60.9
-14.9
0.0

2021
2.3
17.3
-7.8
32.5
23.8
37.2

2022e
4.1
2.9
17.2
-6.4
10.2
1.9

2023f
5.0
0.9
-18.9
10.3
19.5
3.3

2024f
8.3
13.1
-3.9
2.5
4.7
4.1

2025f
5.3
4.4
-4.0
10.5
5.1
5.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-1.8
3.6
-5.7
-2.9

2.3
3.7
1.6
1.9

4.1
4.4
3.8
4.2

5.0
4.5
9.4
3.4

8.3
3.4
33.3
0.5

5.3
3.9
13.0
1.8

Inflation (Consumer Price Index)

3.1

5.7

9.8

7.3

7.5

7.4

-27.4
21.5

-22.8
32.2

-36.0
10.5

-14.5
18.9

-34.5
16.9

-38.8
11.6

-5.3
27.7
118.9
-2.2

-4.8
27.0
106.4
-2.1

-5.9
28.9
102.7
-2.4

-4.4
26.8
101.6
-1.4

-3.7
25.7
101.2
-0.6

-3.3
26.9
100.2
-0.6

64.5
83.0

64.7
83.2

64.3
82.9

63.5
82.4

61.7
81.2

60.6
80.5

1.0
8.5

1.4
9.2

0.0
8.7

1.0
8.8

2.9
10.1

2.7
11.1

Current Account Balance (% of GDP)Net Foreign Direct Investment Inflow (% of GDP)
Fiscal Balance (% of GDP)
Revenues (% 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.
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: 2015-2022. Forecasts are from 2023 to 2025.
c/ Projection using neutral distribution (2014) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU.
MPO

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Apr 23

NAMIBIA

Key conditions andchallenges

Table 1

2022

Population, million

2.6

GDP, current US$ billion

12.1

GDP per capita, current US$

4732.6

International 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

125.7

b

62.8

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 (2021); Life expectancy(2020).

Boosted by the mining sector, Namibia’s
economy expanded by 3.5 percent in 2022.
In 2023, the economic recovery is expected
to continue at a slower pace amid negative
spillovers from Russia’s invasion of
Ukraine and uncertainty about commodity
prices. Planned investments in green hydrogen and mining could boost growth in
the coming years. The population living on
less than US$2.15 per day is estimated at
19 percent for 2023.

Namibia’s economy was already constrained by structural problems before the
COVID-19 pandemic, including weaknesses in the business environment and skills
mismatches in the labor market. Its dependence on mineral extraction and exports aswell as on agriculture has made it vulnerable to global commodity price shifts andclimate shocks and droughts. As a resultof these vulnerabilities, the country’s economy contracted by an average of 0.2 percent between 2016 and 2019. Poverty remains high for the country’s level of development, and it is one of the most unequal countries in the world. Unemployment is persistently high amid relatively
weak job creation in the more-productive
formal sector that has not been sufficient tocompensate for the loss of jobs in the stagnating agricultural sector.
The lingering impacts of the pandemic,
which led to a sharp economic downturnin 2020, and the ongoing war in Ukraine
continue to weigh on the country’s
growth performance. The continuing recovery presents an opportunity for
Namibia to transition toward more sustainable growth by implementing structural reforms to boost productivity andcompetitiveness and create new and higher-skilled jobs. With adequate management, the projected large investments inthe mining and energy sectors can significantly advance these efforts. Structuralreforms are needed in an environment
where fiscal balances are vulnerable toexternal shocks and volatile Southern
African Customs Union (SACU) revenues, while monetary policy is constrained by the Namibian dollar’s peg tothe South African rand.

Recent developments
Growth in 2022 reached 3.5 percent, driven by mining (especially the growth of
diamond production), manufacturing,and the continued recovery of services.
Diamond production increased by 46 percent, boosted by the use of Debmarine’s
new recovery vessel. Many services sectors, such as trade and finance, which
rely on face-to-face interaction, continued
to recover following the removal of allremaining pandemic-related restrictions
mid-year. On top of both droughts andflooding, agricultural production has
been hampered by higher fertilizer prices
due to the war in Ukraine.
Stronger-than-expected growth and domestic revenue overperformance helped
improve the fiscal position in 2022, despitea decrease in SACU receipts. The overall
fiscal deficit was estimated at 5.3 percent ofGDP, down from 8.8 percent in 2021. Public debt remained relatively high, at an estimated 73.8 percent of GDP in 2022. On theexternal side, exports were boosted by increasing diamond and other mineral production, but the current account deteriorated substantially due to the high prices
of imported fuels. The deficit was partly

FIGURE 1 Namibia / Real GDP growth, fiscal balance, andpublic debt

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

Percent of GDP

Poverty rate (%)

Percentage of GDP

100

10

80

90

8

70

80

6

70

4

60

60

2

50

50

0

40

40

-2

30

-4

20

-6

10

-8

10

-10

0

0
2015

2017

Public debt

2019

2021

Real GDP growth (rhs)2023f

Real GDP per capita (constant LCU)

60000
50000
40000
30000

30

20000

20

2025f

70000

10000
0
2009 2011 2013 2015 2017 2019 2021 2023 2025
International poverty rate
Upper middle-income pov. rate

Fiscal balance (rhs)

Source: World Bank staff estimates.

Source: World Bank. Note: see Table 2.

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Apr 23Lower middle-income pov. rate
Real GDP pc

financed by higher foreign direct investment inflows, mainly in the mining and oil
exploration sectors.
Despite the economic recovery in 2022,
the socioeconomic situation did not improve significantly. Employment is estimated to remain below pre-pandemic
levels as labor-intensive manufacturing
subsectors have added jobs relatively
slowly. Spurred by higher fuel prices, inflation increased to a five-year high of
6.1 percent in 2022, disproportionately affecting the most vulnerable and decreasing consumers’ real income. Poverty rates
are estimated to remain above pre-pandemic levels, with an estimated 19.4 percent of the population living on less than
US$2.15 per day.

OutlookGDP growth is projected at 2.4 percent in
2023 and is expected to average just under
2 percent in the outer years, supported by
the recovery of construction, services, andprivate investment. The rebound from thepandemic is expected to wane gradually
over time, driven by the projected slowdown in the global economy and volatilecommodity prices. Inflationary pressures
should ease following the monetary tightening both globally and in the Common
Monetary Area and diminishing increases
in imported energy and food prices.
The current account deficit is projected to
improve, driven by favorable forecasts forexported minerals and lower imported fuel prices, as well as increasing SACU revenues. The deficit is expected to persist
over the medium term and is vulnerable tochanges in the prices of minerals and energy. Planned new investments in green hydrogen could boost foreign direct investment and growth over the medium term,
though there is uncertainty about feasibility and timelines.
Fiscal consolidation is expected to continue, and small primary surpluses areprojected for the next three years. On
the revenue side, such efforts would beboosted by increasing SACU receipts,
which are expected to increase by 71 percent from 2022 to 2023 and an improved
outlook for revenues, supported by theongoing economic recovery and tax administration reforms. On the expenditureside, the government is expected to manage operational outlays more effectively, including containing the public sector
wage bill relative to GDP. Expenditure

TABLE 2 Namibia / Macro poverty outlook indicators

containment policies are expected mostly
in the outer years and would largely preserve development expenditure and social protection programs. Debt is forecast
to peak at about 77 percent of GDP in
2024 and decrease thereafter. Additional interest rate increases would raise thecost of financing the deficit and servicing Namibia’s public debt, making fiscal consolidation more difficult. Containing the public sector wage bill and other spending items through more effective expenditure management in the outer years may be challenging amid very
high unemployment and other socioeconomic problems. Furthermore, if downside risks to economic conditions are realized, revenue outturns may be below
ambitious targets amid rising pressureson spending.
Protecting the most vulnerable throughwell-targeted social spending programs
and implementing structural reforms tostimulate private sector investment andcreate productive jobs will be critical to put
Namibia on a sustainable growth path.
However, as the impacts of policies likeinvestment in skills development are expected to take time to affect people’s livelihoods, the poverty rate is expected to only
decline slightly over the medium term.

(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

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
3.5
8.5
-0.3
4.9
18.4
16.0

2023f
2.4
3.0
3.8
5.0
2.8
4.7

2024f
1.7
2.8
-1.3
5.4
3.5
3.5

2025f
2.1
2.7
-1.8
5.6
3.9
3.2

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-6.6
6.3
-12.9
-5.3

1.8
2.0
1.4
1.9

3.5
3.0
7.6
1.8

2.4
2.0
3.5
1.9

1.7
2.0
2.1
1.5

2.1
2.0
2.1
2.1

Inflation (Consumer Price Index)

2.2

3.6

6.1

5.3

4.5

4.5

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

2.8
-1.9

-9.8
5.2

-11.5
7.5

-9.3
4.2

-8.0
4.3

-7.8
4.2

Fiscal Balance (% of GDP)
Revenues (% of GDP)

-8.9
33.4
70.0
-4.7

-8.8
29.9
73.5
-4.5

-5.3
32.6
73.8
-0.6

-4.7
34.7
76.8
0.3

-4.4
33.6
77.1
0.4

-4.4
32.0
76.5
0.3

20.2
38.7
62.7

19.9
38.3
62.5

19.4
37.5
62.0

19.0
37.2
61.7

18.9
37.2
61.6

18.9
37.1
61.5

-1.5
18.0

-0.6
18.2

0.1
18.0

3.1
18.7

2.9
18.7

0.4
19.0

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.
a/ Refers to Public and Publicly Guaranteed debt.
b/ Calculations based on 2015-NHIES. Actual data: 2015. Nowcast: 2016-2022. Forecasts are from 2023 to 2025.
c/ 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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Apr 23

NIGERKey conditions andchallenges

Table 1

2022

Population, million

26.2

GDP, current US$ billion

17.1

GDP per capita, current US$

654.3

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

64.8

b

61.5

Total GHG emissions (mtCO2e)49.4Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ WDI for School enrollment (2021); Life expectancy(2020).

After a slowdown in 2021 GDP growth
accelerated to 11.5 percent in 2022 (7.6
percent in per capita terms) as agricultural production increased, while the extreme poverty rate declined to 46.9 percent. Growth is expected to remain robust
at 6.9 percent in 2023 and then accelerate
as oil revenues come onstream. Growthand poverty reduction are subject to significant downside risks including delaysin oil production, climate-related shocks,
and insecurity.

Niger’s economy is agriculture-dependentand remains vulnerable to climate-related
shocks. This is reflected in a robust but
volatile growth trajectory that ranged between 2.4 and 10.5 percent from 2011
to 2019. As growth has been associatedwith limited improvements in productivity and high population growth (averaging 3.9 percent over 2010-19) per capita
GDP remains at US$640 in 2022, towards
the bottom of the world’s income distribution. Around 50 percent of the population lives in extreme poverty, aggravatedby gender disparities.
After the COVID-19 pandemic and theglobal economic downturn, the country
has continued to be shaken by natural disasters, worsening regional and domestic
insecurity, and to a more limited extent
by Russia’s invasion of Ukraine. Deteriorating regional security affects important
agricultural areas, and addressing insecurity is key to improving economic performance, public finances, service delivery,
and access to markets.

Recent developments
After the lackluster GDP growth in 2021
(1.4 percent) with a decline of 2.3 percent
in per capita terms, economic growth isestimated to have jumped to 11.5 percent

in 2022 (7.6 percent in per capita terms)
as agriculture production increased by 73
percent following a better-than-averagerainy season and the expansion of irrigatedland, more than offsetting the decline in
the extractive and manufacturing activity.
The service sector benefited from the expansionary fiscal policy and the construction of the pipeline boosting market services and transportation.
Average annual inflation reached a 10-year
high of 4.2 percent in 2022, up from 3.8
percent in 2021, resulting from continued
pressures on the domestic food market andglobal commodity prices. Nevertheless,
Niger had the lowest inflation rate in the
WAEMU region.
The extreme poverty rate (less than $2.15 aday per capita in PPP) is expected to have declined to 46.9 percent in 2022 from 53.3 percent in 2021, as growth, particularly in agriculture, recovers. The number of extreme
poor is projected at 12.3 million in 2022, with
important regional differences. High foodinflation coupled with insecurity disrupted
livelihoods and markets in some regions(Tillabéry, Diffa, Tahoua, and Maradi) andnegatively affected household food security. This situation was exacerbated by flooding, dry spells, and limited access to inputs,
which are expected to have affected 15 percent of farming villages and led to declines intheir agricultural production.
To counter inflation across WAEMU
countries, the Central Bank of West
African States (BCEAO) raised policy interest rates by a cumulative 75 basis
points in 2022 (to 2.75 percent for liquidity calls and 4.75 percent for the marginal lending facility). BCEAO will likely

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

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

Percent, percentage points
15

Poverty rate (%)

10

100

5

80

Real GDP per capita (constant LCU)

120

40000035000030000025000060

020000015000040-5100000
20

50000

-10
2020
2021
Gov. cons.
Inventories
Statistical disc.

2022
2023
Exports
Private cons.
GDP

2024
2025
GFCF
Imports002007 2009 2011 2013 2015 2017 2019 2021 2023 2025
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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Real GDP pc

need to continue tightening in 2023 in linewith other major central banks, as foreignexchange reserves have declined, and inflation remains well above the target range of
1-3 percent. Furthermore, delaying fiscal
adjustments towards the regional fiscal
deficit target of below 3 percent of GDP by2025 could exacerbate debt sustainability
risks in some countries, while increasing regional financing needs, reducing FX reserve
buffers, and elevating inflationary risks.
The fiscal deficit increased to 6.9 percent
of GDP in 2022 to accommodate additional social spending to address food insecurity, an emergency plan to support
agriculture and livestock, and additional
security spending. The fiscal deficit has
been largely financed by external loans(3.8 percent of GDP) and debt issuance on
the regional market (3 percent of GDP).
The current account deficit widened to14.6 percent of GDP amid food and extractive projects-related imports.
As a result of the widening fiscal deficit
and the CFAF depreciation vis-à-vis the US
dollar, public debt increased to 56 percent
of GDP – an increase of 16 percentage
points since 2019.

OutlookReal GDP growth is expected to be in linewith the potential, at 6.9 percent (3 percent
per capita)\ in 2023, and to further rise in
2024 (12.5 percent) due to the start of largescale oil production and exports, continued donors’ support and an economic reform program designed to increase overall
productivity and strengthen economic
governance (including investment of rents
from the petroleum sector and the sustained flow of international aid to improveaccess to basic services, infrastructure, andfinancial inclusion) bringing GDP per capita to a level 15 percent higher than in 2021.
Inflation is expected to fall to 3.2 percent
in 2023, and to 2.8 percent in 2024 as foodinflation moderates, before picking up
slightly in 2025 driven by additional demand fueled by oil revenues.
The poverty headcount rate is projected to
decline by almost 1.7 percentage points by
2025, in line with higher non-oil growth,moderate agricultural growth and lower inflation in 2023 and 2024. Despite projected

TABLE 2 Niger / Macro poverty outlook indicators

GDP growth being above Niger’s population growth rate of 3.8 percent, the absolute
number of poor will remain roughly constant at 13 million between 2021 and 2024.
An ambitious fiscal adjustment aims tobring the fiscal deficit down to 5.3 percent
in 2023, supported by an IMF program,and to 3 percent by 2025 through measures to improve the structurally low level of domestic non-oil revenues. This
would facilitate putting the debt-to-GDP
ratio back onto a declining trajectory from2024. With higher food imports, the current account deficit will grow to 16.2 percent before narrowing to 10.7 percent
with the onset of oil exports.
This outlook is subject to a high degree of
uncertainty and multiple downside risks,
including intensified climate change-related shocks (which require improvements
in disaster risk management and resilience through adaptation investments),
deterioration of the security situation
which can drain additional resources,
dampening global oil prices and/or delaysin oil production expansion, and delays
to key structural economic reforms andcomplementary investments.

(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

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
11.5
3.2
0.6
33.0
0.0
5.1

2023f
6.9
4.2
1.9
18.5
19.4
17.1

2024f
12.5
5.0
19.0
1.3
90.6
13.7

2025f
9.1
5.6
15.0
7.7
17.5
9.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

4.2
7.7
1.9
2.1

1.0
-5.1
4.1
5.4

11.5
27.0
-0.7
4.5

6.9
5.1
7.5
8.5

12.5
5.2
27.7
12.1

9.1
5.2
9.6
12.6

Inflation (Consumer Price Index)

2.8

3.8

4.2

3.2

2.8

3.4

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

-13.2
2.5

-14.4
3.3

-14.6
4.1

-16.2
4.1

-10.7
4.1

-7.5
3.8

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

-5.4
17.4
45.0
-4.4

-6.1
18.2
51.3
-5.0

-6.9
15.0
56.0
-5.5

-5.3
17.4
57.5
-3.9

-4.0
19.6
54.0
-2.7

-3.0
19.2
48.8
-1.8

48.6
80.2
94.8

53.3
82.1
95.1

46.9
80.1
95.1

47.2
80.3
95.0

45.9
79.0
94.6

45.2
78.4
94.4

4.2
6.9

3.8
6.8

4.0
6.8

4.2
7.0

4.6
7.4

4.4
7.6

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.
a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
b/ Projection based on microsimulation model that accounts for differences in sectoral growth, food and nonfood inflation.

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NIGERIA

Key conditions andchallenges

Table 1

2022

Population, million

218.5

GDP, current US$ billion

477.4

GDP per capita, current US$

2184.4

National poverty rate
Gini index

a

41.1

b

35.1

School enrollment, primary (% gross)

c

85.7

c

52.9

Total GHG emissions (mtCO2e)

383.2Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2022).
b/ Most recent value (2018), 2017 PPPs.
c/ WDI for School enrollment (2019); Life expectancy(2020).

Oil price booms have previously supported the Nigerian economy, but thishas not been the case since 2021. Instead, macroeconomic stability has weakened amidst declining oil production,
costly fuel subsidies, exchange rate distortions, and monetization of the fiscal
deficit. The deteriorating economic environment is leaving millions of Nigerians
in poverty. Risks are tilted to the downside given the lack of macro-fiscal reforms, the naira demonetization, and an
uncertain external outlook.

Macroeconomic stability has weakened
considerably due to multiple FX rates,
high and increasing inflation, rising fiscal pressures, and declining forex reserves. Nigeria’s fiscal position has deteriorated since 2015 due to declining
oil revenues and rising expenditures,
resulting in persistently high fiscal
deficits. To finance the growing deficit,
the government has resorted increasingly to costly financing from the central
bank, which in turn has increased interest costs, crowding out private sector
credit, and contributing to inflation.
Nigeria’s chronically high inflation has increased since 2019, especially for fooditems, eroding the purchasing power ofpoor and vulnerable Nigerians and increasing poverty. The effectiveness ofmonetary policy is compromised by multiple FX windows, the central bank’s provision of development finance at subsidized
rates, and monetization of the fiscal deficit.
Persistent structural economic issues(volatile growth, low private investment,
low and inefficient public spending, due
to low revenue collection, and low social
development outcomes leading to low
productivity) have prevented any meaningful acceleration of growth. Insecurity
remains widespread, with more violent
conflict events occurring across the country, adversely impacting private investment and growth.

FIGURE 1 Nigeria / Oil price, Government revenues, andreal GDP growth

In 2022, oil revenues, the fiscal deficit
outturn, FX reserves, and economic
growth decoupled from the cycle of higher global oil prices. GDP growth decelerated from 3.6 percent in 2021 to 3.3 percent in 2022. Growth was driven by manufacturing, construction, and most services. In contrast, the oil sector shrankby 19.2 percent. From the demand side,
growth was driven by private consumption and investment.
Inflation reached an annual average 18.8
percent in 2022, a 21-year high. Food inflation in 2022 is estimated to have pushed
five million Nigerians into poverty. The increase in inflation resulted from higher
global commodity prices, the sharp depreciation of the parallel market exchange
rate, floods that impacted several states,

Percent, percentage points
5
4

90

15

Recent developments

FIGURE 2 Nigeria / Real GDP growth and sectoral
contributions to real GDP growth

US$/bbl110

Percent, percent of GDP
20

The oil sector, historically the main contributor to fiscal revenues and accounting for about 90 percent of total exports,
has underperformed since 2020. Declining oil production and the mounting
cost of the petrol subsidy have prevented Nigeria from reaping the benefits ofhigher global oil prices. The weakness
in oil production stems from technicaland security challenges in the oil-producing Niger Delta region, aging infrastructure and inadequate investments inthe sector, and the Nigerian National
Petroleum Company’s (NNPC) delays inpaying for the government’s share ofcosts in joint-venture operations.

3

70
10

50

5

30

2
1
0

10
0

-1

-10

-5

-2

-30
2014

2016

2018

GDP growth
GDP growth projection
Oil price (rhs)

2020

2022

-3

2024

2020

Revenues
Revenues projection
Oil price projection (rhs)

Sources: WDI, NBS, and World Bank.

2021

68

Apr 232023f

Oil Industry

Services

GDP

Sources: NBS and World Bank.

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2022

Agriculture

2024f

2025f

Non-oil Industry

and the monetization of the fiscal deficit.
The central bank has increased the reference rate by 600 basis points since May
2022, but inflation continued risingthroughout the year. While banking sector indicators remain sound at the systemlevel, the deteriorating fiscal and external
environment could expose the financial
system to shocks that it lacks adequate
buffers to withstand.
The fiscal position deteriorated. In 2022,
the cost of the petrol subsidy increased
from 0.7 percent to 2.3 percent GDP. Low
non-oil revenues and high interest payments compounded fiscal pressures. The
fiscal deficit was estimated at 5.0 percent of
GDP in 2022, breaching the stipulated limit for federal fiscal deficit of 3 percent. Thishas kept the public debt stock at over 38
percent of GDP and pushed the debt service to revenue ratio from 83.2 percent in
2021 to 96.3 percent in 2022.
The current account balance recorded a
deficit of 0.3 percent of GDP in Q1-Q3
2022. The increase in crude oil exports
reflecting higher oil prices was outpacedby higher imports of refined petroleum
products and lower remittances andcapital inflows. As of December 2022,

FX reserves were enough to cover 6.9
months of imports, compared to 7.5
months in end-2021.

Outlook
Nigeria is in a more fragile position than
before the late 2021 global oil price boom.
Growth and poverty reduction have further been affected by cash scarcity in thecontext of the Naira redesign. The economy is projected to grow by an averageof 2.9 percent per year between 2023 and2025, only slightly above the population
growth rate of 2.4 percent. Growth will be
driven by services, trade, and manufacturing. Oil production is projected to remain
subdued in part because of inefficiencies
and insecurity.
With Nigeria’s population growth continuing to outpace poverty reduction, andpersistent high inflation, the number ofNigerians living below the national poverty line will rise by 13 million between 2019and 2025 in the baseline projection.
Fiscal and external pressures are expected
to persist due to rising global and domestic

TABLE 2 Nigeria / Macro poverty outlook indicatorsinterest rates and low oil revenues resulting from the moderation in oil prices andinability to significantly increase oil production. In the absence of significant FX
management reforms, international reserves are projected to remain stagnant.
Meanwhile, non-oil revenues will not increase as a share of GDP without significant tax revenue reforms. As a result, thefiscal deficit will remain above 5.0 percent
of GDP in 2023-2025.
Downside risks to Nigeria’s outlook haveintensified, with most of the risks comingfrom domestic policies, continued low oil
production, and heightened scarcity of foreign exchange and local currency. Fiscal
and debt pressures will increase if thepetrol subsidy is not phased out in June
2023, as envisaged in the 2023 Budget. The
authorities can strengthen the economy byrestoring macroeconomic stability throughreforms to (i) increase oil and non-oil revenues, (ii) tighten monetary policies to reduce inflation, and (iii) unify the multiple
FX windows and adopt a single, marketresponsive exchange rate. Increased insecurity as well as adverse climate change effects could further dampen the economic
outlook for Nigeria.

(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

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

2021
3.6
25.6
-34.0
4.7
-32.1
44.4

2022e
3.3
5.0
1.3
-6.8
5.4
4.0

2023f
2.8
2.4
-15.7
4.4
11.2
2.5

2024f
2.9
2.1
12.1
1.8
6.0
4.4

2025f
3.1
2.5
3.5
2.6
7.0
4.8

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-1.9
2.2
-5.8
-2.2

3.4
2.1
-0.5
5.6

3.1
1.9
-4.6
6.7

2.9
1.9
4.6
2.8

2.9
2.0
3.7
3.1

3.1
2.2
3.7
3.3

Inflation (Consumer Price Index)

13.2

17.0

18.8

16.5

13.5

11.5

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

-3.7
-0.2

-0.4
-0.3

0.0
0.1

0.7
-0.3

0.1
-0.4

0.0
-0.4

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

-5.1
6.5
36.0
-2.8

-6.3
6.9
38.8
-3.6

-5.0
6.4
38.6
-1.8

-5.4
6.0
39.3
-1.9

-5.3
6.7
40.8
-1.4

-5.8
6.4
42.2
-1.6

a,b

42.0

41.5

41.1

40.9

40.7

40.4

-0.2
36.3

4.2
37.3

4.0
38.0

2.6
37.9

3.0
37.9

3.3
38.0

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.
a/ Calculations based on 2018-LSS. Actual data: 2018. Nowcast: 2019-2021. Forecasts are from 2022 to 2025.
b/ 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 and international 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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RWANDAKey conditions andchallenges

Table 1

2022

Population, million

13.8

GDP, current US$ billion

12.6

GDP per capita, current US$

914.8

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

140.7

b

66.8

Total GHG emissions (mtCO2e)

7.2Life 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).

Rwanda’s economy has shown some resilience in 2022 growing about 8 percent,mainly driven by the recovery in tourismrelated sectors. However, high inflationpressures posed some risks to vulnerable
households. Despite higher inflows ofgrants and remittances, the current account deficit remained wide, affected by
global commodity market shocks. RealGDP growth is estimated at 6.2 percent
in 2023 and is projected to be 7.5 percent
on average in 2024–2025.

Rwanda has been among the fastest growing economies in the world for almost a
decade, averaging 7.2 percent over
2010–19. Capital accumulation, mostly
large-scale public investment, was themain growth driver. Limitations of this development model have become clear. Labor productivity and total factor productivity are low for its income level. Public
debt grew rapidly as well—more thantripling relative to GDP since 2010—raising concerns about its long-term sustainability. Since June 2020, Rwanda’s external and overall public debt distress isclassified as moderate. Inclusive growth
also remains a main challenge to Rwanda’s development ambitious targets, as
the poverty reduction momentum has
weakened in recent years.
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 flooding risks,
land degradation, and biodiversity loss.

Recent developments
After a strong recovery in 2021, Rwanda’s
economy encountered multi-faceted challenges. The economy experienced setbacks

stemming from the slowdown in global
growth and rising global inflation. Agriculture output underperformed due tounfavorable weather coupled with lower
use of fertilizers and other inputs—a consequence of higher prices linked to global
supply chain disruptions. Despite thesechallenges, Rwanda’s economy has
shown some resilience, and it is estimated to have expanded by about 8 percent in 2022 (Table 2). Spurred by the revival of tourism, the services sector drove
growth, while the industrial and agricultural sectors slowed down in 2022. Even
though employment indicators improvedin the third quarter to levels, similar to
those at the beginning of the pandemic, the unemployment rate of 24.3 percent
in November 2022 was 8.9 percentage
points higher than in November 2019, resulting in an increase of 85 percent in
the number of unemployed. Employmentoutcomes for women and youth weremore affected by the pandemic.
Inflation reached its highest level in overthirteen years—21.7 percent in the year to
November 2022—owing to rising global
commodity prices and the poor agricultural harvest. Food prices were the mostaffected inflation categories. Rising foodprices particularly burdened poor households and those in rural areas, who devote more than 70 percent of their budgets to food purchases. As inflationarypressures started mounting, the National
Bank of Rwanda (NBR) quickly tightened
its monetary policy. The NBR raised policy rate by a cumulative 250 basis points
between February 2022 and February
2023 to 7 percent (a level not seen since

FIGURE 1 Rwanda / Quarterly inflation and real GDP growth

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

Percent
25

Poverty rate (%)

20

90Real private consumption per capita (constant LCU)

100

7000006000008015705000001060400000

5

50

0
-5

40

3000003020000020-1010000010
0-15
2019Q1

2019Q4

2020Q3

Inflation

2021Q22022Q10
2010

2022Q4e

2012

2014

2016

2018

International poverty rate
Upper middle-income pov. rate

GDP growth

Source: World Bank staff estimates.

Source: World Bank. Notes: see Table 2.

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2020

2022

2024

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

June 2014). This led to increases in shortterm money market rates. The NBR took
additional measures to curb inflationpressures, such as the resumption of
mop-up operations since June 2022 andthe re-establishment of the reserve requirement ratio to the pre-COVID level of
5 percent in January 2023.
The current account deficit is estimated tohave declined from 10.9 percent of GDP
in 2021 to 10.6 percent in 2022, supportedby the recovery in tourism and strong reexports. Exports increased by 37.9 percent,driven by higher commodity prices and reexports to the DRC as pandemic restrictions were lifted. Increases in global prices
for oil and other commodities expanded
import payments by 25.1 percent in 2022.
Foreign direct investment and government
borrowing partially financed the current
account deficit, leading to a drawdown on
foreign reserves.
The government has begun consolidation
efforts to preserve fiscal space for development priorities. The overall deficit is estimated at 6.1 percent of GDI in 2022, one
percent lower than in 2022. Capital expenditure was lower by 0.6 percent of GDP,

while current expenses were consistent
with the recent trends. Reduction in fiscal
deficit has brought down the public debt
to 71.3 percent in 2022 from 73.3 percent
in 2021. Bonds and other commercial
loans account for 11.5 percent of the total
public debt.

OutlookGDP growth is expected to moderate to
6.2 percent in 2023 due to sluggishness ofthe global economy and external demand
as well as to elevated inflation but regain
momentum in 2024. GDP growth is projected to accelerate to 7.5 percent on average in 2024–2025 driven by the pickup
in construction of the new airport and thesubsequent boost to the services sector inline with global growth outlook and the
expected decline in inflation.
Inflationary pressures are expected to remain high in the first half of 2023 before
the inflation rate converges toward thetarget band toward the end of the year,
reflecting the monetary policy measures

TABLE 2 Rwanda / Macro poverty outlook indicators

undertaken. Persistently high food priceinflation could delay or even revert the
expected small poverty gains in the next
few years behind tapering growth in private consumption. Projected poverty reductions of 2 percentage points between
2022 and 2024 (from 47.4 to 45.3 percent)will only be enough to keep the number ofpoor constant given population growth.
The government plans to rationalize bothrecurrent non-wage spending and capitalbudgets to stabilize debt levels while safeguarding fiscal space for social and human capital spending. It is phasing out
the spending measures introduced during
the pandemic or that were financed by
the 2021 SDR increase, as well as tightly
controlling recurrent spending, dropping
underperforming public investment, introducing efficiencies, and strengthening
the oversight of state-owned enterprises.
The implementation of the Medium-Term
Revenue Strategy through tax policy reforms is also a major part of the fiscal
consolidation plan. Debt levels are expected to rise in the medium term as Rwanda
continues to rely on credit option, toughon concessional terms.

(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

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
8.1
6.2
6.6
13.9
31.5
22.8

2023f
6.2
3.5
-1.3
14.2
20.1
13.9

2024f
7.5
6.4
3.8
5.9
13.2
7.0

2025f
7.5
6.4
2.9
6.3
11.2
5.9

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-3.5
0.9
-4.2
-5.5

10.9
5.8
14.7
12.2

8.1
1.6
5.5
12.5

6.2
5.5
9.2
5.5

7.5
5.0
8.5
8.3

7.5
5.0
8.5
8.3

Inflation (Consumer Price Index)

7.7

0.8

13.9

7.9

5.0

5.0

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

-12.2
1.0

-10.9
1.9

-10.6
2.9

-12.4
3.1

-11.6
3.3

-10.7
3.6

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

-10.4
23.9
72.4
-8.8

-7.1
24.6
73.3
-5.2

-6.1
25.2
71.0
-3.9

-6.9
23.3
76.2
-5.0

-6.0
23.8
79.3
-4.3

-5.5
23.8
79.7
-3.9

51.1
77.6
92.1

49.0
76.3
91.7

47.4
75.3
91.4

46.9
74.9
91.3

45.3
73.8
90.9

43.6
72.8
90.6

-0.7
15.4

1.8
14.3

2.1
13.1

2.4
12.0

2.8
11.0

2.9
10.0

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.
a/ Calculations based on 2010-EICV-III and 2016-EICV-V. Actual data: 2016. Nowcast: 2017-2022. Forecasts are from 2023 to 2025.
b/ Projection using average elasticity (2010-2016) with pass-through = 0.7 based on private consumption per capita in constant LCU.

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Apr 23SÃO TOMÉ ANDPRÍNCIPE
Table 1

2022

Population, million

0.2GDP, current US$ billion

0.5

GDP per capita, current US$

2401.3

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

67.8

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/ Most recent WDI value (2020).

STP has faced severe macroeconomic imbalances. Growth stagnated amid successive shocks, most recently the impact ofRussia’s invasion of Ukraine, and recurrent energy crisis. Inflation spiked to 25
percent as a monetary-financed fiscal
deficit depleted foreign reserves. Measures
to restore macroeconomic stability included ceasing monetary financing and adjusting fuel prices. Delayed implementation of
structural reforms and an uncertain global
environment poses risks to outlook.

Key conditions andchallenges
São Tomé and Príncipe (STP) is a small island lower-middle income country (LMIC)
constrained by remoteness, a small private
sector, fragile institutions, and low humancapital. Growth has been driven by externally financed public spending, but a declining trend in external financing and low
domestic revenue mobilization have exposed the limitations of the Governmentexpenditure-led growth model. Underdeveloped infrastructures, especially unreliable electricity supply and low road density, constrain growth. Energy reforms areparamount to fiscal sustainability, toachieve transition to a cleaner and cheaper energy matrix and to enable private
sector growth.
Economic growth in recent years has beenhampered by persistent energy shortages,
the COVID-19 pandemic, climate shocks,
and high commodities prices triggered by
the war in Ukraine. Moreover, the politicaluncertainty caused by the legislative elections in 2022 resulted in lower external financing disbursements. The new government adopted measures to restore macroeconomic stability by ending monetary financing of the budget and adjusting fuelprices in early February. A new IMF program requested by the government is expected to support a fiscal adjustment program, including expenditure control andthe introduction of value-added tax (VAT)
in June 2023, and a tighter monetarystance to curb inflation and support thepeg to the Euro.
STP’s young and fast-growing population
lacks employment opportunities, heavily
relying on informal and subsistence activities. Low access to finance further limits
income-generating opportunities. Extreme
poverty remains high for STP’s income
levels, with about 15.4 percent of the population living on less than US$2.15 per day(in 2017 PPP terms), 44.6 percent on lessthan US$3.65 per day (the poverty line for
LMIC), and almost 20.6 percent facing
food insecurity.

Recent developments
Amid renewed shocks, growth declined
from 1.9 percent in 2021 to 0.9 percent
in 2022, reflecting persistent energy shortages and the burden of higher food andfuel prices driven by the war in Ukraine.
Due to high population growth, GDPper capita declined. The high cost of imported inputs such as seeds and fertilizers reduced agricultural production, as
did repeated flooding caused by heavy
rains. Industrial production suffered fromdelays in the execution of externally financed infrastructure projects, the highcost of fuel, and persistent blackouts.
Growth in 2022 was sustained mostly by
rebounding tourism, although activity remains below pre-pandemic levels.
The current account deficit, excluding
grants, is estimated to have widened to
22 percent of GDP due to higher costsof imports, in particular food, fuel, andFIGURE 1 São Tomé and Príncipe / Real GDP growth andcontributions to real GDP growth

FIGURE 2 São Tomé and Príncipe / Actual and projected
poverty rates and real GDP per capita

Percent (y/y)
8Poverty rate (%)

Real GDP per capita (constant LCU)

100

25000

90

6

80

20000

70

4

60
2

15000

50
40

0

10000

30
20

-2

5000

10
-4

0

2016 2017 2018 2019 2020 2021 2022f 2023f 2024f 2025f
Agriculture
Services

02010

Industry
Real GDP growth rate (rhs)

2012

2014

2016

2018

International poverty rate
Upper middle-income pov. rate

Sources: São Tomé and Príncipe authorities' data, IMF, World Bank.

Source: World Bank. Notes: see Table 2.

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2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

fertilizer, which was only partially offset
by services exports from the rebounding
tourism sector. Net international reserves
plummeted to a negative level in November 2022, threatening the currency peg tothe Euro before reserves were shored up
by an emergency loan in December. The
authorities are negotiating with Portugal
an additional disbursement of €40 million under a credit facility backing the exchange rate peg.
Fiscal expansion undermined macroeconomic stability. Domestic revenue collections suffered from the delayed implementation of revenue mobilization measuresand persistent energy shortages. Public expenditures increased, in part driven by theneed to respond to climate-related emergencies, but also by the public sector wage
bill, which increased by 22.9 percent. Consequently, the domestic primary deficit(excluding oil) is estimated to have increased from 3.1 percent in 2021 to 5.6 percent of GDP in 2022. Public debt is estimated at 92.3 percent of GDP.
By December 2022, inflation reached a historic high of 25.2 percent, largely driven
by pressures on prices of imported goods(such as food and fuel), fuel prices adjustments, and the monetary financing of the

fiscal deficit. Food inflation reached 29 percent, disproportionately affecting the poorest. The high inflation differential with theeuro area appreciated the real exchange
rate. The central bank tightened monetary
policy by increasing the reference ratefrom 9 to 10 percent in June 2022 and raising mandatory reserves requirements.

OutlookReal GDP growth is projected to reboundto 2.1 percent in 2023, sustained by acontinued recovery in tourism, alongwith higher disbursements of external financing from multilateral development
partners. The recession in the industry
sector is expected to slow due to theresumption of externally financed infrastructure projects and improved energy
supply. Despite growing tourism and improved terms of trade, the current account deficit is expected to widen to 25
percent of GDP due to the recovery ofinvestment-related imports.
The fiscal position is projected to improve with the planned freeze in thewage bill, cuts in domestically-financed

TABLE 2 São Tomé and Príncipe / Macro poverty outlook indicators

public investment, and improvement indomestic revenue mobilization including
the introduction of VAT. Therefore, the domestic primary deficit is expected to narrowto 2 percent of GDP in 2023. Inflation is projected to decline to 10.7 percent, supported
by a more conservative fiscal policy and thecentral bank´s policies to drain excessive
liquidity by issuing certificates of deposit.
Poverty reduction is likely to stagnate in
the short term. The share of people livingon less than US$2.15 a day (in 2017 PPP
terms) is expected to remain broadly thesame in 2023. The growth rebound remains modest and households are likely toface price increases with the introductionof the VAT.
The outlook is subject to significant uncertainty and downside risks. Delays in theimplementation of reforms and fuel priceadjustments could once again pressure on
the government’s fiscal position and foreign exchange reserves. Furthermore, continued disruption in global supply chains,
lower availability of external financing andnew exogenous shocks to food and fuelprices, including from climate events,
could undermine STP’s growth prospects
and further deteriorate households’ purchasing power.

(annual percent change unless indicated otherwise)

Real GDP growth, at constant market prices

2020
3.1

2021
1.9

2022e
0.9

2023f
2.1

2024f
3.4

2025f
3.7

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

2.3
-1.1
4.4
2.2

1.6
-1.0
-1.5
2.6

0.9
-1.5
-1.2
1.6

2.1
1.5
-0.5
2.7

3.4
2.5
1.5
3.9

3.7
2.8
2.0
4.1

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

9.4

9.5

25.2

10.7

8.7

6.2

-11.4

-17.1

-20.6

-18.9

-18.1

-17.1

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

-4.9
26.0
87.6
-4.6

-5.9
19.7
91.6
-5.7

-5.7
18.6
92.3
-5.3

-4.9
19.1
85.0
-4.5

-2.8
20.4
84.3
-2.4

-1.0
20.7
81.5
-0.7

15.3
44.5
79.1

15.3
44.5
79.2

15.4
44.6
79.3

15.4
44.6
79.3

15.3
44.5
79.1

15.1
44.3
78.7

1.2
37.0

0.9
37.1

0.6
37.2

1.0
37.4

1.2
37.8

1.3
38.2

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.
a/ Projection using point to point elasticity at regional level with pass-through = 0.7 based on GDP per capita in constant LCU. Actual data: 2017. Nowcast: 2018-2022.
Forecasts are from 2023 to 2025.
b/ Actual data: 2017. Nowcast: 2018-2022. Forecasts are from 2023 to 2025. Actual data: 2017. Nowcast: 2018-2022. Forecasts are from 2023 to 2025.

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Apr 23

SENEGAL

Key conditions andchallenges

Table 1

2022

Population, million

17.3

GDP, current US$ billion

31.1

GDP per capita, current US$

1798.3

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

81.2

b

68.0

Total GHG emissions (mtCO2e)35.7Life expectancy at birth, years

commitment to implement a medium-term
fiscal consolidation that protects the poorestand creates space for public investment.

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ WDI for School enrollment (2021); Life expectancy(2020).

Growth slowed to 4.2 percent in 2022,
from 6.5 percent in 2021, alongsidesoaring food and energy prices stemming from Russia’s invasion of Ukraine.
The fiscal deficit and debt levels remained elevated, mainly due to the
sharp rise in energy subsidies. Growthis expected to accelerate in 2024 driven
by hydrocarbon production. Risks, tilted
to the downside, include delays to hydrocarbon production, election costs, andfailure to eliminate energy subsidies.

Low productivity and informality continue to hamper the structural transformationof the economy. The use of traditional production techniques, uncertainty over land
tenure, limited access to credit, climate unpredictability, and supply bottlenecks impede agricultural sector productivity
growth. This poses serious challenges interms of poverty reduction as three quarters of the poor in Senegal live in rural areas and rely on agricultural activities andsmall non-farm enterprises. Most lowskilled labor force that was shed by the
agricultural sector is engaged in informal
trade, rather than in high value-added services or technology-based industries. The
manufacturing sector is constrained due tothe lack of skilled human capital. The private sector is hampered by restrictive business regulations. The Human Development Report 2021-2022 ranked Senegal
170th out of 191 countries, below the average for sub-Saharan Africa.
Strengthening macroeconomic management would support Senegal’s structuraltransformation. Fiscal and current accountdeficits (at 6.7 and 19.5 percent of GDP respectively) and debt levels (75 percent ofGDP) remain elevated in 2022. Fiscal costs
related to electricity sector subsidies are significant, but the government's decision toprogressively phase out generalized energy
subsidies, combined with expanding targeted social protection measures, signals

Recent developments
GDP growth decelerated from 6.5 percent
in 2021 to 4.2 percent in 2022 following adecline in exports, agriculture, and mining. Real export growth declined from 22.6
percent in 2021 to 8.1 percent in 2022 due
to lower external demand and the closureof the borders with Mali in the first half of2022. Agriculture sector growth decelerated from 0.6 percent in 2021 to 0.3 percent
in 2022, reflecting higher input costs andpoor performance in peanuts production(affected by heavy rains) and cotton production (affected by parasite infestations).
Tightening supply chains and soaring
commodity prices affected growth in theindustry sector which declined from 7.8 in
2021 to 1.1 percent in 2022. Inflation
reached 9.6 percent in 2022.
The poverty rate (using the lower middleincome poverty line of $3.65 a day) is expected to slightly increase to 36.3 percent
in 2022 compared to 35.9 percent in 2021,
given the high level of inflation, particularly on food, which reached 15 percent.
The current account position deteriorated
from 13.3 percent of GDP in 2021 to 19.5
percent of GDP in 2022, following higher
food and oil import prices and higher services imports associated with the FDI-financed hydrocarbon projects. The current
account deficit will be financed mostly by
FDI and donor financing.

FIGURE 1 Senegal / Evolution of main macroeconomic
indicators

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

Percent
12

Poverty rate (%)

Percent
0

Real GDP per capita (constant LCU)

100

10

1200000

90
-5

8
6

70

-10

4
2

100000080

80000060
50-1560000040

0-2400000

30

-20

20

-4
-6
2015

2017

2019

2021

2023p

200000

10

-25
2025p

0

0
2011

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

2013

2015

2017

2019

International poverty rate
Upper middle-income pov. rate

Source: World Bank.

Source: World Bank. Notes: see table 2.

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2021

2023

2025

Lower middle-income pov. rate
Real GDP pc

To counter inflation across WAEMU countries, the Central Bank of West African States(BCEAO) raised policy interest rates by a cumulative 75 basis points in 2022 (to 2.75 percent for liquidity calls and 4.75 percent forthe marginal lending facility). BCEAO will
likely need to continue tightening in 2023 inline with other major central banks, and as
foreign exchange reserves have declined,
and inflation remains well above the target
range of 1-3 percent. Furthermore, delaying
fiscal adjustments towards the regional fiscal deficit target of below 3 percent of GDP
by 2025 could exacerbate debt sustainability
risks, while increasing regional financing
needs, reducing FX reserve buffers, and elevating inflationary risks.
The overall fiscal balance increased slightly
from 6.3 percent of GDP in 2021 to 6.7 percent of GDP in 2022. Total revenues increased to 20.4 percent of GDP in 2022, driven by tax revenues (18.1 percent against 17
percent in 2021). The increase in total revenue was offset by an increase in spending(27.1 percent in 2022), as the government

turned to social transfers and tax exemptions to mitigate the contraction in household incomes. To help rebuild fiscal space,
the government adopted in January 2023 a
roadmap to phase out energy subsidies by2025, to move towards the domestic regional market financing, and to shift away from
non-concessional financing.

Outlook
The economic outlook hangs on hydrocarbon prospects. Under the assumptionof hydrocarbon production starting in
2024, overall GDP growth is forecast toreach 4.7 percent in 2023, before accelerating to 9.9 percent in 2024. Hydrocarbon production should drive an increase in exports of 22.9 percent in 2024
and boost industry growth to 17.7 percent in 2024. Service sector growth is projected to average 6.3 percent in 2024-2025,
mainly supported by the dynamism of

TABLE 2 Senegal / Macro poverty outlook indicators

the transport sector with the Regional
Train Express and the Bus Rapid Transit.
Financial services and insurance sectors
should also grow strongly thanks to thespillovers from hydrocarbon production.
Inflation is expected to decelerate to 2 percent by 2025. The current account deficit
is projected to narrow to 15.3 percent of
GDP in 2023 and further to 7.8 percent in
2024 thanks to hydrocarbon exports. The
fiscal deficit is expected to decrease to 3
percent in 2025, with the elimination of energy subsidies and increase in tax revenues. Furthermore, the implementation of
fiscal consolidation measures should create fiscal space for social spending. The
poverty rate ($3.65 in 2017 PPP) is expected
to slightly increase in 2023, before declining in 2024 and 2025, in line with moderate
growth and lower inflation. The rate at
which poverty declines will partly depend
on social assistance payments, which are
expected to increase in generosity and coverage, partly due to savings from theelimination of energy 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

2020
1.3
2.3
0.8
7.2
-13.2
7.0

2021
6.5
3.1
13.3
16.5
22.6
15.5

2022e
4.2
4.8
6.4
4.4
8.1
29.1

2023f
4.7
4.6
5.4
6.8
10.0
8.3

2024f
9.9
4.8
5.4
9.3
22.9
8.4

2025f
5.2
5.0
4.0
5.1
10.3
7.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

1.9
12.2
-1.5
0.6

6.3
0.6
7.8
7.5

3.9
0.3
1.1
6.2

4.7
0.7
5.4
5.5

9.9
1.4
17.7
8.8

5.2
1.5
10.1
3.9

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

2.5

2.2

9.6

5.0

3.0

2.0

-10.9

-13.3

-19.5

-15.3

-7.8

-6.6

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

-6.4
20.1
69.1
-4.3

-6.3
19.5
73.3
-4.3

-6.7
20.4
75.0
-4.5

-4.9
20.8
73.7
-2.7

-3.9
22.0
68.9
-1.7

-3.0
22.6
67.3
-0.7

8.4
37.1
75.2

8.2
35.9
73.5

8.1
36.3
73.5

8.5
36.8
73.6

7.7
34.5
71.5

7.5
34.0
70.6

0.5
25.1

4.0
25.4

1.8
25.9

2.8
26.6

5.1
27.8

4.1
28.0

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.
a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
b/ Projection based on microsimulation model that accounts for differences in sectoral growth, food and nonfood inflation.

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Apr 23

SEYCHELLES
Table 1

Key conditions andchallenges
2022

Population, million

0.1

GDP, current US$ billion

1.6

GDP per capita, current US$

15931.5

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

a

1.2

a

6.7
32.1

School enrollment, primary (% gross)

b

99.3

b

77.2

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

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ WDI for School enrollment (2021); Life expectancy(2020).

A rebased GDP and the methodologicalchanges to tourism’s contribution, indicated growth was 8.8 percent in 2022,
and will moderate to 3.8 percent in 2023,
driven by tourism and fisheries, household consumption, and investment. The
fiscal balance improved and is expected toreturn to a stronger and more sustainable
path, assuming the exchange rate appreciates as the economy recovers. Strong
growth and a healthy job market has reduced poverty by 0.6 percentage point to
6.2 percent of the population.

The Seychelles’ economic growth has beenvolatile and vulnerable to external shocks,
averaging 3 percent over the past two
decades. Growth has been driven largely
by capital accumulation, with moderate increases in productivity. Investment declined from 33.7 percent of GDP in 2015 to
25.6 percent of GDP in 2021, with a negative effect on growth. Total factor productivity growth has stagnated since 2017, reflecting, in part, the challenges of diversification in a relatively isolated, small-island
economy. Skills gaps and a high incidenceof non-communicable diseases have hampered productivity growth. Promoting labor participation in anticipation of an increasingly skills- and knowledge-intensive
economy remains a key challenge. Labor
market policies still offer limited opportunities for low-skilled youth and middleaged workers in the job market. Nevertheless, employment has increased with therecent economic recovery, while poverty
declined in 2022.
As a small island state, the Seychelles ishighly vulnerable to climate, health, andother external shocks, such as the war in
Ukraine. The COVID-19 pandemic hit theeconomy hard, creating macroeconomic
imbalances and increasing poverty. To
bridge its financing gap and lay the foundation for an inclusive and sustained recovery, the government received in 2020
and 2021 financial support estimated at

US$76 million from the International
Monetary Fund (IMF), the World Bank,and the African Development Bank(AfDB). World Bank technical support
helped the government channel relief toaffected households and firms, advancereforms to improve the transparency andaccountability of the financial system andimplement policies to increase resilience
to climate change. Enhanced economic
governance has become even more criticalgiven rising climate and economic risks.
In addition, the Seychelles could capitalize on its “blue economy” assets, which
already provide global public goods inthe form of carbon sequestration.

Recent developments
GDP was rebased (from 2006 to 2014) andmethodological changes to the contribution of tourism to GDP were introduced inline with international practices (changes
to the survey sample and estimation of thesector’s value added based on occupancy
rates rather than arrivals). Based on provisional GDP figures, growth reached 5.4
percent in 2021 and 8.8 percent in 2022, driven by tourism, fisheries, household consumption, and investment. Western European tourist arrivals offset lost arrivals
from Ukraine and Russia, due to the war.
Unlike many countries, inflation in the
Seychelles was relatively low in 2022, reflecting base effects and the large exchange-rate appreciation (due to increased
tourist arrivals) in 2021 and 2022 that mitigated part of the imported inflationary

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
8

Poverty rate (%)

618300000250000

16

4

14

2

12

0

10

2000001500008-2Agriculture
Industry
Services
Gross Value Added at Basic Prices-4-6

100000

6
4

50000

2
0

-8
-10

Real GDP per capita (constant LCU)

20

0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

2018

2019

2020

2021

2022e

2023f

2024f

International poverty rate
Upper middle-income pov. rate

2025f

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

Source: World Bank. Notes: see Table 2.

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Apr 23Lower middle-income pov. rate
Real GDP pc

pressures. Average annual inflation declined to 2.6 percent in 2022.
The current account deficit narrowed by
12.4 percentage points to 10.8 percent of
GDP in 2022, reflecting much higher
tourism receipts. However, reserves declined to US$639 million (3.2 months ofimports) as of end-December 2022, due
to higher foreign exchange demand forgoods and services imports. Fiscal consolidation continued, causing the deficit
to decline to 2.2 percent of GDP in 2022.
Revenues collection performed broadly inline with projections while expenditure
was less than projected, driven by measures implemented by the government to
reduce the wage bill and social programs.
This reduced the debt-to-GDP ratio by 8.3
percentage points from 2021 to 67.9 percent in 2022, helped by strong implementation of the IMF, World Bank, and AfDB
programs, and a stiff fiscal adjustment as
most of the COVID-19 response measures
were unwound.
The rapid GDP growth has also been accompanied by a strong labor market. In
the third quarter of 2022, total employment

increased by 11.4 percent while average
earnings increased by 0.3 percent, relative
to the same period in 2021. Consequently,
the poverty rate declined from 6.8 percent
in 2021 to 6.2 percent in 2022.

OutlookReal GDP growth is projected at 3.8 percent in 2023, driven by robust tourism, before moderating to an average of 2.8 percent over the medium term. Medium-term
growth will be supported by continued recovery in tourism, global economic
growth, private consumption, and trade.
Stronger economic activity is expected tofurther improve employment in 2023. Average inflation is projected to average 3.8
percent in the medium term, reflecting amoderation in global energy and foodprices. The current account deficit is expected to narrow further to 9.5 percent of
GDP in 2023 and continue its downward
trend, buoyed by robust tourism growthand foreign direct investment inflows. ThisTABLE 2 Seychelles / Macro poverty outlook indicators

is expected to help raise reserves to
US$708 million (3.4 months of imports)
in 2023. Improved revenue collection andcontinued fiscal consolidation are projected to narrow the deficit to 1.3 percent of
GDP in 2023. In 2023 and over the medium term, the primary balance will shift toa surplus, as revenue measures will morethan compensate for the planned increasein capital expenditure on climate change
mitigation and adaptation.
The government has scaled back
COVID-19-related programs and focusedon a targeted program of social support andtemporary cash transfers to protect the mostvulnerable and empower Seychellois to getwell-paying jobs. Reforms to the social protection system are ongoing to ensure its sustainability and promote increased labor
force participation of working-age beneficiaries. This would contribute to reducing
poverty. A planned increase in the wage billof 0.6 percent of GDP would be partially financed by cuts in allowances. The Seychelles’ public debt is expected to continue
to decrease, given proactive debt management and 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

2020
-8.6
-5.1
17.0
-12.7
-25.7
-15.5

2021
5.4
4.0
7.3
1.8
9.9
7.7

2022e
8.8
6.8
2.0
2.7
9.1
3.1

2023f
3.8
4.7
1.4
1.9
2.7
1.8

2024f
3.0
3.5
1.2
1.7
2.5
1.6

2025f
3.1
2.0
1.3
1.7
3.0
1.2

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-9.4
-13.5
0.5
-11.3

5.4
3.1
2.9
6.1

8.8
3.8
3.5
10.2

3.8
2.9
3.0
4.0

3.0
2.1
2.3
3.2

3.1
2.0
2.5
3.3

Inflation (Consumer Price Index)

1.2

9.8

2.6

4.2

3.8

3.5

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

-29.3
10.0

-23.2
13.3

-10.8
15.1

-9.5
13.2

-8.7
15.2

-7.1
14.7

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

-18.6
35.0
88.7
-15.5

-6.8
38.4
76.2
-3.4

-2.2
40.0
67.9
0.7

-1.3
42.2
64.6
0.9

1.0
44.4
60.3
2.1

1.7
45.9
55.3
3.0

0.6
1.3
7.2

0.5
1.2
6.8

0.5
1.1
6.2

0.5
1.1
5.9

0.4
1.0
5.7

0.4
1.0
5.6

-7.1
78.6

-15.6
74.1

15.2
77.0

16.6
79.8

5.0
80.4

4.8
80.9

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.
a/ Calculations based on 2018-HBS. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
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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SIERRA LEONE
Table 1

2022

Population, million

8.6

GDP, current US$ billion

3.4

GDP per capita, current US$

392.9

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

156.4

b

59.8

Total GHG emissions (mtCO2e)9.7Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ WDI for School enrollment (2021); Life expectancy(2020).

Sierra Leone’s post-pandemic recovery
was disrupted by concurrent domestic
and external shocks, as global spillovers
from Russia’s invasion of Ukraine exacerbated existing macro-fiscal vulnerabilities. Inflation and exchange rate depreciation reached record levels, depressing economic activity, and triggering a severe
cost-of-living crisis. Fiscal accounts havedeteriorated on account of macroeconomic
headwinds and policy slippages, and risks
to debt sustainability have intensified.

macroeconomic fundamentals threatens
to increase the level of poverty within acontext of inadequate social safety nets.

Key conditions andchallenges
Sierra Leone’s economic development has
been constrained by concurrent global anddomestic shocks. Growth has been especially volatile over the past decade, reflecting underlying issues with the growthmodel combined with persistent macroeconomic and institutional vulnerabilities.
Exports are overwhelmingly concentrated
in natural resources, and low value-added
agriculture, mining, and wholesale tradeaccount for the bulk of employment but
just over half of economic output.
Between 2012 and 2022, economic
growth averaged 4 percent (half the rateof the previous decade), with significant
variation across years (from 21 percent
during the mining boom in 2013, to a 20
percent contraction in 2015 in the wakeof the Ebola outbreak and global commodity price collapse). The COVID-19
pandemic and war in Ukraine have perpetuated this cycle, with economic
growth slowing between 2020 and 2022
to less than a third of the pre-pandemic(2017-2019) average.
Macroeconomic management remains
weak. Fiscal pressures have progressively
intensified, the debt burden has worsened,
and inflation has soared, driven- in addition to internal imbalances - by global supply shocks, exchange rate depreciation anda deterioration in the terms of trade.
The rise in the cost of living combinedwith weak growth and a decline in

Recent developments
Estimated GDP growth for 2022 has beenrevised downwards from 3.8 percent to 3.0
percent. This marks a reversal of the encouraging rebound observed in 2021 when
GDP grew by 4.1 percent following a 2 percent contraction in 2020. Economic activity
has been depressed by a net negative
terms-of-trade shock, stemming from thespillovers of war in Ukraine and the increase in global food and fuel prices.
Inflationary pressures have complicatedmacroeconomic management and constrained private consumption and investment. Headline inflation averaged 27
percent in 2022 compared to 12 percent
the previous year. Initially, inflation was
driven by supply-side factors such as
global supply chain disruptions and rising commodity prices. However, later inthe year, despite a decrease in global
food and fuel prices, inflation worsened
due to the Leone's depreciation (60 percent during 2022) and the monetizationof the fiscal deficit. Over the year, theBank of Sierra Leone tightened its monetary policy stance and cumulatively revised the benchmark interest rate by over
300 basis points. However, monetary policy effectiveness was limited by underdeveloped financial markets and fiscal
dominance, and further complicated by
the redenomination of the Leone.

FIGURE 1 Sierra Leone / Real GDP growth and contributions
to real GDP growth

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

Percent, percentage points
40

Poverty rate (%)
100

1.60

30

90

1.40

20

80

10

70

0
-10

Real GDP per capita (constant million LCU)

1.20

60

1.00

50

0.80

40

0.60

-20

30

-30

20

0.40
0.20

10

-40
2015
2017
Gov. cons.
Inventories
Statistical disc.

2019
2021
Exports
Private cons.
GDP

2023
2025
GFCF
Imports

0

0.00
2011

2013

2015

2017

International poverty rate
Upper middle-income pov. rate

Sources: Statistics Sierra Leone and World Bank.

Source: World Bank. Notes: see Table 2.

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2019

2021

2023

2025

Lower middle-income pov. rate
Real GDP pc

Fiscal weaknesses and risks to debt sustainability have intensified. The fiscal
deficit for 2022 is estimated to have risen
to 9.7 percent of GDP – 2.3 pp higher thanin 2021, and 4.9 pp higher than the revised
budget targets presented in November
2022. The increase was due mostly to unplanned capital expenditures and emergency domestic security costs (following
protests against the worsening cost-of-living-crisis). Meanwhile, domestic revenues
declined from 15.6 percent to 13.2 percent of
GDP. As a result of fiscal weaknesses andexchange rate dynamics, the debt-to-GDP
ratio is estimated to have risen to nearly 100
percent; two-thirds is owed to multilateralorganizations, and the remaining is high-interest and short-term domestic debt.
External accounts also deteriorated. The
current account deficit is estimated to haveincreased by 1.4 pp to 15 percent of GDP
in 2022, driven by lower merchandise export receipts for major export goods (timber and diamonds) and higher import values reflecting energy and food price. As aresult of lower-than-expected FDI inflows,
but also reflecting central bank interventions in the forex market, reserves fell toaround 3 months of imports by end-2022(from close to 4 months in Q3).

Simulations suggest that the pandemicinduced economic downturn increased
poverty by 2 pp since 2018 to 58.9 percent in 2020. Urban poverty almost doubled compared to rural areas. Global
spillovers from the war in Ukraine, particularly energy price hikes, have further
adversely affected welfare. The 2022
global hunger index ranks Sierra Leone
at 112 out of 121 countries classifying thehunger level as serious.

Outlook
The economy is projected to grow at 3.8
percent on average during 2023–25, below
its long-term average. In 2023, a modest
recovery is expected to be supported by(i) the government’s efforts to restore
macro stability through fiscal disciplineand prudent monetary policy; (ii) continued expansion of iron-ore mining operations; and (iii) some modest easing of
inflationary pressures. Headline inflation
will continue to be influenced by trends
in global commodity prices and is expected to moderate only to 14.3 percent in themedium term by 2025.

TABLE 2 Sierra Leone / Macro poverty outlook indicators

Fiscal discipline will be crucial to restoring
macroeconomic stability. Lowering the
deficit will require strong and difficult
measures on increasing tax rates and expenditure cuts. The fiscal deficit is projected to decline below 3 percent of GDP by2025. However, this is vulnerable to several downside risks especially given recent
fiscal slippages and expenditure overruns,
which have raised concerns about the credibility of the budget process. Risks to debt
sustainability will remain elevated until
fiscal balances improve further, and the reliance on expensive and short-term domestic borrowings can be addressed throughthe lengthening of maturities and greater
access to concessional borrowings.
The international poverty rate (US$2.15
per person/day at 2017 PPP) is projected to
decline slowly, from 26.1 percent in 2018 to
24.6 by 2025. Economic growth is strongly tied to exports, which are dominated byminerals. However, the mining sector has
limited spillover effects on households andconstrains the growth of other sectors of
the economy by undermining the competitiveness of those sectors. Poverty reduction
requires increased agricultural productivity and the creation of good jobs outside
agriculture for the low-skilled labor force.

(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

2020
-2.0
5.4
2.7
-9.6
-9.8
7.5

2021
4.1
36.7
0.6
0.1
1.9
46.6

2022e
3.0
4.2
4.0
7.2
38.0
15.0

2023f
3.4
6.2
3.9
5.4
20.0
13.0

2024f
3.7
6.0
4.0
6.7
18.0
12.0

2025f
4.4
5.8
2.9
7.7
12.0
8.8

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-2.0
1.6
-7.1
-5.8

4.0
2.5
17.4
2.8

3.1
3.0
6.7
2.1

3.3
3.3
5.2
2.6

3.7
3.6
6.2
3.2

4.4
3.6
8.0
4.6

Inflation (Consumer Price Index)

13.5

11.9

22.0

20.0

17.8

14.3

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

-6.8
3.3

-13.6
8.2

-15.0
9.9

-12.8
7.1

-10.2
5.6

-12.2
4.5

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

-6.7
19.0
78.0
-3.7

-7.4
20.4
81.9
-4.1

-10.6
20.2
100.3
-7.0

-5.7
20.8
97.1
-1.8

-3.8
21.1
90.8
-0.5

-3.1
21.4
84.9
-0.3

26.4
64.6
90.1

25.9
64.2
89.9

25.7
64.0
89.8

25.3
63.7
89.7

24.9
63.2
89.5

24.3
62.7
89.3

-1.4
9.1

0.8
9.1

3.3
8.7

2.5
8.4

3.0
8.1

3.3
7.8

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.
a/ Calculations based on 2011-SLIHS and 2018-SLIHS. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
b/ Projection using point-to-point elasticity (2011-2018) with pass-through = 0.4 based on GDP per capita in constant LCU.

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SOMALIA

Key conditions andchallenges

Table 1

2022

Population, million

a

15.6

GDP, current US$ billion

8.1

GDP per capita, current US$

520.4

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

b

39.0

c

56.0

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/ Somalia Integrated Household Budget Survey 2022
(SNBS, 2023).
c/ Most recent WDI value (2020).

The economy is projected to grow by 2.8
percent in 2023, as economic conditions
are expected to improve following a prolonged drought and rising commodity
prices throughout 2022. Multiple shocks
have contributed to rising displacement,
food insecurity and a risk of more people
falling below the poverty line. The poverty projection in 2023 is 73 percent.

Somalia continues to contend with increasingly frequent shocks in the context ofwidespread fragility, conflict, and violence. Repeated climate-related shocks
such as cycles of droughts, floods, and locusts’ infestation, lingering impacts of the
COVID-19 pandemic, higher internationalcommodity prices, as well as security incidences have interrupted Somalia’s growthtrajectory and slowed the transition fromfragility. Growth has been low and volatile
averaging only 2.8 percent in 2014–22 withno growth in real GDP per capita.
The economy does not generate the jobs
needed to reduce poverty. Only about 30
percent of the workforce participates in thelabor market, and this is markedly lower
for women compared to men at 15 percent
and 38 percent, respectively. Households
suffer from food insecurity and loss of productive assets in a context of poor humancapital and widespread insecurity. Repeated shocks contribute to internal displacement and rapid urbanization (estimated at
4 percent per annum), as well as conflictdue to competition for limited resources.
The government has limited fiscal space torespond to shocks and development priorities, including taking over the provisionof security services as the African Union
plans to withdraw peacekeeping operations in 2024. Alongside efforts to increase
domestic revenues, institutions need to bestrengthened to mobilize private capital tosupport much-needed investments in human and physical capital to boost resilience, growth, and productive jobs to
support poverty reduction.
Somalia is progressing towards attaining
debt relief through the Heavily Indebted
Poor Countries (HIPC) initiative, which
would reduce its debt to sustainable levels.
Upon reaching the HIPC Completion
Point, Somalia will enjoy access to newsources of financing, but terms of financing
will shift from grants to loans. Therefore, it
is critical for the country to raise domestic revenues and improve institutions fordebt management.

Recent developments
Somalia is experiencing a prolonged severe drought, with a fifth consecutive season of failed rains, against a backdrop of
higher commodity prices following Russia’s invasion of Ukraine. These paused
2021’s modest economic recovery from thepandemic with a slowdown in real GDP
growth to an estimated 1.7 percent in 2022
(Table 2). Furthermore, 7.1 million people—nearly half of the population—were
food insecure at the end of 2022 due tothe drought and 1.3 million people weredisplaced. Agricultural and livestock production has suffered, with live goats andsheep that dominate the export basket declining by 3.1 percent of the total live animals exported in 2022. Overall merchandise exports declined by 3.8 percent. Similarly, inflationary pressures intensified in
2022 with food inflation rate at its peak

FIGURE 1 Somalia / Real GDP growth

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

Percentage points
6
Agreement on theProvisional Constitution
5

Poverty rate (%)

Real GDP per capita (constant LCU)

120

380
375

100

370

4

80

365

3

60
2

Drought355

40

Drought

1

360

350
20

0
Triple Crisis

-1
2014

2016

2018

Real GDP growth

2020

345

0
2022e

340
2017

2024f

2019

2021

International poverty rate
Upper middle-income pov. rate

Average 2014-22=2.8%

Sources: Somalia authorities and World Bank and IMF estimates.

Source: World Bank. Notes: see Table 2.

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2025

Lower middle-income pov. rate
Real GDP pc

of 17.5 percent in July—almost four times
higher than in mid-2021. Overall inflation
averaged 6.8 percent in 2022. Official development assistance (ODA) including
grants for social safety net programs,
which are targeted to rural poor and vulnerable households, as well as remittancesfinance the trade deficit and play a vitalrole in supporting the vulnerable.
Poverty remains high across the country.
An estimated 73.7 percent of the population living below the poverty line in 2022,
the majority of whom are informal settlers,
displaced people, rural communities, andnomads. According to the 2022 Integrated
Household Budget Survey, the food pricecrisis in 2022 has eroded real household incomes, further contributing to household
vulnerability from the ongoing drought.
Although the international community has
been supporting the humanitarian crisis
through food assistance, an expansion ofsocial safety net programs, and support toinformal settlers in urban areas, there arerisks of more people falling below thepoverty line. In a context of increasing
global shocks, there are competing demands for limited development assistance, underscoring the importance of Somalia strengthening resilience throughadvancing reforms to support growth andfood security.
The fiscal situation remains challenging,offering limited opportunities to respondto recurrent shocks or investments in human capital or infrastructure. While domestic revenue mobilization has outperformed its pre-pandemic levels by 14 percent in 2022, largely dominated by traderelated taxes, it remains low and insufficient to meet expenditure needs. Public expenditures continue to rise, dominatedby personnel costs with social spendinglargely financed by grants.

Outlook
The economy is expected to make a modest recovery in the medium-term, despite
the persistent severe drought. Real GDP
growth is projected to recover to 2.8 percent in 2023 and increase to 3.7 percent
in 2024 and 3.9 percent in 2025. The reforms supported through the HIPC Initiative and the prospect of receiving debt
relief should boost business confidence.
New private investments are anticipatedin energy and telecommunications, while

TABLE 2 Somalia / Macro poverty outlook indicators

ongoing investments in sectors such astransport, education, and health are expected to improve conditions for trade andgradually contribute to improvements inhuman capital. Strengthening the framework for fiscal federalism by enhancing
the dialogue between the Federal Government of Somalia and the Federal Member
States can help to bring political stability,
which can encourage investment from theprivate sector. Harmonizing the currently
disparate regimes for customs and inland
revenues across the federation can also
support revenue raising. Collecting sufficient revenues to cover the wage bill, rising
security costs as well as human and physical capital remain pressing priorities.
As the country continues to cope with ongoing severe drought, the overall humanitarian situation remains dire, and the number of food insecure could grow to 8.3 million people by mid-2023 if food assistanceis not sustained. The poverty rate is projected to remain at around 73 percent between 2022 and 2024. Accelerating the paceof poverty reduction will require policy interventions and public investments thatraise productivity, strengthen resilience,create jobs, and expand pro-poor programs which focus on women and youth.

(percent of GDP unless indicated otherwise)

Real GDP growth, at constant market prices
CPI Inflation, annual percentage change

2020
-0.3
4.3

2021
2.9
4.6

2022e
1.7
6.8

2023f
2.8
4.2

2024f
3.7
3.8

2025f
3.9
3.6

Current Account Balance
Trade balancePrivate remittances
Official grants

-14.9
-67.4
23.2
30.6

-12.5
-65.7
27.3
27.2

-18.4
-74.1
27.7
28.6

-15.9
-72.5
28.2
29.0

-16.1
-70.2
28.4
26.1

-16.8
-70.2
28.4
25.5

0.4
3.1
4.3
7.0
3.3
56.8

-1.1
3.0
1.9
6.0
3.3
45.0

-0.1
3.2
5.6
9.0
3.2
42.7

-0.5
3.3
4.1
7.9
3.4
6.6

-2.1
3.4
0.5
6.1
3.3
9.5

-1.9
3.8
0.3
6.0
3.3
10.7

73.1
91.4
98.8

73.3
91.4
98.8

73.7
91.6
98.8

73.4
91.5
98.8

73.2
91.4
98.8

72.9
91.2
98.8

-0.2
1.6

0.0
1.6

0.0
1.6

0.0
1.6

0.0
1.7

0.0
1.7

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)
GHG emissions growth (mtCO2e)
Energy related GHG emissions (percent of total)aSources: World Bank, IMF, and FGS. Emissions data sourced from CAIT and OECD.
Notes: e = estimate; f = forecast.
a/ GDP baseline estimates 2020-21 are by Somalia National Bureau of Statistics (SNBS, June 2022).
b/ Federal Government of Somalia (FGS).
c/ Calculations based on Takamatsu et al (2022) “Rapid Consumption Method and Poverty and Inequality Estimation in Somalia Revisited”. Actual data: 2017. Nowcast:
2019–22. Forecasts are from 2023–25.
d/ Projection using neutral distribution with pass-through = 1 (High) based on GDP per capita in constant LCU.

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SOUTH AFRICA
Table 1

2022

Population, million

59.9

GDP, current US$ billion

405.9

GDP per capita, current US$

6776.5International 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

97.4

b

65.3

Total GHG emissions (mtCO2e)

611.9

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).

After a strong recovery in 2021, GDP
grew by only 2 percent in 2022, supported by a favorable global environment but
constrained by domestic challenges – especially the electricity crisis and transport disruptions. While the government
recognizes the need to address these constraints, economic growth is expected to
decline to 0.5 percent in 2023 and to average 1.5 percent over 2024-25. With
weak growth and job creation, poverty
and inequality are expected to remain elevated in the near future.

Key conditions andchallenges
Electricity supply shortages have constrained South Africa’s growth for several
years. Rolling scheduled power cuts (loadshedding) started in 2007 and have intensified exponentially over the past few years,
reaching close to 9 hours daily in 2022.
This severe electricity shortfall has disrupted economic activity and increased operating costs for businesses (many of which rely on costly diesel generators). It has also
affected other infrastructure such as waterand IT, and service delivery (health andeducation). Although new reforms and investments are being considered, loadshedding is expected to continue for two
more years at least. Other structural challenges have also increased, in particulartransport and logistics, which have deteriorated due to weak maintenance, theft,sabotage, and slow reforms constraining
South Africa’s export capacity.
Persistent weak growth and the COVID-19
pandemic have exacerbated socioeconomic challenges. South Africa has recovered
its pre-pandemic GDP but not its employment level. At end-2022, there were stillclose to half a million fewer jobs than at
end-2019, with women and youth persistently more impacted. Inequality remains
among the highest in the world, andpoverty was an estimated 62.6 percent in
2022 based on the upper-middle-income
country poverty line, only slightly below
its pandemic peak. These trends haveprompted growing demands for government support, which could put the sustainability of public finances at risk ifthey are met.
Fiscal and monetary policy space is limited
due to the deteriorated public finances andthe prudent monetary policy required tocontrol inflation – in line with the South
African Reserve Bank’s mandate. South
Africa needs to accelerate structural reforms to boost inclusive growth and job
creation while supporting fiscal sustainability. Along these lines, Eskom, the national power utility, is set to benefit froma conditional R254 billion debt-relief
arrangement with the National Treasury
over the next three years to support its reform plan. However, the political consensus needed to tackle reforms is elusive
ahead of the 2024 general elections amid
widespread corruption allegations, risingcrime, weak service delivery and high unemployment and poverty.

Recent developments
The global environment remained supportive, but increasingly severe domestic
constraints led to GDP growth slowing to
2 percent in 2022 from 4.9 percent in 2021.
Mining production fell while manufacturing production stagnated, as load-shedding and transport bottlenecks intensified.
The services sectors (financial, transport,
and personal) and domestic trade were key
drivers of growth. The labor market has remained weak. The employment ratio only increased slightly to 39.4 percent at

FIGURE 1 South Africa / Hours of electrical service lost due
to load shedding

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

Duration of outages (hours)
4000

Poverty rate (%)
70

82000

3500

60

80000

3000

50

78000

2500

40

76000

2000

30

74000

1500

20

72000

1000

10

70000

500

0

Real GDP per capita (constant LCU)

68000
2008 2010 2012 2014 2016 2018 2020 2022 2024

0
2014

2015

2016

2017

2018

2019

2020

2021

International poverty rate
Upper middle-income pov. rate

2022

Source: CSIR.

Source: World Bank. Notes: see Table 2.

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Real GDP pc

end-2022 from a pandemic low of 35.9
percent in September 2021. In this context, the COVID-19 social relief of distressgrant, introduced in May 2020, was extended for another year until March 2024.
Socioeconomic challenges were further
exacerbated by rising fuel and food(bread and cereals) prices, which disproportionately affected the poor. Inflation
averaged 6.9 percent in 2022 but was 8.2
percent for those at the bottom 20 percent of the income distribution.
High global commodity prices supported
South Africa’s fiscal and external balances.
Fiscal revenue overperformed again in
2022. As the government contained expenditure growth, the overall deficit is estimated to have reached 4.2 percent in FY22,
smaller than the initial budget forecast of
6 percent of GDP. The current account balance returned to a small deficit of 0.5 percent of GDP in 2022 as imports growth outpaced exports growth. It was financed
through financial inflows, and international reserves increased by US$3 billion to
US$60.6 billion. In the context of rising
global risk aversion, the exchange rate,
which is fully flexible, depreciated byabout 10 percent in 2022.

OutlookIn the short term, the electricity crisis andtransport bottlenecks will hamper domestic activity even if external demand forcommodities, notably coal, will provide
some support to the economy. GDP
growth is expected to slow to 0.5 percent in
2023 and average 1.5 percent in 2024-25 as
the investments in power generation materialize and load-shedding gradually eases.
The duration and intensity of load-shedding will depend on Eskom’s ability to increase the availability of existing generation capacity while the reform program developed by the government is gradually
implemented. Investment in least-cost renewable energy would also support a
faster resolution of the crisis. Investment inrooftop solar is rising quickly but remains
constrained by limited incentives to sell excess generation back to the grid. Based on
this growth outlook, the poverty rate is expected to remain high, hovering close to 63
percent over 2023-25.
The government is expected to limit public expenditure growth. However, lower

TABLE 2 South Africa / Macro poverty outlook indicators

revenue associated with the tapering of
global commodity prices in the medium
term and weaker domestic growth willtranslate into persistent deficits. As a resultof the debt-relief arrangement with Eskom,
government debt is expected to increase to
72.6 percent of GDP in 2023 and 74.9 percent by 2025. External balances are expected to remain sound even as the current account returns to a deficit.
Risks are tilted to the downside. Lower
external demand for South African commodities or worsening transport bottlenecks constraining export capacity would
further weaken economic growth. Deteriorating global financial conditions in
the context of monetary policy tightening
in advanced countries could weaken theSouth African rand, increase inflation,and raise the borrowing costs for thegovernment (about a quarter of domestic
debt is held by foreign investors). Domestically, persistent weak growth andjob prospects may fuel social discontent.
Moreover, rising crime and deterioratingstate capacity could further hamper business confidence and investment and affect the government’s capacity to implement much-needed reforms.

(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

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
2.0
2.6
0.9
4.7
7.5
14.2

2023f
0.5
1.7
-2.7
4.2
2.3
4.5

2024f
1.3
1.7
-0.6
4.9
3.0
4.5

2025f
1.6
1.7
-0.4
4.4
3.0
3.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-5.9
14.9
-12.5
-4.4

4.7
8.8
6.1
4.1

2.1
0.3
-2.3
3.6

0.5
2.7
-1.2
1.0

1.3
2.0
0.5
1.5

1.6
2.0
1.1
1.7

Inflation (Consumer Price Index)

3.3

4.5

6.9

5.5

4.5

4.5

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

2.0
1.5

3.7
9.8

-0.5
0.5

-1.6
0.7

-1.9
0.7

-2.2
0.7

-9.9
25.1
70.2
-5.8

-4.6
27.8
68.0
-0.4

-4.2
28.5
71.1
0.5

-4.4
27.7
72.6
0.5

-4.1
27.7
73.7
0.8

-3.4
27.9
74.9
1.7

22.7
42.8
63.8

21.8
41.4
62.8

21.5
41.1
62.6

21.5
41.1
62.6

21.4
41.1
62.6

21.3
40.9
62.5

-2.6
77.7

4.0
78.5

7.5
79.6

-5.7
78.4

-0.7
78.0

0.7
77.8

a

Fiscal Balance (% of GDP)
Revenues (% of GDP)
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.
a/ As in the 2023 Budget Review, the Eskom debt-relief arrangement is reported below the line.
b/ Calculations based on 2014-LCS. Actual data: 2014. Nowcast: 2015-2022. Forecasts are from 2023 to 2025.
c/ 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

2022

Population, million

11.4

GDP, current US$ billion

5.2

GDP per capita, current US$

457.1

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

a

44.1

School enrollment, primary (% gross)

b

73.0

b

55.5

Total GHG emissions (mtCO2e)60.6Life 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).

Falling oil production will continue todrag on growth for a third consecutive
year, although the pace of decline is lessening. Climate and external shocks, anddeclining official development assistance– coupled with structural challenges related to weak governance, inadequate service delivery, and ongoing localized conflict – contributed to high levels of foodinsecurity and widespread extreme poverty. Key downside risks include heightened
conflict, oil price volatility, and climate
shocks amid limited fiscal resources andpressing humanitarian needs.

Key conditions andchallenges
A decade after independence, South Sudan’s development prospects remain constrained by high levels of fragility amid localized conflict. A 2018 peace agreement
ended five years of civil war; however, thetransition 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 and about 90 percent of government revenues. A modest economic recovery in 2019 was upended by historic floods
and the COVID-19 pandemic, which led to a
massive loss in oil revenues.
Since 2021, reforms initiated under an International Monetary Fund staff-monitored
program have helped improve macroeconomic and price stability. Higher oil prices
following Russia’s invasion of Ukraine havesupported foreign exchange buffers and fiscal revenues, although expenditures havealso increased. Poverty remains dire, with 7
in 10 people living in extreme poverty.
Some 8.9 million people, comprising 78 percent of the population, face severe food insecurity, which is compounded by higher
global food prices and domestic floods. In
addition, 2.2 million people are internallydisplaced (55 percent of whom are womenand girls), and 2.3 million remain refugees
in neighboring countries.
External risks relate to adverse global oil
and food prices, which reduce scarce fiscal
resources amid pressing humanitarian

FIGURE 1 South Sudan / Exchange rate developments

SSP/USD

700

Recent developments
Economic activity remained weighed
down by a fourth consecutive year offlooding, violence flareups, higher food inflation due to the war in Ukraine, and lingering impacts of the COVID-19 pandemic. Oil production fell by 7.6 percent in
FY22 due to floods and low investmentsin oil fields. Agricultural prospects remain
weak with reduced yields in crop production due to widespread floods and prolonged dry spells. These dynamics reduce
households’ purchasing power and worsen food insecurity. GDP contracted by an
estimated 2.3 percent in FY22, following a
5.1 percent decline the previous year.
Tighter monetary policy and successful
exchange rate reforms have helped toease price pressures: barring mid-2022
when the South Sudanese pound depreciated briefly, inflation has remained innegative territory since November 2021.

FIGURE 2 South Sudan / Actual and projected poverty
rates and real GDP per capita
Poverty rate (%)

Spread percent

800

needs. Implementing the 2018 peace deal
is essential for domestic peace and stability, and the resumption of growth. Macroeconomic, governance, and transparency
reforms are urgently needed to ensure
scarce resources are spent on development needs and to facilitate a sustainable
and inclusive economic recovery. Reforms
and investments are especially critical in
agriculture, which supports livelihoodsfor 80 percent of the population; thesewill help to support diversification awayfrom the oil sector, create jobs, and build
resilience to climate change.

Real GDP per capita (constant LCU)

300

120

3500

250

100

3000

200

80

600
500
400

2000

150

300

60
1500

100

40

200
50

100
0

2500

1000

20

500

0
0

0
2009 2011 2013 2015 2017 2019 2021 2023 2025

Spread (rhs)

Official XR (lhs)International poverty rate
Upper middle-income pov. rate

Parallel XR (lhs)

Sources: Bank of South Sudan and World Bank.

Source: World Bank. Note: see Table 2.

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Real GDP pc

Urban inflation, proxied by official Juba
consumer price index data, picked up
in the first half of FY23, reflecting passthrough from earlier depreciation. The exchange rate premium between official andparallel markets increased from 1.4 percent in November 2022 to 4.7 percent inJanuary 2023, following the appreciationof the US dollar and drawdowns on foreign exchange reserves at the central banksince October 2022.
Notwithstanding higher oil revenues, fiscal pressures proved greater than anticipated in FY22. Expenditure outturns exceeded planned outlays by 168 percent,offsetting higher oil revenues and causing
the government to return to oil advancesand monetary financing of the fiscal deficitin mid-2022. Higher oil prices, and revenue and customs administration reforms
lifted overall revenues by 55 percent.
The FY23 draft budget envisages sustained
increases in capital expenditures, a 20 percent increase in public sector salaries to protect against the impact of inflation, and rising transfers to regions, which will further
widen the fiscal deficit. Public financial
management reforms to strengthen expenditure controls and cash management havebeen initiated, including an integrated financial management information system(IFMIS). But there is limited transparency
on oil revenues, including servicing of
non-concessional external debt. South Sudan remains at a high risk of debt distressfor both external and domestic debt.
Despite increased oil receipts and weaker
demand for capital imports, the current
account balance widened in line with rising food import costs, increased repatriation of investors’ profits, and continued
transfers to Sudan.

OutlookGDP growth is expected to remain negativein FY23, reflecting the continued impact offloods on agricultural and oil output, withoil production projected to drop by 3.7 percent. Nonetheless, higher government current spending and expanding domestic
credit should support a recovery in the nonoil sector, with farm output also expected to
improve as floods eventually recede.
Over the medium term, growth should rise
to above 2 percent as oil output recovers and

TABLE 2 South Sudan / Macro poverty outlook indicators

non-oil activity improves, supported byhigher government outlays on critical public investments in roads, health, and education, and moderating inflation. This outlook
is predicated on prudent monetary and fiscal policies that anchor macroeconomic stability; progress on governance, transparency, and structural reforms; and steady implementation of the peace deal. Pressure on
the current account balance is expected toincrease from higher debt-service obligations, a decline of oil prices, and a decline ininternational aid in the face of the fallout
from the war in Ukraine.
Poverty is expected to remain stagnant ataround 70 percent in the medium term as
real growth prospects are limited. Addressing this reinforces the urgency of fiscal and public financial management reforms that generate budgetary resources toincrease 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,the reduction of legacy arrears, and risingsocial and humanitarian expenditures. It
is, thus, also vital to strengthen the management and transparency of oil revenues.

(annual percent change unless indicated otherwise)

Real GDP growth, at constant market prices

2020
9.5

2021
-5.1

2022e
-2.3

2023f
-0.4

2024f
2.3

2025f
2.4

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

9.5
6.0
27.5
-9.6

-5.1
-4.0
-2.3
-9.7

-2.3
-1.8
-4.8
1.7

-0.4
-1.4
-2.2
2.7

2.3
2.8
1.2
3.8

2.4
2.8
1.2
4.0

Inflation (Consumer Price Index)

33.3

43.1

22.0

18.0

16.1

8.5

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

-20.3
-0.4

-5.5
0.9

-1.4
1.0

4.2
-0.4

3.8
-0.9

3.6
-1.4

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

-9.8
29.5
40.7
-7.8

-6.8
30.9
57.6
-4.4

-6.1
30.1
59.5
-4.0

4.0
31.6
53.7
5.3

5.6
30.7
47.4
6.8

6.0
30.5
42.9
7.3

65.3
84.7
96.1

67.5
86.6
96.7

68.9
87.7
97.1

69.7
88.1
97.3

69.6
88.1
97.3

69.5
88.0
97.2

-0.2
3.0

0.6
2.9

0.1
2.9

0.0
2.9

0.1
3.1

0.4
3.2

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.
a/ Calculations based on 2016-HFS-W3. Actual data: 2016. Nowcast: 2017-2022. Forecasts are from 2023 to 2025.
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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SUDANKey conditions andchallenges

Table 1

2022

Population, million

46.9

GDP, current US$ billion

51.7

GDP per capita, current US$

1102.2

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

65.6

Total GHG emissions (mtCO2e)

127.5

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).

The October 2021 military takeover weakened domestic activity, slowing progress
toward debt relief as part of the heavily
indebted poor countries initiative. Despite
food insecurity, floods, higher input costs,
and supply shortages, good rains helped
agriculture recover. Growth is projected
at 0.4 percent in 2023 following five yearsof recession. Inflation remains in double
digits. The population living on lessthan US$2.15 per day is estimated tohave risen from 30.6 percent in 2021 to
32.3 percent in 2022.

The October 2021 military takeover hascome at a high economic cost for Sudan
and has slowed progress in receiving debt
relief under the HIPC initiative. Sudan’s
economy contracted for four consecutive
years between 2018 and 2021, resulting ina cumulative 10.4 percent decline in output. The pause in foreign inflows caused
depreciation pressures, leading the Central Bank of Sudan to shift to a fully flexible exchange rate for a brief period in
March 2022. Consequently, the currency
rapidly depreciated from SDG 600 to SDG
800 per US dollar in one week. The central bank immediately reverted to a managed float to curb the sharp depreciation
and reduce the spread between the parallel and formal market rates. An appropriately valued and stable exchange rate iscentral to achieving sustained and inclusive economic growth.
Sudan is vulnerable to risks primarily
from political and macroeconomic uncertainties and continued spillovers from
Russia’s invasion of Ukraine. Although
an agreement framework that sets thegroundwork for establishing a civilianled transitional government was signed inearly 2023, the political context remains
uncertain and unstable. Macroeconomic
risks remain high even with efforts to reduce subsidies and contain inflation. Access to external finance is also limited.
Moreover, Sudan is vulnerable to natural

hazards, including localized flooding,drought, and locust infestations. Food insecurity will likely worsen if more climate
shocks occur amid rising global commodity prices. Mitigating these risks will require resolving the political situation andmaintaining economic stability.

Recent developments
The pace of GDP contraction slowed to an
estimated 1 percent in 2022, backed by stable agriculture and livestock production
and modest growth in gold exports. However, both the manufacturing and service
sectors shrank (0.7 percent and 3 percent,respectively) due to continued fiscal tightening from substantially higher taxes andfees, ongoing civil disturbances, and disrupted business logistics.
The fiscal deficit increased from 0.3 percent of GDP in 2021 to 1.7 percent of
GDP in 2022, reflecting budget rigidities.
Spending in 2022 rose by 131 percent
to reach 11.7 percent of GDP, as wage
expenditures more than tripled, whiletransfers (including social benefits andtransfers to states) increased more than
fivefold. Despite the nominal increase,spending contracted in real terms. The
authorities continued efforts to reduce
subsidies, which declined from 3.8 percent in 2021 to 2.9 percent of GDP in
2022. The deficit was financed by higher
taxes, transit tariffs, customs duties, anddomestic borrowing. Public debt declined
to 183.6 percent of GDP in 2022 (from215.6 percent in 2021).

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
3

Poverty rate (%)

21Agriculture
Industry
Services
Gross Value Added at Basic Prices

Real GDP per capita (constant LCU)

100

800

90

700

80

600

70

0
-1

60

500

50

400

40

300

30
-2

100

10

-3
-4

200

20
0

0
2009

2018

2019

2020

2021

2022e

2023f

2024f

2011

2013

2015

2017

International poverty rate
Upper middle-income pov. rate

2025f

Sources: Central Bureau of Statistics and World Bank’s staff estimates.

Source: World Bank. Notes: see Table 2.

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2019

2021

2023

2025

Lower middle-income pov. rate
Real GDP pc

Average annual inflation declined from359.7 percent in 2021 to 164.2 percent
in 2022, driven by a slowdown in basemoney growth due to reduced monetization. Weak domestic demand also contributed to slow inflation. After rapidly
depreciating in March, the currency remained relatively stable, with the premium between the parallel and official rate
averaging 0.6 percent from April 2022.
As of end-December 2022, the parallelexchange rate stood at SDG 580 per US
dollar and the official rate averaged SDG
575 per US dollar. Strong export performance (especially for gold and livestock), higher oil transit fees, and lower domestic demand helped narrow thecurrent account deficit to 6 percent of
GDP in 2022. Gross international reserves
fell to roughly US$1.2 billion in 2022 (1.4months of imports), down from US$1.63
billion at end-2021.
Although official poverty statistics are notavailable after 2014, the percentage of the
population living on less than US$2.15 per

day (2017 PPP) is estimated to have increased from 20.4 percent in 2018 to 32.9
percent in 2023. The protracted economiccrisis contributed to an estimated 12-percentage-point increase in extreme poverty.

Outlook
The economy is expected to recover at a
weak pace of 0.4 percent in 2023, weighed
down by the slow resolution of Sudan’s
political crisis and as widespread social
unrest and insecurity persist. Thereafter,
GDP growth is expected to average around
2 percent between 2023 and 2025, driven
by rising agricultural output and exportsof livestock, as well as mining and services.
Inflation is expected to continue declining,reflecting the authorities’ aim to containthe fiscal deficit and limit monetization.
However, it will remain elevated given domestic shortages coupled with high importprices for consumer goods and production

TABLE 2 Sudan / Macro poverty outlook indicators

inputs. The central bank aims to reducebase money supply growth to 27 percent in
2023 from 49.4 percent in 2022.
The current account is expected to remain
in a significant deficit over 2023-25, reflecting Sudan’s low domestic production andhigh import requirements. A persistent
trade deficit will continue to impede theaccumulation of foreign reserves and hinder investor sentiment. The fiscal deficit
is projected to average about 2.5 percent
of GDP over the medium term, reflecting
higher outlays on wages and transfers.
Subsidies are expected to continue to decline. In the absence of grants to finance increased wages and transfers, the government is expected to delay capital spending
and rely on trade receipts from exports ofgold and animal products.
Projections suggest that extreme poverty
will continue to increase until 2024. Even
though extreme poverty is expected tostagnate at around 33 percent up to 2025,
poverty rates measured by all poverty
lines are still high.

(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

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
-1.0
-0.3
-3.0
-1.6
4.5
6.0

2023f
0.4
1.1
-2.7
0.1
6.0
5.0

2024f
1.5
1.8
1.3
1.0
12.0
5.5

2025f
2.0
2.1
2.3
1.4
15.0
5.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-3.6
-2.5
-5.7
-3.0

-1.9
-0.6
-0.7
-3.9

-1.0
1.0
-0.7
-3.0

0.4
1.2
1.7
-1.4

1.6
1.5
2.7
0.7

2.0
1.7
3.0
1.6

Inflation (Consumer Price Index)

163.3

359.7

164.2

75.0

35.0

20.0

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

-21.6
-2.7

-7.3
-1.6

-6.0
-1.3

-7.0
-1.6

-7.6
-2.0

-7.8
-2.0

Fiscal Balance (% of GDP)
Revenues (% of GDP)

-5.9
4.8
281.4
-5.9

-0.3
10.5
215.6
-0.3

-1.7
10.0
183.6
-1.4

-2.0
10.5
167.3
-1.6

-2.4
11.0
157.9
-2.0

-2.5
11.2
149.5
-2.1

27.3
64.4
91.9

30.6
67.6
92.9

32.4
69.0
93.4

32.9
69.3
93.5

32.9
69.4
93.5

32.9
69.4
93.5

0.0
16.6

-0.1
16.6

0.4
16.9

0.9
17.4

1.3
17.9

1.5
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.
a/ Debt projections do not include any restructuring achieved during the HIPC process.
b/ Calculations based on 2014-NBHS. Actual data: 2014. Nowcast: 2015-2022. Forecasts are from 2023 to 2025.
c/ Projection using neutral distribution (2014) with pass-through = 1 (High (1)) based on GDP per capita in constant LCU.

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Apr 23TANZANIA

Key conditions andchallenges

Table 1

2022

Population, million

65.6

GDP, current US$ billion

75.5

GDP per capita, current US$

1151.4

International 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

97.2

b

66.4

Total GHG emissions (mtCO2e)

159.8

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 (2021); Life expectancy(2020).

Tanzania’s economy has maintained its
growth momentum, expanding by 4.6
percent in 2022, up from 4.3 percent in
2021. GDP per capita rose by 1.4 percent
in 2022 and the international poverty
rate dropped marginally by 0.3 percentage points. Headwinds from high commodity prices kept growth below potential, however. Sustaining the growth momentum hinges on the Government facilitating private sector investment that creates jobs. The economy continues to faceheadwind as result of ongoing Russia’s
invasion of Ukraine.

Tanzania’s economy emerged from thepandemic in relatively good shape becauseof strong macroeconomic conditions: relatively low and stable inflation and manageable external and fiscal balances. However, the economic recovery has been relatively subdued due to strong headwinds
associated with the war in Ukraine and theweak domestic business environment,
which reduced private investment, including FDI. Tanzania’s private sector has beenchallenged by a costly business regulatoryenvironment, high taxes, weak infrastructure, and inadequate skills.
The elasticity of poverty reduction to
growth has been very low, indicating theimportance of policy measures to ensure
growth benefits all households including
the poor, for example through public
spending on social sectors and rural infrastructure. Priority reforms should aim tostrengthen the efficiency of public investment, strengthen debt management anddata transparency, and augment fiscal
space to increase investments in physicaland human capital by enhancing public expenditure efficiency and domestic revenue
mobilization. To enhance the impact ofgrowth on poverty reduction, investing inhuman capital, raising smallholder agricultural productivity, and supporting thecreation of good jobs by facilitating private
sector investment through deregulation
will be essential. Moreover, helping

women access economic opportunities andassets such as land remains critical.

Recent developments
In 2022, Tanzania maintained its growth
momentum, with estimated real GDP
growth of 4.6 percent, up from 4.3 percent
in 2021 but slightly lower than the authorities’ forecast of 4.9 percent. Led by the services and industry sectors, the recovery remained broad-based as all subsectors surpassed their pre-pandemic production levels by Q3-2022. This is consistent with highfrequency indicators including cement
production, electricity generation, andtourist arrivals, all of which grew substantially in 2022. Shocks from global commodity markets and prolonged droughts
pushed headline inflation up, averaging
4.3 percent in 2022 and reaching 4.9 percent (y/y) in January 2023. A combinationof tight monetary policy stance and fuelsubsidies have managed to keep inflation
low relative to Tanzania’s neighbors.
Global headwinds have challenged Tanzania’s external sector. The current-accountdeficit widened to an estimated 5.6 percent
of GDP in 2022, up from 3.2 percent of GDP
in 2021, as higher food and fuel prices meant
the import bill grew faster than exports earnings. The current account deficit has been
funded mainly by external loans and foreign
reserves. Gross official liquid reserves of the
BOT declined by US$ 1.2 billion over the past
one year reaching US$ 5.2 billion at end-2022(equivalent to 4.7 months of imports). The
Tanzanian Shilling has remined relatively

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

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

Percent, percentage points
7

Poverty rate (%)

Real GDP per capita (constant million LCU)

120

6

2.50

100

2.00

5
80

4

1.50

3

60

2

40

1.00

1

0.50

20
0
2018

2019

2020

2021

2022e

Agriculture
Services
GDP at Constant Prices

2023p

2024p

2025p

0

Industry
Net Taxes on Production

0.00
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025
International poverty rate
Upper middle-income pov. rate

Source: World Bank staff estimates and projections.

Source: World Bank. Notes: see Table 2.

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Real GDP pc

stable against the currencies of major trading partners.
During FY2021/22, the overall fiscal deficit
narrowed to 3.6 percent of GDP, downfrom 4.0 percent of GDP in FY2020/21. This
performance was due to a combination ofhigher tax revenue collections and expenditure restraint notwithstanding the implementation of fuel and fertilizer subsidy
programs. Both external and domesticloans remained almost equally importantfor financing the deficit (on net basis). According to the latest debt sustainability
analysis, Tanzania’s public and publicly
guaranteed debt as a share of GDP remains relatively modest at 42.1 percent
of GDP as of FY2022/23. The latest DSA
indicates that Tanzania’s risk of external
debt distress remains moderate.
Only a minor reduction in the poverty rate
is anticipated in 2022. The international
poverty rate for mainland Tanzania is projected to drop from 44.3 in 2021 to 44.0 percent in 2022, about 0.3 percentage points
below pre-pandemic levels.

OutlookGDP growth is projected to reach 5.1
percent in 2023 – about 2.2 percent percapita - as investment increases and external terms of trade improve. However, Tanzania is only projected to reachits potential growth rate of 6 percent in
2025. The current account is projected at
6.1 percent of GDP in 2023 as importdemand to support public investment
remains elevated. Driven by increased
revenue collection from expanding economic activities, the fiscal deficit is projected to narrow marginally to 3.0 percent of GDP in 2023. However, thishides a large quantity of VAT refunds
and domestic payment arrears that remain outstanding and are estimated at
3-4 percent of GDP end 2022. Addressing this key issue further to the strategy
the authorities put forward will be critical to fiscal management.

TABLE 2 Tanzania / Macro poverty outlook indicators

A deterioration of the external environment
and the slow pace of implementation of domestic policies are the major risks to themacroeconomic outlook, with real GDP
growth ranging between 4.5 – 5.5 percent in
2023 under alternative scenarios (1.6 to 2.6
percent per capita). Supply shocks andcommodity-price pressures associatedwith the war in Ukraine and a slow recovery of global demand coupled with tightening external financial conditions are major downside risks. Domestic risks include
slow or incomplete implementation of
structural reforms particularly related to
key issues such as private sector and gender as well as climate change effects on the
agriculture and tourism sectors.
In 2023 poverty is expected to drop by 0.6
percentage points based on a GDP per
capita growth rate of 2.2 percent and theaverage poverty to growth elasticity for
Sub-Sahara Africa. A new nationwide integrated household budget survey will be
conducted in 2023/24 which will enable an
update of the official poverty rate.

(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

2020
2.0
0.9
7.4
2.4
-8.6
-7.6

2021
4.3
2.3
9.0
7.8
5.2
9.6

2022e
4.6
4.8
8.4
9.3
10.2
23.7

2023f
5.1
3.8
6.2
6.8
12.3
11.5

2024f
5.6
3.2
4.6
4.8
11.5
1.9

2025f
6.2
3.4
7.3
7.0
8.9
3.6

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

2.0
3.1
2.5
0.9

4.3
3.7
4.1
4.8

4.5
3.3
4.3
5.5

5.0
3.6
4.8
6.1

5.6
3.8
5.6
6.8

6.2
4.1
6.2
7.5

Inflation (Consumer Price Index)

3.3

3.7

4.3

5.2

4.5

3.9

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

-2.5
1.4

-3.2
1.6

-5.6
1.8

-6.1
2.1

-4.8
2.4

-4.1
2.7

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

-2.9
14.3
39.3
-1.3

-3.8
14.5
42.0
-2.1

-3.5
15.6
42.2
-1.8

-3.1
16.1
42.1
-1.4

-2.7
16.1
41.9
-1.1

-2.2
16.6
41.3
-0.7

44.6
74.1
91.9

44.3
73.8
91.7

44.0
73.6
91.3

43.4
73.2
90.8

42.8
72.7
90.2

42.1
72.2
89.6

0.8
10.0

0.8
9.4

1.5
9.4

1.9
9.7

1.7
9.8

1.6
9.9

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.
a/ Calculations based on 2013- and 2018-HBS. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
b/ Projection using point to point elasticity at regional level with pass-through = 0.7 based on GDP per capita in constant LCU.

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Apr 23TOGO

Key conditions andchallenges

Table 1

2022

Population, million

8.8GDP, current US$ billion

8.4

GDP per capita, current US$

952.3

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

124.2

b

61.0

Total GHG emissions (mtCO2e)

10.1Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ WDI for School enrollment (2021); Life expectancy(2020).

Following a post-COVID rebound in 2021,
growth moderated in 2022 and 2023 due todisruptions associated with the Russia’s
invasion of Ukraine while government efforts to address security threats in the
North and higher food and energy prices
led to increased fiscal deficits and higher
debt. Having risen in 2020-23, extreme
poverty is projected to resume its downward trend in 2024-25 as the recovery
strengthens, albeit at a modest pace due tofiscal consolidation measures.

Despite recent shocks, growth in Togo
has shown signs of resilience thanks inpart to increased public spending but thecountry is facing rising social, security
and fiscal challenges. 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 increased to30.6 percent in 2022 (from 29.6 percent
in 2021) largely due to a sharp increasein consumer price inflation and slowing
agricultural production. The Savanes region, Togo’s poorest, has experienced an
uptick in terrorist attacks since 2021 asJihadist groups operating in the Sahelexpand southward.
A lack of economic opportunity for youth
and weak service delivery further exacerbates the situation. Climate change also
constitutes an increasing threat, disproportionally affecting poorer regions.
Growth is expected to strengthen gradually in 2024-25, as external demandregains momentum and domestic inflation moderates, but fiscal consolidation
measures and tighter financing conditions will keep a lid on the recovery.
Risks remain tilted to the downside, including the possibility of weaker-thanexpected global demand, growing insecurity in the North, fiscal financing
pressures, and climate shocks disrupting
agriculture production.

Recent developments
Real GDP growth is estimated to haveslowed to 4.9 percent in 2022, down from
5.3 percent in 2021, as disruptions associated with the war in Ukraine led to weakening export revenues and increased costof living at home, which was only partially offset by higher public spending. In
particular, a sharp uptick in food and energy prices led headline inflation to reacha 20-year high of 7.5 percent in 2022,
which contributed to a significant deceleration in consumer spending. Increased
energy and fertilizer costs also negatively impacted the agriculture sector, which
together with more variable rainfall contributed to slowing production. In thiscontext, extreme poverty increased to 30.6
percent nationwide, and reached up to
45.9 percent in rural areas.
Rising inflation and growing insecurity in
the Savanes region led the government toimplement emergency spending in a revised 2022 budget, including higher subsidies for fertilizers and fuel, tax exemptions, public sector wage and pension increases amounting to 1.3 percent
of GDP, and new capital expenditure forsecurity purposes amounting to 2 percent of GDP. These emergency measures,some of which appear poorly targeted,contributed to the fiscal deficit increasing to 8.3 percent of GDP in 2022, up
from 4.8 percent in 2021. The government was able to meet rising borrowing
needs through additional external concessional financing and higher regional

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

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

Percent, percentage points
8

Poverty rate (%)

Real GDP per capita (constant LCU)

100

60000090

6500000

80
4

70

2

60

40000050
030000040
200000

30

-2

20

-4
2020

2021

2022

Net Exports
Gross Fixed Capital Formation
Private Consumption
GDP per Capita Growth

2025

10

Change in Inventories
Government Consumption
Real GDP Growth

0

2023

2024

10000002006 2008 2010 2012 2014 2016 2018 2020 2022 2024
International poverty rate
Upper middle-income pov. rate

Source: World Bank.

Source: World Bank. Notes: see Table 2.

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Apr 23Lower middle-income pov. rate
Real GDP pc

bond issuances where appetite for debt
remained strong throughout the year despite tightening financing conditions.
To counter inflation across WAEMU
countries, the Central Bank of West
African States (BCEAO) raised policy interest rates by a cumulative 75 basis
points in 2022 (to 2.75 percent for liquidity calls and 4.75 percent for the marginal
lending facility). BCEAO will likely needto continue tightening in 2023 in linewith other major central banks, and as
foreign exchange reserves have declined,
and inflation remains well above the target range of 1-3 percent. Furthermore, delaying fiscal adjustments towards the regional fiscal deficit target of below 3 percent of GDP by 2025 could exacerbate
debt sustainability risks in some countries, while increasing regional financing
needs, reducing reserve buffers, and elevating inflationary risks.

Outlook
Growth is projected to stabilize at 4.9 percent in 2023, as an uptick in consumer
spending driven by subsiding energy andfood price inflation should be offset by decelerating public investment and external
demand. As the global economy regains
momentum in 2024-25, growth in Togo is
projected to strengthen as well, reaching
5.3 percent in 2024 and 5.5 percent in 2025,
but fiscal consolidation measures andtighter financing conditions will keep a lid
on domestic demand. While extreme
poverty is expected to remain elevated in
2023, at 30.7 percent, it is projected to gradually decline to 30.1 percent in 2024 and29.5 percent in 2025 as inflation moderates
and agriculture production recovers,
though still remaining above pre-COVID

TABLE 2 Togo / Macro poverty outlook indicatorslevels. The decline in poverty is projected
to be the strongest in rural areas, given thepositive outlook for the agriculture sector.
Lower poverty reduction is expected in urban areas, reflecting steady but more moderate growth in services activity.
The Government’s fiscal consolidation
plan, which includes reduced capitalspending and increased revenue mobilization, is expected to bring the deficit to
4.5 percent of GDP in 2025, thereby remaining above the WAEMU convergencecriterion of 3 percent. While external debt
distress risks are moderate, elevated domestic debt, ongoing refinancing pressures and tighter global financing conditions are a source of vulnerability. Downside risks to the outlook also stem fromregional security threats, disruptions from
more frequent extreme weather events,
and uncertainty around global demandand commodity markets.

(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

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
4.9
2.1
5.9
21.8
5.2
11.0

2023f
4.9
5.4
3.3
2.9
4.9
3.7

2024f
5.3
5.5
1.3
6.9
5.8
5.8

2025f
5.5
5.3
5.2
5.8
6.8
6.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

2.0
1.3
5.3
0.9

5.1
6.0
6.8
4.0

5.0
3.9
3.1
6.3

4.9
4.5
4.8
5.1

5.3
5.1
6.2
4.9

5.5
5.3
6.4
5.2

Inflation (Consumer Price Index)

1.8

4.5

7.5

5.3

3.5

3.0

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

-0.3
0.7

-1.3
-1.1

-5.8
0.9

-5.6
1.8

-5.3
2.0

-4.2
2.0

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

-6.9
16.2
60.4
-4.6

-4.8
17.0
63.6
-2.3

-8.3
17.4
68.0
-6.0

-6.6
17.3
70.1
-3.8

-5.4
16.6
70.4
-2.5

-4.5
16.3
69.6
-1.9

28.8
57.4
83.9

29.6
58.7
84.4

30.6
59.0
84.7

30.7
59.0
84.5

30.1
58.6
84.3

29.5
58.1
84.1

2.7
23.1

7.8
25.1

5.2
25.9

3.1
25.2

4.6
25.0

4.4
25.2

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.
a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
b/ Projection based on microsimulation model that accounts for differences in sectoral growth, food and nonfood inflation.

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UGANDAKey conditions andchallenges

Table 1

2022

Population, million

47.2

GDP, current US$ billion

38.8

GDP per capita, current US$

822.2

International poverty rate ($2.15)

a

42.2
a

71.9

a

91.1

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

a

42.7

School enrollment, primary (% gross)

b

102.7

b

62.9

Total GHG emissions (mtCO2e)62.5Life expectancy at birth, years

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

Uganda’s economy is expected to growabove 5 percent in FY23, as investment
picks momentum, supported by lower inflationary pressures and easier monetary
policy. Reducing the fiscal deficit to 3.5
percent by FY24 would make debt moresustainable. GDP growth will accelerate
beyond 6 percent in FY24 and FY25, if notderailed by a global slowdown, disruptions
to global finances and weather shocks.
Poverty will fall as incomes recover.

Increased shocks and less momentum behind policy reform create challenges forsustaining economic growth and reducing
poverty in Uganda. Real GDP per capita
grew by only 1.0 percent per year between
2011 and 2022 in the context of rapid population growth, drought and other external shocks, a less supportive external environment, and weakening policy and institutional framework (including centralization of policymaking). The pace of poverty
reduction decelerated as most households
rely heavily on agriculture and are vulnerable to climate change and weather shocks.
Ahead of possibly transitioning into an oil
producer, the Ugandan economy needs tostructurally transform and shift labor intoa more productive employment to reinvigorate economic activity and reduce poverty. Labor is not moving to high-productivity activities. Approximately two-thirds of
the Ugandan workforce remain occupiedin agriculture, which produces less than aquarter of the GDP. Although services constitute a large share of GDP, many jobs
in the sector are informal and low-skilled.
Given Uganda’s small domestic market
and distortions, international trade must
support this transformation and boost economic growth and development.
The private sector must drive this transformation and diversification. Uganda’s
growth model of debt-financed public
spending—which has emphasized physical

FIGURE 1 Uganda / Fiscal adjustment

Percent of GDP
18

infrastructure—has crowded out private
sector investment and is not sustainable.
A more appropriate role for the state is
to build human capital, facilitate private
investment and job creation, and pursue measures to reduce inequality andstrengthen resilience. The prospects forthe shift to private sector-led growth depend on macroeconomic stability, more
efficient and effective public spending, increased government support for the mostvulnerable, and the uptake of digital andother innovative technologies.

Recent developments
Uganda’s economy weathered successive
shocks in 2022 with GDP growth expected torecover to 5.7 percent y/y during FY23 (July2022 to June 2023). A post-COVID-19 recovery in services and industrial sectors offset
the weather-induced decline in agriculture.
An uptick in investments and employment
growth reinforced domestic demand before
lending rates rose in response to a tightermonetary stance starting in June 2022.
High-frequency phone surveys find that
employment, labor, and farm incomes improved through November 2022, although more than half of the population
remained moderately food insecure,while 15 percent were severely insecure.
Due to inflation, the poorest households
in rural areas were unable to access or
buy food in desired amounts.
The external current account deficit is expected to widen to 9 percent of GDP in FY23
due to a deterioration in the terms of trade.

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

Percent of GDP
60

16

12

2.50

90

50

14

Real private consumption per capita (constant million LCU)

100
80

2.00

70

40

60

10

30

8
6

1.50

50
40

20

1.00

30

4

20

10

2

0.50

10

0

0
FY2019FY2020

FY2021

Public debt (rhs)
Domestic revenue (lhs)0

FY2022 FY2023f FY2024f FY2025f

0.00
2009

Primary deficit (lhs)

2011

2013

2015

2017

International poverty rate
Upper middle-income pov. rate

Source: Ministry of Finance, Planning and Economic Development.

Source: World Bank. Notes: see Table 2.

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2019

2021

2023

2025

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

While Uganda’s exports benefitted from thesurge in commodity prices, the re-openingof the Rwanda–Uganda border, easing of
non-tariff barriers with Kenya, resumptionof the gold trade, and recovery of tourism,
imports growth has been stronger, partly tosupport investments.
Inflation subsided beginning November
2022, thanks to lower international commodity prices and Bank of Uganda’s (BoU)
tight monetary policy. In February 2023,
BoU maintained its policy rate at 10 percent, 350 basis points above its level a year
ago, for the fourth consecutive month.
Hence, the annual headline and core inflation slid to 9.2 percent and 7.8 percent,respectively, as the energy and utilities
prices reduced.
Due to shocks, government revenues remained below target, while recurrent
spending overshot the underspending on
the capital budget. The fiscal deficit is expected at 5.1 percent of GDP and public debt
at 50 percent of GDP. Despite efforts to repay domestic arrears, government’s reliance on the domestic market to finance its
deficit hurts the private sector’s recovery.

Outlook
Uganda’s economic growth is expected toaccelerate to above 6 percent per year in
the medium-term, as inflationary pressures subside, BoU eases monetary policy,
and the government relies mainly on revenue collection and spending efficiencies
to cut the deficit. The investments and exports of oil will support government’s other promotional efforts for tourism, export
diversification, and agro-industrialization.
Nonetheless, the slowdown of global
growth, disruptions in global financial
conditions, and increasingly volatile
weather remain major downward risks.
Accelerated growth may reduce poverty(measured at the $2.15/day international
poverty line) from 41.4 percent in 2023 to
39 percent by 2025. But given that households have limited adaptive capacity, thepace of poverty reduction will ultimately
depend on how food access and affordability evolve, and on the incidence of weather
and any environmental shocks.

TABLE 2 Uganda / Macro poverty outlook indicators

Inflation expectations are lower as
global supply chains improve, energy
prices stabilize, and the shilling stabilizes with increased foreign capital inflows. Core inflation is projected to return to the target of 5 percent by December 2023. However, drought conditions will exert pressure on foodprices and sustain headline inflation
above 6 percent. With the balance ofrisks tilted downwards, BoU is expected to cautiously ease monetary policy
to support economic recovery.
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 reduce debt accumulation and combined with a deliberate effort to minimize non-concessional borrowing, reduce fiscal risks. The government plans to reduce domestic borrowing while maintaining the debt below 50
percent of GDP beyond FY23 to avoid
crowding out the private sector.

(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

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
4.7
3.4
-17.4
20.1
-18.6
-8.9

2023f
5.7
5.0
-0.6
9.1
18.0
14.4

2024f
6.2
5.3
2.2
8.0
16.7
11.7

2025f
6.7
5.6
2.5
8.3
15.3
10.6

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

3.0
4.6
3.1
2.2

3.4
3.8
3.4
3.3

4.7
4.4
5.4
4.4

5.7
4.2
6.3
6.1

6.2
4.0
7.9
6.3

6.7
4.3
8.1
7.0

Inflation (Consumer Price Index)

2.3

2.5

3.7

8.3

7.2

5.0

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

-6.7
2.6

-10.2
2.1

-7.9
3.1

-9.0
5.2

-10.6
6.3

-12.2
6.6

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

-7.1
13.1
40.4
-4.8

-9.5
14.7
49.6
-6.8

-7.4
14.2
50.7
-4.6

-5.1
15.3
50.7
-2.0

-3.5
15.5
49.1
-1.0

-3.4
16.1
48.0
-1.2

42.6
72.3
91.3

42.4
72.0
91.1

42.3
71.9
91.1

41.4
71.2
90.9

40.5
70.5
90.6

39.0
69.7
90.3

0.6
17.8

1.6
16.8

3.5
17.1

3.7
17.4

3.9
17.8

4.0
18.2

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.
a/ Calculations based on 2019-UNHS. Actual data: 2019. Nowcast: 2020-2022. Forecasts are from 2023 to 2025.
b/ Projection using neutral distribution (2019) with pass-through = 0.7 (Low (0.7)) based on private consumption per capita in constant LCU.

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ZAMBIAKey conditions andchallenges

Table 1

2022

Population, million

19.6

GDP, current US$ billion

28.3

GDP per capita, current US$

1445.4

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

62.4

Total GHG emissions (mtCO2e)

94.5

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).

Challenges in agriculture, mining, andconstruction slowed economic growth to
3.9 percent in 2022 after the post-pandemic rebound in 2021. Strong momentum in services, continued government
commitment to reform, a boost in business confidence from expected debt restructuring, and favorable copper prices
should support a modest but steady
growth acceleration in 2023–24.

Zambia is in debt distress and requires
debt relief. Weak fiscal discipline, excessive non-concessional borrowing, andfalling copper prices caused external debt
to jump to 66.4 percent of GDP in 2019from 6.7 percent in 2011. The COVID-19
pandemic exacerbated Zambia’s debt vulnerabilities, leading to a default on Eurobond payments in 2020. The government
elected in August 2021 has launched policy
reforms and begun a sharp fiscal adjustment but a substantial reduction in the netpresent value of Zambia’s debt stock is also required to restore debt sustainability.
Currently, Zambia’s creditors—official
and private—are discussing terms for adebt restructuring agreement.
In addition, job creation, increased productivity, and economic transformation isneeded to ensure that future economic
growth lifts more Zambians out of poverty, currently estimated at 62 percent. Thisis needed over the medium term to counterthe track record of low and unevengrowth, slow structural change, weak productivity especially in agriculture, insufficient human capital accumulation, andlack of adequate enablers for private sector-led growth. The Human Capital Index
shows that a child born in Zambia will be
40 percent as productive when they growup as they could be if they enjoyed complete education and full health, which is
below the regional average.

Recent developments
External and domestic headwinds
slowed the pace of recovery in 2022.
Real GDP grew by 3.7 percent, yearon-year, in Q1–Q3, driven by services(Figure 1). But falling world copper
prices and operational challenges reduced copper production by 4.4 percent
in 2022. Meanwhile, adverse weather
and disruptions in the supply of fertilizer dampened crop output. The current account surplus narrowed to 2.3
percent of GDP in 2022 as spillovers
from Russia’s invasion of Ukraine raised
Zambia’s import bill while falling copper prices and output slowed growthin nominal export revenue. Uncertainty
about debt restructuring reversed portfolio capital flows, triggering a 28.6 percent depreciation of the kwacha between
September 2022 and February 2023 andplacing pressure on reserves.
Inflation has remained in single digits
since June 2022 and was 9.6 percent (y/y)
in February 2023, supported by fiscal andmonetary restraints. In February 2023, theBank of Zambia increased the statutory
reserve ratio on deposits by 2.5 percentage points and hiked the policy rate by
25 basis points.
The government remains committed to fiscal prudence and in 2022 delivered 6 percentage points of GDP improvement in the
primary fiscal balance (commitment basis).
The debt service standstill, controls on recurrent spending, rationalization of capitalprojects, and increased income tax revenue

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

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

Percent, percentage points
9

Poverty rate (%)

6

Real GDP per capita (constant LCU)

100

9000

90

8000

80

7000

70
3

6000

60

5000

50
0

4000

40

3000

30
-3

20

2000

10

1000

0

-6
2020Q1

2020Q3

Agriculture

2021Q1
Industry

2021Q3Mining2022Q1Services02006 2008 2010 2012 2014 2016 2018 2020 2022 2024

2022Q3

International poverty rate
Upper middle-income pov. rate

GDP

Source: Zambia Statistics Agency.

Source: World Bank. Notes: see Table 2.

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Apr 23Lower middle-income pov. rate
Real GDP pc

created space to increase social spending—ensuring that fiscal consolidation did
not excessively drag growth.
Available data point to a slow and unevenrecovery of household welfare in the last
couple of years. The annual Labor Force
Survey indicates that urban unemployment returned to pre-COVID-19 levels by
2021 but rural unemployment did not recover from the sharp increase in 2018.
Household earnings, in turn, decreased
across the board 2020–21. A phone survey
from July 2022 found that as many as 50
percent of households did not fully meettheir demands of basic staples, overwhelmingly citing economic reasons as themain barrier to access (increased prices orlack of money).

Outlook
The recovery is expected to strengthen,with GDP growing by around 4.5 percent

annually 2023–25. A debt restructuring
deal will boost market confidence, external capital flows, and macroeconomic stability. Firmer copper demand from China
and commencement of fertilizer production at a newly established domestic plant
will broaden the base of GDP growth.
Completion of reforms to agricultural
policies, business regulations, and the energy sector will ensure fiscal sustainability and promote private sector-led growth.
However, the Bank of Zambia expects inflation to rise and remain above its target band of 6–8 percent over the next
two years on account of inflationary pressure from sustained exchange rate depreciation, increase in energy costs, and lingering external headwinds.
The risks to the outlook are balanced but
there is substantial uncertainty. Soonerthan-anticipated debt restructuring deal
would create fiscal space, accelerate foreign aid delivery, and improve engagement with the international community.
Firmer-than-expected copper prices will

TABLE 2 Zambia / Macro poverty outlook indicators

boost the external sector's performanceand support exchange rate stability. However, the prolonged war in Ukraine willcontinue to impact the terms of trade forZambia as it heavily depends on imported
petroleum. Growing rainfall variability
leading to floods and sometimes droughts
is a risk that is undermining agriculture
production and rural livelihoods.
Under current GDP-based projections, theincidence of poverty is projected to slowly
return to pre-pandemic levels by 2025. Projected sustained growth in the services andconstruction sectors are expected to benefit
the urban poor and reverse the recent increase in urban poverty. Progress with rural poverty, however, is more uncertain.
While the agriculture sector is projected togrow, rates are just above population
growth and the sector is subject to highvolatility. Structural barriers to agricultural productivity and limited ability to cushion external shocks among the rural poor
mean that additional support may beneeded to improve their livelihoods.

(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

2020
-2.8
3.1
10.8
-29.7
21.8
10.6

2021
4.6
3.6
5.6
25.3
-6.6
2.5

2022e
3.9
4.5
-3.4
9.2
6.0
9.3

2023f
4.2
4.5
12.8
11.3
-4.6
1.6

2024f
4.7
4.5
8.8
0.2
3.5
-0.6

2025f
4.8
4.5
8.8
7.4
2.6
4.7

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-2.2
17.2
1.3
-6.1

4.7
6.9
4.2
4.7

3.0
-3.9
-3.9
7.8

4.2
2.0
1.0
6.1

4.7
3.0
2.5
5.9

4.8
3.0
2.5
6.1

Inflation (Consumer Price Index)

15.7

22.3

10.7

11.1

10.1

7.1

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

10.7
-1.0

8.4
1.9

2.3
-2.5

3.4
-2.9

4.3
-3.5

3.7
-4.1

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

-13.3
21.0
-7.3

-9.3
23.1
-2.9

-7.9
21.9
-0.2

-8.5
21.5
-0.1

-7.7
22.3
0.7

-6.9
20.3
0.6

62.7
78.7
91.5

62.2
78.5
91.2

61.9
78.3
91.1

61.7
78.0
90.9

61.2
77.5
90.6

60.7
77.0
90.4

1.0
8.2

1.5
8.7

0.9
8.8

1.0
9.0

1.4
9.4

1.4
9.9

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.
a/ Calculations based on 2015-LCMS-VII. Actual data: 2015. Nowcast: 2016-2022. Forecasts are from 2023 to 2025.
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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Key conditions andchallenges

Table 1

2022

Population, million

16.3

GDP, current US$ billion

20.7

GDP per capita, current US$

1267.0International 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

50.3

School enrollment, primary (% gross)

b

96.1

b

61.1

Total GHG emissions (mtCO2e)

122.9Life expectancy at birth, years

natural disasters, and pandemic have contributed to the high rate of poverty andvulnerability in Zimbabwe.

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2019), 2017 PPPs.
b/ WDI for School enrollment (2021); Life expectancy(2020).

Real GDP growth is estimated to haveslowed to 3.4 percent in 2022 on the backof worsening agriculture conditions andmacroeconomic instability. Annual inflation returned to triple digit levels in
2022, driven by both monetary expansion
and external shocks. Poverty levels, albeit
declining, remained elevated. Economic
growth is projected to slow to 2.9 percent
in 2023 and remain subdued in the medium term, reflecting global shocks andstructural bottlenecks.

Zimbabwe’s economic development continues to be hampered by price and exchange rate instability, misallocation of
productive resources, high informality,
low investment, and limited structuraltransformation. 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, limiting transfer of
new technologies and investment in modernizing the economy.
High unsustainable debt and arrears tointernational financial institutions (IFIs)
limit Zimbabwe’s growth potential. External debt is estimated at 107 percent of
GDP in 2022. The government has prepared an Arrears Clearance, Debt Relief
and Restructuring Strategy, resumed token payments to IFIs and Paris Club creditors, and initiated a high-level structured
Dialogue Platform with creditors and development partners.
Although it has declined since its peak of2020, extreme poverty remains high in thecontext of cyclical agricultural productionand elevated food prices. Persistent inflation, high dependence on low-productivity agriculture, slow structural transformation, and intermittent shocks like drought,

Recent developments
Real GDP slowed to 3.4 percent in 2022
from 8.5 percent in 2021 on the back ofworsening agriculture conditions andprice and exchange rate instability. Due tolow rainfall, agriculture output contracted
by 14 percent, after growing at double digits in 2021. Triple digit inflation constrained private sector demand, while fiscal austerity limited growth of government
demand and investment. Mineral exporters benefited from high global prices
and together with tourism contributed
most to overall economic growth.
Inflation returned to triple digits, albeit declining since August 2022, fueled by broadmoney expansion and surge in global
prices. Russia’s invasion of Ukraine,
through high food and energy prices, has
exacerbated domestic inflationary pressures that emanated from lose monetary
policy and quasi-fiscal operations, with annual inflation returning to triple digits in
May 2022. End of period inflation reached
244 percent in 2022. However, monetary
tightening, including sharp hike in interest
rates, and fiscal policy measures brought
inflation down to 230 percent in January
2023. Further, the relative relaxation on
foreign currency auction controls contributed to declining parallel market premium from over 93 percent in July 2022 to
30 percent in February 2023. Despite still

FIGURE 1 Zimbabwe / Exchange rates

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

ZWL$/US$

Poverty rate (%)

1200

100

16000

90

14000

1000

Real GDP per capita (constant LCU)

80

12000

70

800
600
400

60

10000

50

8000

40

6000

30

4000

20

200

2000

10
0
Jan-200Jul-20Jan-21

Jul-21

Official exchange rate
Interbank market exchange rate

Jan-22

Jul-22

Jan-23

0
2011

2013

2015

2017

2019

International poverty rate
Upper middle-income pov. rate

Parallel market exchange rate

Sources: Zimstat and World Bank staff estimates.

Source: World Bank. Notes: see Table 2.

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2021

2023

2025

Lower middle-income pov. rate
Real GDP pc

high inflation, the Central Bank reduced
the interest rate from 200 percent per annum to 150 percent in February 2023.
The fiscal deficit was contained for a fourthyear in a row, but quasi-fiscal operations
continued. The fiscal deficit is estimated at
1.5 percent of GDP in 2022, from 1.7 percent in 2021. Additional spending driven
by inflation was matched by higher revenue. The large part of additional spending was allocated for wages, public investment, procurement of grain, and social
protection. Revenues increased significantly due to high inflation and exchange ratevaluation gains as some of the taxes (45percent) were collected in U.S. dollars.
The current account remained in surplus
though narrowing from 1.5 percent of GDP
in 2021 to 1.1 percent in 2022 as trade
deficit widened. The merchandise trade
deficit increased sharply as import growthcontinued to outpace growth of exports on
the back of high global prices. However,strong remittances and improvements intourism receipts from abroad kept the current account in surplus.
The job loss and economic disruptions associated with the COVID-19 pandemic
have mostly dissipated. The modest economic growth in 2022 translated into amarginal decline in the international
poverty rate. Nevertheless, about 6.2 million people lived below the international
poverty line in 2022.

OutlookReal GDP growth is projected to slow further to 2.9 percent in 2023 and remain
subdued in the medium term, reflecting
global shocks, structural bottlenecks, andprice and exchange rate instability.
Growth in 2023 will be driven mostly
by agriculture, mining, and further recovery of tourism and other related services.
Agriculture output is expected to growon account of better rains, but costly inputs and financing issues are likely toweigh on yields of key crops.
Downside risks to the outlook are high reflecting potential policy loosening prior toelections, sharp global slowdown ofgrowth, volatile commodity prices, and climate change. Inflation will slow down but
remain in triple-digits in 2023. Further
monetary tightening and liberalization of
the exchange rate could bring inflation to
double-digit levels from 2024.

TABLE 2 Zimbabwe / Macro poverty outlook indicators

The fiscal deficit is projected to increasein 2023, reflecting election spending pressures. Higher wages and transfers will drive expenditure while investments in public infrastructure are expected to be moderate. Revenue will continue to benefit fromhigh inflation and exchange rate depreciation. With limited access to concessional
financing and rising costs of commercial
financing, financing of future deficits will
become more difficult, necessitating further fiscal consolidation. The current account surplus will continue shrinking, reflecting increase in imports and slowdown
in remittances inflows.
The international poverty rate is expected
to decline modestly in the medium termalong with the projected increase in GDP
per capita. Although the agriculture sector is expected to do relatively wellthanks to the timely rain, high food prices
and slow economic growth will continue
to retard the pace of poverty reduction.
Breaking the correlation of household
welfare with the weather cycles, increasing labor productivity through capital
deepening and structural transformation,and instituting a robust social protection
system are the structural priorities to reduce poverty and vulnerability.

(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

2020
-7.8
-2.7
-23.8
-4.1
-39.8
-29.0

2021
8.5
4.7
142.1
-3.8
41.1
54.8

2022e
3.4
3.4
0.8
6.9
6.0
5.5

2023f
2.9
3.5
2.6
1.1
2.8
3.1

2024f
3.4
3.2
1.9
5.6
3.8
3.1

2025f
3.4
3.2
2.2
5.3
3.8
3.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-7.7
4.1
-8.2
-9.6

8.4
17.5
6.4
7.7

3.4
-14.1
7.4
5.1

2.9
3.0
3.3
2.7

3.4
3.4
3.5
3.3

3.4
3.4
3.7
3.2

Inflation (Consumer Price Index)

557.2

98.5

193.4

124.0

74.0

54.0

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

3.0
0.7

1.5
0.4

1.1
0.8

0.4
0.7

0.7
0.6

0.5
0.5

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

1.5
13.3
92.1
1.5

-1.7
15.2
81.7
-1.7

-1.5
18.9
111.6
-1.4

-1.7
17.6
106.2
-1.6

-1.5
17.5
87.2
-1.1

-1.5
17.8
79.2
-1.4

43.9
68.1
86.9

41.4
65.8
85.6

40.8
65.4
85.4

40.5
65.2
85.3

40.0
64.8
85.1

39.5
64.1
84.9

-1.3
10.7

3.2
11.4

2.3
12.1

1.6
12.2

1.7
12.3

1.8
12.5

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.
a/ Calculations based on 2019-PICES. Actual data: 2019. Nowcast: 2020-2022. Forecasts are from 2023 to 2025.
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

04 /2023