Sub-Saharan Africa

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

AnnualMeetings2023

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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
LesothoMPO1

Oct 23

Liberia
Madagascar
MalawiMali
Mauritania
Mauritius
Mozambique
Namibia
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

121.9

GDP per capita, current US$

3481.2

International 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

61.6

Total GHG emissions (mtCO2e)

111.0Life expectancy at birth, years

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

The economy stagnated in the first quarter of 2023 due to a decline in oil production. In addition, the partial removal ofgasoline subsidies and currency depreciation have negatively affected non-oil sectors. As a result, growth is expected tofall in 2023, while inflation is estimatedto accelerate. Hence, poverty is expected
to marginally rise to 32.8 percent. The excessive dependency on oil revenue remains an elevated risk.

Angola, a lower middle-income country
with 34 million people and the second
largest oil producer in Sub-Saharan Africa,
is overly dependent on oil. In 2022, oil accounted for 26 percent of GDP, 62 percent
of tax revenues, and 95 percent of exports.
This has made growth and macroeconomic
management highly vulnerable to external
shocks, stunted the non-oil economy, andconstrained the creation of jobs. In addition, governance weaknesses and a challenging business environment have limited private sector development. Consequently, 80 percent of workers are informal,
as self-employment (with no employees) accounts for a third of all jobs. Informality isparticularly high for women (88 percent
compared to 72 percent for men). Urban andyouth unemployment remain high, reaching 38 percent and 52 percent, respectively.
Macroeconomic stability has been enhanced in the past few years through amore flexible exchange rate regime, central
bank autonomy, sound monetary policy,
and fiscal consolidation. However, economic diversification remains a challenge
due to limited human and physical capital.
The reform agenda to boost economic diversification is complex, requires effective
coordination, solid institutions, and highlevel political commitment to succeed.
Building human capital is a key priority
for reducing poverty and boosting economic growth. Limited access to healthand education services reduces the potential productivity of an Angolan child to athird, as investments in human capital formation remain modest. While Angola has
a social protection registry and a cashtransfer program (Kwenda) with nearly
750,000 rural beneficiaries receiving payments as of August 2023 (65 percent are
women), a broader safety net with urban
coverage and adaptable income support
would reduce poverty in the near-termand protect households against shocks.

Recent developments
The economy expanded 0.3 percent yearon-year in the first quarter of 2023, as
growth in services (4.1 percent) was offset
by a decline in oil production (-8.0 percent). Maintenance shutdown in a major
oil field brought production below 1 million barrels per day for the first time inyears. However, production is already recovering, exceeding 1.1 million barrels per
day by mid-2023. Growth for 2023 is estimated at 1.3 percent, as both the oil andthe non-oil sectors are expected to underperform. Despite the recent recovery in oil
production, the average in 2023 will very
likely stand close to the 2022 level. Nonoil sectors will be affected by cut in public
investments and the recent sharp currency
depreciation, which is harming private
consumption and production in sectorsthat rely on imported inputs.
Inflation continued falling rapidly from apeak of 27.7 percent in January 2022 to 10.6
percent in April 2023. However, the partial

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 (%)

480

Real private consumption per capita (constant LCU)

90

30000
25000

70

2

60
0

20000

50

-2

40

-4

30

-6

20

15000
10000
5000

10

-8
2020

2021

2022

2023e

2024f

0

2025f

0
2008 2010 2012 2014 2016 2018 2020 2022 2024

Agriculture
Services

Oil industry
Total

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

removal of gasoline subsidies and theweakening of the kwanza have reversed
the inflation’s declining trend. The reform
raised gasoline prices from 160 to 300
kwanzas per liter and mitigation measures
were insufficient to shield poorer consumers. The kwanza depreciated around40 percent against the US dollar between
mid-May and end-June, due to lower government’s supply of foreign currency resulting from lower oil revenues and larger
external debt service as debt relief deals expired. The combination of higher gasoline
prices and more expensive imported products has increased inflation from 10.6 inApril to 12.1 in July, with food and transportation prices also growing faster.
Slowing growth and rising food prices is
expected to result in negative per capita
private consumption growth and a marginal increase in poverty at $2.15 per day(2017 PPP) from 32.4 to 32.8 percent in

2023, with a total of 11.8 million Angolans
living in poverty.

Outlook
Although new oil projects will slightly increase production in coming years, it will
be difficult for the sector to avoid longterm production decline. Oil GDP is estimated to grow only 1 percent in the coming years due to field depletion and lack ofinvestment. Non-oil sectors are projected
to drive overall growth, which is expected to return to 3 percent in the medium
term. Achieving higher growth rates will
depend on the country’s effort to diversify
its economy.
Inflation is projected to continue increasing in the coming months as higher
prices of imported products pass on to

TABLE 2 Angola / Macro poverty outlook indicators

consumers. The monetary policy is expected to be effective in containing second
round effects and anchoring inflation expectations. As a result, inflationary pressures are expected to ease in 2024 and, under a baseline scenario, decline gradually
toward the Central Bank’s target of 7 percent. However, the phasing out of fuel subsidies planned for 2024-2025 will likely delay this convergence.
With private consumption growth projected to exceed population growth in 2025,
poverty is expected to increase marginallyin 2024 but fall to 32.1 percent in 2025. The
number of people living in poverty is projected to reach 12.2 million in 2024. Reducing
poverty in the near-term will require targeted interventions, such as substantial expansion of cash transfers, investments to increase agricultural incomes, and increased
employment opportunities for youth andlow-skilled workers in urban areas.

(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
-9.3
-14.0
-2.0
-7.3
-21.7

2021
1.2
4.7
-6.4
5.3
-8.6
-3.8

2022
3.0
7.0
3.6
5.9
2.9
15.5

2023e
1.3
1.0
1.0
1.5
0.1
-2.0

2024f
2.3
3.0
2.5
3.0
0.9
3.0

2025f
3.0
4.0
2.6
4.0
0.9
3.0

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

3.1
3.9
1.8
4.2

1.2
1.0
1.2
1.3

2.2
3.0
1.8
2.5

3.0
5.0
2.2
3.3

Inflation (consumer price index)

22.3

25.8

21.4

12.6

18.4

14.1

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

1.5
3.4

11.1
4.4

9.6
5.4

6.7
3.1

2.7
2.0

1.0
0.8

-1.6
21.7
133.8
5.4

2.3
21.8
82.9
7.4

1.0
23.8
64.6
5.0

0.9
25.6
88.3
6.7

1.9
26.2
75.0
7.5

-0.1
23.9
67.0
5.1

33.6
54.8
80.8

33.1
54.4
80.2

32.4
53.9
79.5

32.8
54.2
79.9

32.8
54.2
79.9

32.1
53.7
79.2

-3.6
13.3

-1.9
12.6

-0.8
12.2

-0.4
12.0

-0.2
11.8

0.0
11.8

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 2013- and 2018-IDREA. Projection using point to point elasticity at regional level with pass-through = 0.7 based on private consumption per capita inconstant LCU.
b/ Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.

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Oct 23

BENIN
Table 1

2022

Population, million

13.4

GDP, current US$ billion

17.5

GDP per capita, current US$

1310.1

International poverty rate ($2.15)

a

20.1
a

53.2

a

83.6

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

Recent developments

Key conditions andchallenges

a

37.9

School enrollment, primary (% gross)

b

116.7

b

59.8

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/ Most recent WDI value (2021).

Real growth is projected to moderate to
5.8 percent in 2023 as sanctions againstneighboring Niger and reforms in Nigeria
affect reexport activities and importprices. Poverty reduction should slow in
2023, settling at 15.6 percent. The response to overlapping crises has significantly reduced fiscal space, while debt
levels increased. Food and energy pricevolatility, regional tensions, increased security risks in the North, and extreme
weather events cloud the outlook.

The countercyclical, expansionary fiscal
policy response to the overlapping crises
over 2020-22 were enabled by the fiscal
consolidation efforts in 2016-19. This, combined with significant infrastructure investment under the second Government
Action Plan (PAG, 2021-26) and a resilient
agriculture sector, maintained above-regional average growth over the past years.
Nonetheless, poverty and vulnerability remain high, with large spatial disparities.
With rising political instability in the
sub-region and security threats in the
North, sustaining economic growth necessitates structural reforms to alleviatecritical constraints. First, rebuilding fiscal
space requires improved revenue collection and streamlining tax expenditures,
while enhancing the efficiency of public
spending. Second, the recent crises andrecurrent climate shocks highlight theneed for reforms to strengthen shock resilience, including through an adaptivesocial protection system.
Risks include political instability inneighboring Sahel countries, increased insecurity and social tensions in the North
together with sustained food, energy, andfertilizer price volatility. These would
disproportionally impact poor and vulnerable households, slowing poverty reduction while increasing fragility. Extreme climate events could also severely
damage agricultural output.

Real GDP growth is expected to moderate
to 5.8 percent in 2023 (2.9 percent in percapita term) from 6.3 percent in 2022, due
to the global economic slowdown, sluggish growth in Nigeria and the impact of
ECOWAS sanctions against neighboring
Niger. The primary sector should remain
resilient thanks to proactive managementof fertilizer distribution. The services sector – the main contributor to growth – isexpected to grow at a slower pace in 2023
as the political instability in Sahel countries affects reexport activities from thePort of Cotonou and sluggish growth inNigeria. Public investment is expected toscale back as fiscal space narrows. Private
consumption growth is set to pick up progressively as inflationary pressures abatein the second half of 2023. At end-July,
year-on-year inflation reached 3.9 percent,remaining below peers due to good harvest supporting local food supply andmeasures to combat inflation, such as
temporary tax exemptions on import andexport restrictions to neighboring countries. Growth in agriculture combinedwith relatively low inflation is expected
to reduce the international poverty rate($2.15 a day, 2017 PPP) from 16.1 percent
in 2022 to 15.6 percent in 2023.
The current account deficit (CAD) is expected to decline to 5.9 percent in 2023
(6.3 percent in 2022) as international
crude oil price decline, but remain elevated due to lower international cotton
prices and security spending. The CAD

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

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

Percent of GDP
10

Poverty rate (%)
100

5000008

90

490000680

Real private consumption per capita (constant LCU)

480000

70

4
2

60

47000050

460000040450000

-2

30

-4

20

-6

10

440000430000

0

-8
2012

2014

2016

Change in debt

2018

2020

2022

420000
2011

2024

2013

2015

2017

2019

International poverty rate
Upper middle-income pov. rate

Fiscal balance

Source: World Bank.

Source: World Bank. Notes: see Table 2.

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4

Oct 23

2021

2023

2025

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

will be primarily financed by an SDG Eurobond issuance, regional bonds and concessional financing.
The fiscal deficit is set to decline to 4.3 percent of GDP in 2023, having been above
5 percent over the last 2 years, driven bylower public spending (primarily due tothe expiration of measures to cushion
spillovers from Russia’s invasion of
Ukraine), improvements in tax administration and risk management systems in customs. Public debt is expected to decline
to 53.8 percent of GDP in 2023 – 0.4
ppt lower compared to 2022 – and remains on a declining path in the medium
term, thanks to fiscal consolidation efforts. Benin remains at moderate risk ofexternal and overall debt distress, butwith 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 125 basis points since
mid-2022 to 3.25 percent for liquidity callsand 5.25 percent for the marginal lending
facility. However, the monetary policy
stance remains broadly accommodative,
inflation is still above target and foreignexchange reserves have been on a downward trend.

OutlookIn the medium term, real growth is expected to hover around potential, at 6
percent (3.1 percent per capita) driven by
private consumption as inflationary pressures abate, and total investment, whichis expected to gradually shift from public
to private. The dynamism of agriculture
production, the construction sector, as
well as agro-transformation industries
with the expansion of the special economic zone, will support growth. Inflation is projected to reach the WAEMU target of 2 percent in 2024. The CAD should

TABLE 2 Benin / Macro poverty outlook indicators

improve progressively, averaging 4.7 percent of GDP over 2024-25, as the prices ofoil products decline.
Poverty reduction is expected to continue
its downward trend as economic growth,particularly in agriculture, remains robust,with the headcount rate ($2.15 a day, 2017
PPP) declining from 15.6 percent in 2023 to
14 percent in 2024 and further to 12.8 percent by 2025.
The planned revenue-based fiscal consolidation – complemented by the removal of exceptional subsidies andmore efficient spending - should rebuild
fiscal space with an expected deficit ofaround 3 percent by 2025, in line with
the WAEMU convergence criterion, as
public debt declines to 52.4 percent of
GDP. However, delaying fiscal adjustment could exacerbate debt sustainability risks, while a deterioration of theregional security situation and domestic spillovers, or extreme weather events
could delay 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
3.8
3.0
19.6
-6.2
-6.7
-11.3

2021
7.2
4.2
2.0
26.5
14.5
22.5

2022
6.3
3.7
4.2
11.7
17.5
13.7

2023e
5.8
3.8
14.5
2.9
4.3
0.0

2024f
6.0
4.0
5.6
10.5
7.1
6.6

2025f
6.0
4.1
4.9
8.7
7.5
5.4

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

6.3
4.9
7.0
6.7

5.8
5.1
8.2
5.0

6.0
5.3
6.5
6.1

6.0
4.9
6.2
6.4

Inflation (consumer price index)

3.0

1.7

1.4

3.5

2.0

2.0

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-1.7
0.5

-4.2
0.9

-6.3
1.0

-5.9
1.3

-5.6
1.6

-5.1
1.6

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

-5.5
14.3
54.1
-3.9

-4.3
14.7
53.8
-2.6

-3.7
15.2
53.5
-2.1

-2.9
15.6
52.4
-1.3

18.3
50.5
82.1

17.7
49.5
81.4

16.1
47.2
79.9

15.6
46.6
79.9

14.0
45.1
79.0

12.8
43.2
78.2

2.0
31.7

7.1
35.7

1.1
35.7

1.2
35.7

4.9
37.9

4.3
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/ Projections using microsimulation methodology.

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Oct 23

BOTSWANA

Key conditions andchallenges

Table 1

2022

Population, million

2.6

GDP, current US$ billion

20.3

GDP per capita, current US$

7718.2

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

61.1

Total GHG emissions (mtCO2e)

52.1Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2015), 2017 PPPs.
b/ Most recent WDI value (2021).

Growth is projected to slow to 3.8 percent
in 2023 from 5.8 percent in 2022, reflecting lower global demand for diamonds,
and recover during 2024-25 driven by
new diamond agreements and licenses
signed in 2023 and improved global demand. However, the mining sector will
not deliver significant job creation so
unemployment is projected to remain elevated, constraining reductions inpoverty and inequality. Inflation is expected to remain within the central
bank's 3-6 percent target.

Over the past decades, Botswana delivered robust economic growth thanks
to steady and significant revenue fromdiamonds channeled to public services,solid institutions, and sound macroeconomic policies, lifting many out ofpoverty. Public debt levels remain low,in tandem with sizable fiscal and foreignexchangesavings.
However,growth has lost steam in recent years,
a symptom of the exhaustion of the
diamond and public sector-led growthmodel and external shocks.
The large public sector crowds out private investments while infrastructureand skills gaps persist. The public sector
accounts for 27 percent of total employment, while unemployment remains
high, at 25.4 percent, mainly affecting
the youth. Poverty, estimated at 14.3
percent under the USD 2.15 per day International Poverty Line (IPL) remains
high for Botswana's income level and inequality (Gini index of 53.3) is among
the world's highest.
The objective to make the economy
more inclusive requires accelerating
job creation and diversification, particularly given the projected decline indiamond production by 2030. Comprehensive reforms are needed to improve the country's competitiveness,
including a reduction of the oversized public sector and improving

its performance, new investments inphysical and human capital, and further actions to enhance trade facilitation and integration. Removing regulatory barriers to facilitate market entry,
improving sectoral governance and accelerating planned SOE reforms would
improve the business environment.
The increase in the frequency and magnitude of climate change events, especially higher temperatures and changes
in precipitation, have increasingly disrupted output and threatened livelihoods, underscoring the need tostrengthen the country's resilience andimplement investments in adaptation.

Recent developments
After a relatively strong recovery in
2022, economic growth slowed in 2023
due to the slowdown in global demandfor diamonds and falling prices. On
June 30, 2023, Botswana and De-Beers
agreed in principle a new partnershipthat includes a 10-year extension of theirdiamond sales agreement and a 25-year
extension of the Debswana mining licenses, which calmed market jitters overthe partnerships future. The new agreement, once signed, will increase theshare of diamond supply sold via government-owned Okavango DiamondCompany from 25 to 30 percent, andincrease progressively to 50 percent in
ten years. A Diamonds for Development
Fund has been agreed with a projected$75 million yearly over ten years. The

FIGURE 1 Botswana / Direct contribution of diamonds toexports

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

Millions of Pula

Poverty rate (%)

Percent
100

120000100000Real GDP per capita (constant LCU)

70

90000
80000

60

80

70000
50

80000
60
60000
40

60000

40

50000

30

40000

40000
20000

30000

20

20

20000
10

0

0

0

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Total exports (lhs)
Contribution of diamonds (rhs)

1000002009 2011 2013 2015 2017 2019 2021 2023 2025

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

Sources: International Merchandise Trade Statistics and Statistics Botswana.

Source: World Bank. Notes: see Table 2.

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

immediate fiscal and economic impact
may be limited, and its medium-term
impact is subject to its implementation.
Inflation receded more quickly than expected, averaging 7.8 percent in 2023H1
compared to 10.9 percent in 2022H1,
falling into the Central Bank's 3-6 percent target in May. The pace of disinflation is attributed to falling oil prices
which resulted in a steep decline intransport inflation. Food inflation remains historically high, disproportionately affecting the poor. At 2.65 percent,
the Central Bank’s policy interest rate
has remained unchanged since August
2022, while credit growth declined to
4.8 percent in 2023Q1 from 5.4 percent
in 2022Q1.
Higher revenue from diamonds and
SACU has allowed fiscal policy to cushion subdued domestic demand. The
government has increased subsidies andallowances of social welfare programs
to cushion against the FY22/23 poor
crop and grazing yields caused by the
drought and accelerated the implementation of growth-enhancing energy andwater infrastructure.

OutlookReal GDP growth is projected to slow to
3.8 percent in 2023, reflecting a decline indiamond production and prices due toweaker global demand. Growth willslightly increase over the medium-term,
driven by the pickup in the global demandfor diamonds and efforts to diversify the
economy. The projected moderate real
GDP per capita growth (to 2.1 percent) will
result in negligible projected changes inpoverty (14.1 percent under the IPL overthe medium-term).
Following a balanced budget in 2022, thegovernment is expected to record a fiscal
deficit of 2.8 percent of GDP in 2023, despite an increase in SACU revenues. Suchdeterioration is projected to be driven byincreased spending in subsidies and capital expenditures. In the medium-term,
the government plans to implement expenditure-driven fiscal consolidation by
restructuring and privatizing parastatals,
reducing the public sector wage bill andre-prioritizing public investments. With a

TABLE 2 Botswana / Macro poverty outlook indicators

credible implementation of the consolidation plan, the fiscal balance is projected
to gradually improve, putting debt on adeclining path.
Inflation is projected to remain within
the Central Bank’s target range over the
medium-term. At 13 percent, food inflation is expected to remain above historiclevels. The current account is expected to
weaken but remain in surplus because of
weaker terms of trade, lower global demand for diamonds and increase in investment-led imports from a low base. It
is then expected to strengthen in 2024/5
driven by the projected rebound in global
demand for diamonds.
The outlook remains uncertain and depends heavily on the path of global demand for diamonds. Supply disruptions
and demand fluctuations at the global level could intensify commodity price volatility which would threaten fiscal sustainability and possibly lead to tightening of
the monetary policy. Delays in planned fiscal consolidation and structural reforms
could further erode fiscal and externalbuffers, increasing Botswana’s vulnerability to external shocks.

(annual percent change unless indicated otherwise)

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

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

2022
5.8
4.5
3.0
0.0
-5.6
-11.8

2023e
3.8
2.0
40.6
9.8
2.6
18.1

2024f
4.1
3.4
1.5
1.2
6.7
2.3

2025f
4.3
3.6
-0.6
0.9
7.9
1.4

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

5.8
2.4
7.6
4.8

3.8
2.6
4.0
3.7

4.1
2.3
4.2
4.0

4.3
2.2
4.4
4.3

Inflation (consumer price index)

1.9

6.7

12.2

5.8

5.0

4.5

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-8.6
0.7

-0.5
0.6

2.9
0.2

1.0
0.7

1.1
0.7

1.5
0.6

-9.5
28.6
24.6
-8.9

0.0
31.9
22.4
0.5

0.0
28.5
20.6
0.6

-2.8
29.3
21.9
-1.9

-1.7
29.5
20.8
-0.9

-0.3
29.7
19.3
0.4

16.0
38.6
64.5

14.8
37.5
62.6

14.3
37.0
61.8

14.1
36.8
61.5

13.9
36.5
61.1

13.6
36.3
60.6

-1.6
12.6

1.1
12.8

0.0
12.7

0.3
12.4

-2.6
12.6

-1.3
12.8

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 using annualized elasticity (2009-2015) with pass-through = 0.87 based on GDP per capita in constant LCU; $3.65 and $6.85 poverty use regional elasticity.

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7

Oct 23

BURKINA FASO
Table 1

2022

Population, million

22.7

GDP, current US$ billion

21.7

GDP per capita, current US$

955.3

International poverty rate ($2.15)

a

31.2
a

63.1

a

87.2

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

a

43.0

School enrollment, primary (% gross)

b

92.2

b

59.3

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/ Most recent WDI value (2021).

GDP growth is projected to increase to
4.3 percent in 2023 (1.7 percent percapita), following weak growth in 2022,with broad-based growth, including a
recovery in mining. Inflation is expected to fall sharply to 1.9 percent as
poverty resumes a gradual decline afterrising sharply in 2022. Downside risks
to the outlook relate to the politicaltransition, insecurity, regional instability, and high borrowing costs that could
delay fiscal consolidation.

Key conditions andchallenges
Insecurity and political instability remain themost critical growth constraints in the shortterm. The mining sector, which represents
around 17 percent of GDP and 20 percent ofgovernment revenue, has been impacted by
insecuritywithseveralminessuspendingoperations and new mining investments postponed in 2022. Continued violent incidents
could further reduce mining, including goldthat accounts for more than 70 percent of exports. As local populations are displaced due
to insecurity, agricultural output is negatively impacted. The two coups in 2022 triggered a sharp reduction in the international community’s financing while negatively
affecting private investment and foreign
direct investment.
The primarily rain-fed agriculture and livestock sectors, which account for around 20
percentofGDPandemployover90percentof
thecountry’s poor, arealso highlyvulnerable
to climate shocks and natural disasters. Domesticsupplysideshocksonfoodproduction
and markets (including security blockages)
have been compounded by high global foodpricesduetotheRussianinvasionofUkraine,
aggravatingchronicfoodinsecurity.

Recent developments
GDP growth is expected to increase to 4.3
percent in 2023 (1.7 percent per capita).

The primary sector is expected to return
to trend growth (+4.1 percent), withthe secondary sector recovering to 3
percent growth due to improved security around key mines, and services
continuing to be robust (+5.1 percent).
Consumption (an elevated public wage
bill and private sector activity benefitting from the stabilizing security situation), and net exports are driving
growth. Capital formation is not projected to contribute to growth due to
crowding out by government current
spending on security. The current account deficit (CAD) is expected to improve to 4.4 percent of GDP in 2023,
due to increased mining exports andimproved terms of trade, notably higher
gold prices and lower oil prices.
In 2022, food prices caused inflation toreach a region-wide high of 14.1 percent. Inflation is forecast to sharply decrease to 1.9 percent in 2023, due tostrong agricultural yields, which havemoderated food prices. Since May 2023,
year-on-year headline CPI inflation has
been negative.
In 2022, the rise in the cost of living
far exceeded increases in incomes forhouseholds, resulting in a 4.5 percentage
point increase in the international poverty rate to 32.3 percent, reversing gains
since 2018. The poverty rate is expected
to resume a gradual downward trend in
2023, to 31 percent, as inflation drops.
However, the humanitarian situation remains dire, with over 2 million internallydisplaced persons, in addition to an estimated 3.35 million people severely foodinsecure during the 2023 lean season.

FIGURE 1 Burkina Faso / Real GDP growth andcontributions to real GDP growth

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

Percent, percentage points
15

Poverty rate (%)

Real private consumption per capita (constant LCU)

100

35000090

1030000080

57025000060200000

50

0
-5

40

15000030

100000

20
-10

50000

10
2020

2021

Gov. cons.
Inventories
Statistical disc.

2022

2023

Exports
Private cons.
GDP

2024

2025

0

0
2009 2011 2013 2015 2017 2019 2021 2023 2025

GFCF
Imports

International poverty rate
Upper middle-income pov. rate

Source: World Bank.

Source: World Bank. Notes: see Table 2.

MPO

8

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

To counter inflation across WAEMU
countries, the Central Bank of West
African States (BCEAO) raised policy
interest rates by a cumulative 125
basis points since the start of 2022
to 3.25 percent for liquidity callsand 5.25 percent for the marginal
lending facility. However, the monetary policy stance remains broadly
accommodative, inflation in the region is still above target and foreignexchange reserves have been on a
downward trend.
The 2023 fiscal deficit is projected at
6.7 percent of GDP due to high military and humanitarian expenditurescaused by ongoing security and foodinsecurity crises. External concessional
financing has decreased, so the deficit
will be primarily financed through expensive domestic borrowing on theregional market, where interest rates
have risen to over 7.5 percent for 3and 5-year bonds. Public debt is projected to exceed 61 percent of GDP by
the end of 2023.

Outlook
Assuming improvements in security andthe implementation of key private sectorenabling reforms (energy, mining, business climate), growth is expected to bebroad-based and reach 5.1 percent (2.5
percent per capita) by 2025. Investment
is expected to recover with stability andhigher investor confidence. Inflation is
projected to remain within BCEAO’s target range of 1-3 percent in 2024 and 2025,
also reflecting lower global oil prices.
With low inflation and moderate
growth, poverty incidence is projected
to decrease by about one percentage
point annually until 2025, but the number of people living in extreme poverty
will remain over 7 million. Climate
shocks and security issues will continue
to affect poor households, while thecontinued closure of up to a quarter ofschools limits human capital accumulation and poverty reduction.

TABLE 2 Burkina Faso / Macro poverty outlook indicators

Improving domestic tax collection and lower military expenditures and social transfers
would support fiscal consolidation. However, the fiscal deficit is projected to remain
above WAEMU’s 3 percent target over the
medium term. Financing the deficit will remain costly, but greater access to concessional funding could ease the burden, although public debt will continue to increase
mainly due to domestic debt.
The outlook faces significant downside risks
from persistent insecurity, climatic shocks,
and instability from the political transition.
The coup in neighboring Niger on 26 July
2023 and the response from ECOWAS andWAEMU(economicandfinancialsanctions)have increased regional instability withrisksofnegativespillovereffectsonsecurity,
economic, and humanitarian fronts, including further increasing the cost of financing
on the regional market. The withdrawal of
MINUMSA peacekeeping force from Mali
bytheendof2023could also increase regional security risks. Additionally, the price ofgoldcouldweaken,weakeningtheCADanddomesticrevenuemobilization.

(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

2022
1.5
4.3
5.2
5.4
-2.8
8.2

2023e
4.3
3.1
6.2
-0.2
2.7
-2.0

2024f
4.8
4.3
4.8
6.1
3.4
4.0

2025f
5.1
4.1
4.1
7.4
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

1.5
8.1
-8.8
4.6

4.3
4.1
3.0
5.1

4.8
4.5
2.8
5.9

5.1
4.3
4.1
6.0

Inflation (consumer price index)

1.9

3.9

14.1

1.9

2.0

2.1

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-0.1
-0.6

0.4
0.5

-6.2
0.3

-4.4
0.3

-4.1
0.4

-3.8
0.5

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

-5.0
18.7
44.9
-3.6

-7.5
20.2
55.4
-6.0

-10.6
21.7
58.3
-8.5

-6.7
20.9
61.2
-4.9

-6.1
20.8
62.4
-4.0

-5.5
21.3
63.8
-3.4

27.7
59.4
85.4

27.6
59.3
84.4

32.3
64.1
87.3

31.0
63.0
86.7

30.0
61.7
86.2

28.8
60.7
85.8

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/ Projections using microsimulation methodology.

MPO

9

Oct 23

BURUNDI

Key conditions andchallenges

Table 1

2022

Population, million

12.9

GDP, current US$ billion

3.9

GDP per capita, current US$

303.9

International poverty rate ($2.15)

a

65.1

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

a

86.7

a

38.6

School enrollment, primary (% gross)

b

115.1

b

61.7

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/ WDI for School enrollment (2020); Life expectancy(2021).

Growth is projected at 2.9 percent in
2023, a moderate improvement over 2022,
driven by agriculture and services. Industrial growth was subdued due to mining
disputes and fuel shortages. While recovery is expected to accelerate over the
medium term, the country faces downside
risks, including from incomplete implementation of IMF program reforms. With
rapid population growth, per capita GDP
is stagnating or growing very slowly, resulting in persistently high poverty.

Burundi’s economic development has
been hampered by structural challenges
that reinforced a cycle of fragility andpoverty. Burundi faces 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 tocurrent expenditures but led to foreign exchange restrictions, exchange rate overvaluation, fiscal dominance of monetary policy, and high public sector indebtedness.
The sustained lack of economic growth
has resulted in high poverty rates andlow human development outcomes. In
2021, only 53 percent of children completed primary school and transition to secondary school remains low (48 percent).
Burundi has one of the highest rates ofchronic undernutrition worldwide, withover half of the children under five stunted. The share of stunted children among
those under the age of five increased to55.8 percent in 2021 from 52.6 percent in2020 and could deteriorate further in lightof high inflationary pressures. Against
this backdrop, monetary poverty was estimated at 71 percent (based on the international poverty line of $2.15/day) in
2022, up from 65 percent in 2013.

Gradual reengagement with the international community including the recent IMF
program under the ECF arrangement creates an opportunity for reforms to stabilize
the country’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
Growth in 2023 is projected at 2.9 percent up
from1.8percentin2022,drivenbyagriculture
and services. Industrial growth was subdued
due to the ongoing suspension of mining activities as contracts were renegotiated while
fuel shortage has worsened in recent months.
Private consumption and investment supported growth on the demand side.
The fiscal deficit is expected to decrease
to 6.7 percent of GDP in 2023 from 12.1
percent in 2022 as result of cuts in current
expenditures and modest increase of revenues. It merits mentioning that the fiscal
deterioration in 2022 was driven by the
sharp increase in subsidies specifically thelarge fertilizer subsidy prepayment.
Public debt is projected at 72.7 percent of
GDP in 2023 up from 68.4 percent of GDP
in 2022 as ECF-supported program disbursements will increase external concessional debt in the medium term.
Driven by the ongoing foreign exchange reforms spillovers on the imports prices, thecurrent account deficit (CAD) would remainhigh at 17.6 percent of GDP in 2023 as mining
contract negotiations affected export performance while imports of both capital and

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

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

Percent, percentage points
5

Poverty rate (%)

4Real private consumption per capita (constant LCU)

100

1600009015500080150000

70

3
2
1

60

14500050

1400004013500030
013000020125000

10
-1
2018

2019

Agriculture
Taxes

2020

2021

2022

2023

Industry
GDP growth

2024

0

2025

1200002006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Services

International poverty rate
Real priv. cons. pc

Sources: Official statistics and World Bank calculations.

Source: World Bank. Notes: see Table 2.

MPO

10

Oct 23Lower middle-income pov. rate

consumption goods increased. The CAD is
primarily financed by trade credits. The foreign exchange parallel market premium averaged 39 percent in July 2023, compared to
65 percent a year before, due to the ongoing
forex market liberalization. International reserves have decreased, covering 0.4 monthof imports at end-June 2023 from 1.9 months
a year before.
Drivenbyhigherfood(+25percent),headline
inflationisexpectedat23.8percentin2023.
Lackluster economic growth in the past
years, combined with high population
growth, has resulted in a further decline in
GDP per capita from an already low base.
Sharply rising food prices have further eroded households’ purchasing power, leading
to steadily increasing poverty rates.

Outlook
Growth is projected to increase to 4.2-4.5
percent over 2024-25. Services should

continue to recover while agricultural
growth will likely pick up assuming favorable rainfall and good distribution offertilizers. Industry is projected to accelerate due to a loosening of forex constraints, resolution in mining disputes,
and increased power generation. Private
consumption and public investment are
projected to remain high given economic
recovery and resumption of partner-financed public infrastructure programs.
The fiscal deficit is expected to narrow to
3.2 percent of GDP by 2025 as revenues
increase, aligned with fiscal consolidation
efforts under the IMF program. Public
debt is expected to decrease, reaching 61
percent of GDP by 2025. External pressures would remain high over 2024-25 asimport prices would stay high due thespillovers of the exchange rate unification
despite the exports pick up, therefore the
CAD will remain high at 18 percent of
GDP in 2025.
With the projected uptick in economic
growth, poverty (based on $2.15/day,

TABLE 2 Burundi / Macro poverty outlook indicators

2017 PPP) is expected to modestly decrease to 69 percent by 2025. The numberof poor will continue to increase against
the backdrop of Burundi’s population set
to double by as early as 2050 - further
exacerbating existing pressures on limited land resources. Significantly higher
economic growth rates will be necessary
to substantially bring down poverty andbreak out of the fragility-poverty cycle.
Downside risks are high, particularly on
the fiscal front. Weak domestic revenue
mobilization efforts could lead to revenue shortfalls and incomplete implementation of the reforms under the ECF
program would undermine fiscal andexternal sustainability. Weather shocks
may constrain agricultural growth andpoverty reduction. On the upside, foreign aid could accelerate reflecting thereengagement with the international
community and exports could strengthen as a result of broad structural reforms, which would 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

2022
1.8
2.4
5.9
4.0
5.8
7.0

2023e
2.9
2.9
5.7
8.2
7.8
7.3

2024f
4.2
3.3
5.2
11.8
13.8
7.4

2025f
4.5
3.4
4.8
13.8
14.1
7.5

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

2.9
3.0
2.7
2.9

4.2
4.1
4.4
4.1

4.5
4.4
4.8
4.3

Inflation (consumer price index)

7.5

8.3

18.8

23.8

17.5

12.0

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-10.1
0.2

-12.5
0.3

-15.6
0.3

-17.6
-0.1

-18.6
-0.1

-18.3
-0.1

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

-6.3
23.1
66.0
-3.4

-5.2
25.1
66.6
-2.3

-12.1
26.7
68.4
-9.5

-6.7
26.9
72.7
-3.2

-3.9
28.2
65.9
-1.0

-3.2
28.6
61.3
-0.5

70.6
88.9

70.4
88.8

70.6
88.9

70.4
88.8

70.1
88.7

69.7
88.5

2.6
8.7

4.1
8.7

3.5
8.7

3.6
8.7

3.7
8.7

3.8
8.7

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 2013-ECVMB. Actual data: 2013. Nowcast: 2014-2022. Forecasts are from 2023 to 2025.
b/ Projection using neutral distribution (2013) with pass-through = 0.87 (Med (0.87)) based on private consumption per capita in constant LCU.

MPO

11

Oct 23

CABO VERDE
Table 1

Key conditions andchallenges
2022

Population, million

0.6GDP, current US$ billion

2.3

GDP per capita, current US$

3927.5International 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

74.1

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(2021).

After rebounding to 17.7 percent in
2022, driven by the recovery of tourism,growth is expected to moderate to 5.6
percent in 2023 as exports slow. Growthfriendly fiscal consolidation should create conditions for growth of 5.7 percent
over the medium term. The outlook remains subject to downside risks fromlingering inflation, debt pressures, climate shocks and the impact of the rising
global cost-of-living on tourism.

Cabo Verde is a young, small, and vibrantisland nation with an open economy. Its
robust – albeit volatile – economic growthhas been driven by tourism, remittances,and foreign direct investment enabled bystructural reforms and social and politicalstability. The development model has
shown signs of fatigue since the 2008 global financial crisis, as growth fell from anaverage annual rate of 7.5 percent in the
2000s to 2.8 percent in the last decade (excluding 2020) and is highly volatile. The
impact of the pandemic underscored key
vulnerabilities, including the dominanceof the tourism sector, absence of buffers toshocks, and poor performing State-Owned
Enterprises (SOE).
Achieving higher and more sustained
growth requires reforms to: reduce the economy’s vulnerabilities to external economic
and climate-related shocks; increase private
sector productivity to benefit from the thriving tourism sector; and reduce internaltransport costs and market fragmentation.

Recent developments
The economic recovery from the
COVID-19 pandemic resulted in growthreaching 17.7 percent in 2022, driven
mainly by tourism (accommodation, commerce, and transport) and related private

consumption. Economic growth slowed in
the first quarter of 2023, with a real GDP
growth of 6.7 percent.
Headline inflation reached 7.9 percent (y/y) in 2022, fueled by high international oil
and commodity prices triggered by Russia’s invasion to Ukraine. Food inflation
peaked at 15.7 percent while energy inflation increased to 23.8 percent. Inflationarypressures eased in the first half of 2023.
Headline inflation in July reached 6.3 percent, with food and energy inflation respectively at 13.4 percent and 5.5 percent.
The poverty rate ($3.65 per day PPP 2017)
fell to 16.9 percent in 2022, down from 19.8
percent in 2021, but remained above prepandemic levels (15.5 percent in 2019).
Economic growth is fundamental forpoverty reduction, with the service sectors(which account for a large share of employment, including for the poor) growing
20.8 percent in 2022. This led to new jobs,
especially in tourism, although poverty alleviation was dampened by inflation, particularly high food prices.
The fiscal deficit narrowed to 4 percent of
GDP in 2022, supported by increased fiscal
revenues while the debt-to-GDP ratio declined from 144 percent in 2021, to 120.9 percent in 2022, driven by GDP growth. In thefirst half of 2023, total revenue increased by
22.8 percent, driven by personal income tax
and VAT, while total expenditure increasedby 3.4 percent, reflecting higher acquisitionof goods and services, interest payments, social benefits, and subsidies.
The current account deficit (CAD) declined from 11.8 percent of GDP in 2021
to 3 percent in 2022, driven by the strong
recovery in net service exports and robust

FIGURE 1 Cabo Verde / Real GDP growth and inflation

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

Percentage
40

Poverty rate (%)

Percentage
40

30

30

20

20

10

10

0

0

-10

Real private consumption per capita (constant LCU)

70

35000060

30000050

25000040

200000

-20

-10

30

150000

-30

-20

20

100000

10

50000

-40

-30
2019Q1

2019Q4

2020Q32021Q22022Q12022Q40

Real GDP growth (lhs)
Food and beverages inflation (rhs)Headline inflation (rhs)
Energy inflation (rhs)02007 2009 2011 2013 2015 2017 2019 2021 2023 2025
International poverty rate
Upper middle-income pov. rate

Source: Government of Cabo Verde.

Source: World Bank. Notes: see Table 2.

MPO

12

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

remittances. The CAD was financed primarily by FDI and concessional loans. International reserves reached 7.2 months ofimports and helped support the accommodative monetary policy in place since
the COVID-19 crisis.

OutlookReal GDP growth is projected at 5.6 percent in 2023 (4.6 percent in per capita
terms) and over the medium-term, growth
will be supported by the implementationof structural reforms aimed at improving
public sector efficiency and the businessenvironment. Inflation is expected to decline from the 2022 peak, as the effects ofhigh international oil and food prices eases. Headline inflation is projected at 4.5
percent. Over the medium-term, the strong

nominal anchor provided by the peg with
the Euro and the return to fiscal consolidation should contain inflation, converging to 2 percent by end-2024.
Poverty (using US$3.65 per-day-2017 PPP)
is projected to decline to 16.5 percent in 2023
driven by growth in services and industry,
and a moderation of inflation (expected toslow down to 4.5 percent in 2023). The
poverty rate in 2024 is expected to continue
falling to 16 percent and then to 15.5 percent
by 2025, reaching the pre-pandemic poverty
level (15.49 percent in 2019).
The overall fiscal balance is projected to improve to -3.1 percent of GDP in 2023 and to asmall surplus in 2025. In order to reduce debt
levels and create space to manage volatility,
the authorities are committed to gradualrevenue-driven fiscal consolidation, which
includes enhanced management of fiscal
risks, improved domestic revenue mobilization and current expenditure restraint. The

TABLE 2 Cabo Verde / Macro poverty outlook indicators

public debt-to-GDP ratio is expected to improve from 114.5 percent in 2023 to 104.1
percent by 2025 but requires continued
management of the fiscal risks related to
SOEs arising from loan guarantees.
The CAD is projected to increase to 4.1 percent of GDP in 2023, reflecting the impact
of moderate tourism growth and high foodand fuel prices. The CAD is projected to
decline to 3.3 percent of GDP in 2025 supported by tourism and remittances, which,
together with higher FDI inflows, will help
maintain international reserves at about 6
months of prospective imports.
The outlook is subject to substantial downside risks stemming from the lingering inflationary impact of the war in Ukraine
and weaker external demand in tourism
markets, which could undermine the fiscal
consolidation and weaken growth. Climate-related shocks will remain a concern,
given the country's high 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
-19.3
-22.7
3.0
46.3
-58.9
-17.3

2021
6.8
6.6
5.4
12.0
3.1
8.6

2022
17.7
28.3
-7.0
-27.0
100.7
13.1

2023e
5.6
7.8
14.8
-6.8
10.7
7.5

2024f
5.7
8.2
5.3
2.1
9.9
9.5

2025f
5.8
9.0
4.0
3.1
10.3
10.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-19.3
9.9
-12.9
-21.1

6.8
3.9
11.2
6.7

17.7
-13.7
3.2
20.8

5.6
-4.4
4.7
6.1

5.7
-2.2
4.9
6.1

5.8
1.0
5.2
6.0

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
3.4

-11.8
4.4

-3.0
4.5

-4.1
4.5

-3.5
4.6

-3.3
4.7

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

-9.0
24.6
141.2
-6.3

-7.5
22.8
144.0
-5.3

-4.0
21.7
120.9
-1.8

-3.1
24.4
114.5
-0.9

-1.9
24.8
109.6
0.3

0.2
25.5
104.1
2.2

6.5
22.0
52.4

5.7
19.8
50.3

5.4
16.9
44.5

5.2
16.5
43.5

5.1
16.0
42.5

5.0
15.5
41.3

2.9
87.0

-2.1
86.3

-1.2
86.4

2.0
86.7

2.0
87.0

2.2
87.4

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 2015-IDRF. Actual data: 2015. Nowcast: 2016-2022. Forecasts are from 2023 to 2025.
b/ Projections using microsimulation methodology.

MPO

13

Oct 23

CAMEROON

Key conditions andchallenges

Table 1

2022

Population, million

27.9

GDP, current US$ billion

42.1

GDP per capita, current US$

1506.7

International poverty rate ($2.15)

a

25.7
a

47.0

a

74.8

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

a

46.6

School enrollment, primary (% gross)

b

105.7

b

60.3

Total GHG emissions (mtCO2e)

127.2Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2014), 2017 PPPs.
b/ WDI for School enrollment (2019); Life expectancy(2021).

Cameroon’s economy is at the onset of amodest economic recovery. Progress onpoverty reduction, however, has remained
weak due to low per capita economic
growth, with 1 out of 4 Cameroonians
living below the international poverty
line ($2.15 PPP a day). The economic
outlook for Cameroon is expected to remain moderately favorable over the
medium term, but with risks tilted significantly to the downside.

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 Cameroonian economy is also more diversified than the rest of
CEMAC, with the oil sector accounting for
only 4 percent of the country’s GDP and
15 percent of its fiscal revenues in 2022.
Cameroon’s debt pressures have intensified, calling for cautious fiscal policies andimproved debt management. The current
development model appears to have runout of steam and is not able to deliver on
Cameroon’s ambition of becoming an upper middle-income country by 2030, as
governance indicators have deteriorated,
human capital remains weak, the businessenvironment is unfavorable, and climatechange represents a growing threat.
Poverty reduction remains weak due toslow economic growth. 1 in 4 Cameroonians lives below the international poverty
line of $2.15 PPP a day, with the poverty
headcount rate declining by just 0.6 percentage points between 2020 and 2023.
Combined with rapid population growth,
this implies that the absolute number ofpoor Cameroonians is rising. Inequality also remains high, with the consumption Gini at 46.6 and large differences in living
standards between regions and between
urban and rural areas.

Six out of Cameroon's ten regions are affected by conflict, including spillovers
from conflicts in neighboring countries.
Furthermore, climate change poses a significant threat to the country's reliance onnatural resources and the livelihoods ofover 70 percent of the workforce engaged
in agriculture.

Recent developments
Cameroon’s economic recovery continued
in 2022, despite heightened fragility andstrong external headwinds. GDP growth
was estimated at 3.8 percent, supported byagroindustry and service sectors. Inflationstood at 6.3 percent at end-2022 year-overyear, up from 3.5 percent at end-2021. Driven by food prices, which rose by 13.7 percent, inflation averaged 7.5 percent annually at the end of May 2023. The current account deficit narrowed from 3.7 percent of
GDP in 2021 to 3.2 percent in 2022, reflecting higher prices for oil exports.
The Bank of Central African States (BEAC)
continued to tighten its monetary policy tocontain inflationary pressures and support
the external viability of the exchange rate
arrangement. The BEAC increased the policy
rateinMarch2023by50basispointsto5.0percent, a cumulative 175 basis points increasesince November 2021. Moreover, the BEAC
ended its weekly liquidity injections after
steadilyscalingthembacksinceJune2021.
Cameroon's fiscal situation has improved
due to lower fuel subsidies, increased oilrevenues, and spending reductions. Nonoil tax revenues grew slightly in the first

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

2003

2006

Gov. cons.
Inventories
Statistical disc.

2009

2012

2015

Exports
Private cons.
GDP

2018

2021

2024

Real GDP per capita (constant FDJ)

500000400000300000002007 2009 2011 2013 2015 2017 2019 2021 2023 2025

GFCF
Imports

International poverty rate
Upper middle-income pov. rate

Source: World Bank.

Source: World Bank. Notes: see Table 2.

MPO

14

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

half of 2023, driven by corporate income
tax and VAT collections. However, unpaid
fuel subsidy expenses from 2022 of CFAF
330 billion (1.1 percent of GDP) carriedover to the 2023 budget, making the total
fuel subsidy spending 1.5 percent of GDP,
down from 3 percent in 2022. Cameroon
still faces a high risk of debt distress, according to the latest WB-IMF analysis.
Cameroon’s financial sector remains weak
due to persistent Non-Performing Loans (13percent of portfolio) and high exposure to
the sovereign (35 percent). Nevertheless, financial soundness indicators improved
marginally in 2022. Domestic credit to theprivate sector increased by 13.6 percent in
2022, up from 9.7 percent in 2021.
Recent reforms create fiscal space and enhance inclusive growth prospects but may
lead to inflationary pressures. Simulations
show that the reduction in fuel subsidies andresulting increase in fuel prices could temporarily raise poverty incidence by 1 percentagepointintheshortrun.Tocushionthe
effect of these reforms, certain groups, suchas farmers, have received tax exemptions
and rebates. Minimum wages and public
sector wages increased, but this may not significantly impact poverty, as most poor
workers are in informal jobs. To reducepoverty, budgetary savings should be channeledintopro-poorprogramstargetedtothe
poorandvulnerable.

OutlookCameroon's economic outlook is moderatelyfavorableforthemediumtermbuthassignificant downside risks. Cameroon’s real
GDPgrowthisprojectedtoreach4.3percent,on average, over 2024-26, supported by sustained activity in the secondary and tertiary
sectors. The secondary sector's growth will
be fueled by agri-food industries, construction and reconstruction in the North-Westand South-West regions, and additional
power generation from new Hydro power
plants. The tertiary sector will see growth intelecommunications, financial services, andhospitality. Average inflation could moderate from 5.9 percent at end-2023 to 4 percent
at end-2024 and should decline to below 3
percent in the medium term in line with the
CEMACconvergencecriterion.
The current account deficit is expected to improve and stabilize around 3 percent of GDP
inthemediumtermsupportedbyongoingefforts to boost export competitiveness. Exports of processed goods are expected to increase gradually, particularly in the regional
market. The fiscal position is expected to improve slightly thanks to the gradual, reduction of fuel subsidies and other cuts to current
expenditure. Continued economic recovery
and revenue administration measures

TABLE 2 Cameroon / Macro poverty outlook indicators

shouldsupportrevenuemobilizationin2023.
The public debt-to-GDP ratio is expected to
declinetoaround40percentby2025.
Risks to this outlook include (i) a further
tightening of global and regional financial
conditions, (ii) adverse impacts of the war
in Ukraine on commodity and financial
markets, and (iii) a persistent security crisis in the North-West, South-West, and Far
North regions. Tightening global and regional financial conditions could increasedebt pressures and impact the country's
growth prospects. Rising inflationary pressure would also negatively affect household
consumption and further slow or even reverse poverty reduction; and further reductions in fuel subsidies could have added
poverty impact unless appropriate measures are put in place to mitigate those impactsonthevulnerable.Inaddition,thetakeor-pay agreement following the completionof Nachtigal could potentially cost the budget approximately CFAF150 billion to thebudget. If these risks materialize, it may result in slower GDP growth, affecting fiscal
and external balances and the pace of poverty reduction. While the percentage of people
living below the international poverty line is
expected to slightly decrease from 24.2 percent in 2023 to 23.6 percent in 2025. The absolute number of Cameroonians living below the international poverty line is projectedtoriseduetopopulationgrowth.

(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

2022
3.8
3.6
7.6
2.6
10.1
7.3

2023e
4.0
3.6
4.1
6.4
9.1
8.6

2024f
4.2
3.7
3.1
7.6
9.3
8.8

2025f
4.5
3.8
2.5
8.9
9.3
9.4

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

3.7
4.3
4.2
3.4

4.0
4.7
4.5
3.5

4.2
5.0
4.8
3.7

4.5
5.6
5.4
3.6

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

2.5
-3.6

2.5
-3.7

6.3
-3.2

5.9
-3.0

4.0
-2.8

3.0
-2.6

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

-3.2
12.6
45.8
-2.3

-3.1
13.7
47.1
-2.1

-1.8
15.5
46.3
-0.8

-0.8
15.4
45.9
0.2

-1.0
15.3
44.1
0.0

-1.0
15.6
42.9
-0.1

24.8
46.3
73.6

24.6
46.1
73.4

24.4
46.0
73.1

24.2
45.7
72.8

23.9
45.5
72.4

23.6
45.2
72.0

0.4
7.0

0.6
7.3

1.0
7.6

1.1
7.9

1.2
8.2

1.3
8.6

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 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

Oct 23

CENTRALAFRICAN REP.
Table 1

2022

Population, million

5.6

GDP, current US$ billion

2.5

GDP per capita, current US$

440.8

International poverty rate ($2.15)

a

65.7
a

85.8

a

96.2

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

Key conditions andchallenges

a

43.0

School enrollment, primary (% gross)

b

128.1

b

53.9

Total GHG emissions (mtCO2e)49.5Life expectancy at birth, years

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

With only 0.5 percent growth, 2022 was
the third year of economic stagnation anddeclining per capita incomes. Notwithstanding spending moderation, the overall fiscal balance remained in a significant
deficit in 2022, while weak economic fundamentals and commodity price shocks
continued to weigh on the external position. Poverty remains elevated, compounded by food price pressures and low
growth. The medium-term outlook remains highly uncertain.

The Covid-19 crisis in 2020, intensificationof the internal armed conflict in early 2021,
and Russia’s invasion of Ukraine in 2022
compounded fragility for the Central
African Republic (CAR), jeopardized its
macroeconomic stability, and worsened analready alarming humanitarian situation.
Poverty remains widespread, with thebulk of the poor living in extreme poverty.
With limited fiscal space, the country continues to depend heavily on international
support to achieve stabilization on several
fronts, including security, humanitarianand macroeconomic.
In April 2023, the IMF approved a three-year
Extended Credit Facility (ECF) program for
the CAR. Budget support by other development partners is currently suspended, interalia, due to concerns about budget transparency, especially around security spending. The CAR faces significant macro andpolitical uncertainties, including risks associated with the newly enacted tokenization
law for natural resources, and the removal ofpresidential term limit through a constitutional referendum, which erode its credibility with international partners and donors.

Recent developments
Continuing the weak economic performance of the past two years, CAR's real

GDP is estimated to have grown by only
0.5 percent in 2022. Forestry, mining, hospitality, and telecommunications drove
economic activity. Timber production, accounting for over half of exports, rose significantly from 551.1 thousand cubic meters in 2021 to 639.0 thousand cubic metersin 2022 due to new forestry licenses. The
mining sector, particularly gold and diamonds, thrived due to higher global prices.
Improved security conditions boosted theservices sector. Net exports fueled growth,
but private consumption suffered due to
inflation. Continued suspension of budget
support and revenue shortfalls led to a
17.7 percent decrease in public investment in 2022, impacting gross fixed investment. In 2023H1, economic activity
continued to suffer from persistent fuelshortages, which disrupted trade andfood supply chains.
The National Plan for Recovery and Consolidation of Peace in CAR and the Mutual
Engagement Framework (RCPCA-CEM)
are not sufficient to address the key problems of poverty reduction in CAR. As the
RCPCA is ending in December 2023, a newplan covering 2024-26 is under preparation, however the microsimulation projections that combine sectoral GDP growthforecasts with the EHCVM data suggest
this situation is unlikely to change muchin the next five years, with more than 65.5
percent of the population living in extreme
poverty in 2022.
The Bank 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

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 FDJ)

120

300000100

25000080200000060150000-2

40

100000

20

50000

6
4
2

-4
-6
2017

2018

2019

2020

Private Consumption
Gross Fixed Investment
Real GDP growth

2021

2022

2023

2024

2025

0

0
2008 2010 2012 2014 2016 2018 2020 2022 2024

Government Consumption
Net Exports

International poverty rate
Upper middle-income pov. rate

Source: World Bank.

Source: World Bank. Notes: see Table 2.

MPO

16

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

policy rate in March 2023 by another 50
basis points to 5.0 percent, a cumulative
175 basis points increase since November
2021. Moreover, the BEAC ended its weekly liquidity injections after steadily scaling
them back since June 2021. Although aggregate financial soundness indicators remained broadly adequate in 2022, liquidity
indicators
havedeterioratedsince
end-2021, while non-performing loans(NPLs) remained high.
While the overall fiscal balance improvedin 2022, it remained structurally in deficit.
Economic slowdown and fuel shortages
reduced domestic revenue collection from
8.8 percent of GDP in 2021 to 7.8 percent
in 2022. Authorities implemented a CFAF
9.5 billion (0.6 percent of GDP) partial adjustment to non-priority domestic spending to address the revenue gap. By yearend, the treasury nearly depleted its cash
balance, using the SDR allocation (CFAF
50.5 billion) and raising domestic financing(CFAF 46.1 billion, equivalent to US$74.9
million or 3.0 percent of GDP). Public debt
rose to 51.8 percent of GDP in 2022, mainly
due to the use of the last SDR allocation
tranche, issuance of net domestic bonds, and
CFAF depreciation against the U.S. dollar. In
2023H1, the government has further tightened its fiscal stance to reduce the domestic
primary fiscal deficit by 0.9 percent of GDP,consistent with limited financing options.

The current account deficit widened to 13.2
percent of GDP in 2022, the third consecutive annual increase, primarily due to a 9.4
percent drop in the terms-of-trade.

OutlookThe medium-term outlook is highly uncertain. Real GDP growth is projected torebound to 1.3 percent in 2023, before averaging 2.4 percent between 2024-25, driven partly by the base effect and contingent on the resumption of budget support
and the implementation of policy adjustments to pave the way for improved fuel supply. Inflation is expected to remain
above the regional ceiling in 2023, before
converging to 3 percent over the medium term in line with the CEMAC convergence criterion. Poverty is projected to remain elevated as a result of stagnant percapita incomes, a relative high food prices
and weak economic recovery.
The overall fiscal balance is projected toremain in deficit over the medium-term,
due to an envisaged increase in public investment to meet pressing social needs.
CAR is expected to remain at high riskof external debt distress and overall debt
distress, although public debt is projected
to be sustainable.

TABLE 2 Central African Republic / Macro poverty outlook indicators

The current account balance is projected to
improve but remain in deficit. The balanceof payment is projected to exhibit a financing gap of roughly 3.5-4.5 percent of GDP
per year over the medium-term. This financing gap is expected to be covered bybridge financing from the regional market, possible disbursements of donor’sbudget support, and disbursement under
the ECF program.
Risks to the outlook remain skewed tothe downside. Pressures points include:(i) Failure to repeal or mitigate the newly
adopted tokenization law, which is likely
to pose several systemic risks including
macroeconomic and financial stability,
money laundering, and derail prospectfor economic recovery; (ii) failure to implement bold policy to move gradually
toward a sustainable price adjustment
mechanism to address fuel supply shortages and to realize domestic revenue mobilization objectives, is expected to weighon economic growth and widen the overall fiscal deficit; (iii) inability to mobilize
concessional donor support; (iv) a reversal in security gains; and (v) strongerthan-expected tightening of regional andglobal financial conditions. Should theserisks materialize, CAR could dip into a
yet deeper crisis, with the government
unable to pay wages, both domestic andexternal arrears reemerging.

(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

2022
0.5
5.4
-8.4
-4.6
-6.5
7.0

2023e
1.3
-2.0
-2.7
-0.5
6.9
-8.1

2024f
1.6
1.4
1.4
2.2
3.6
2.2

2025f
3.1
3.0
3.2
3.1
3.6
2.9

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

0.5
1.8
-1.5
0.4

1.3
3.0
-0.2
0.6

1.6
2.4
0.1
1.7

3.1
2.4
0.3
5.1

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

0.9
-8.5

4.3
-10.6

5.8
-13.2

6.5
-8.4

3.2
-7.3

2.8
-7.5

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

-5.5
12.2
51.8
-5.1

-6.4
11.4
50.0
-5.9

-6.6
11.4
50.7
-5.9

-6.5
11.6
50.9
-5.7

..
..
..

65.1
85.5
96.1

65.5
85.7
96.2

66.1
86.1
96.4

66.4
86.3
96.4

66.6
86.3
96.4

4.0
0.5

2.5
0.5

-0.3
0.5

1.9
0.4

1.7
0.5

1.6
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 2021-EHCVM. Actual data: 2021. Nowcast: 2022. Forecasts are from 2023 to 2025.
b/ Projections using microsimulation methodology.
MPO

17

Oct 23

CHAD
Table 1

2022

Population, million

17.7

GDP, current US$ billion

12.7

GDP per capita, current US$

716.8

International poverty rate ($2.15)

a

30.9
a

64.6

a

89.4

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

Recent developments

Key conditions andchallenges

a

37.5

School enrollment, primary (% gross)

b

93.7

b

52.5

Total GHG emissions (mtCO2e)

115.3

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 (2021).

Significant adverse impacts of the war
in Sudan include a large influx ofrefugees, trade disruptions, and insecurity. GDP growth is expected to be 3
percent (-0.2 percent per capita) due toincreased oil production and high prices,
but inflation could rise to 13.2 percent,exacerbating food insecurity and increasing the poverty rate to 35.4 percent. Medium-term downside risks include political and regional instability,
insecurity, and climatic shocks.

Chad’s economic growth has beenvolatile and weak, reflecting the lack of
economic diversification and dependency on the oil sector, which constitutes
around 85 percent of exports, and 56
percent of fiscal revenues. Chad is also among the world’s most vulnerable
countries to climate change. Insufficientrains as well as frequent flooding haveoften had adverse impacts on the agricultural sector, the main sector of employment, which together with conflictand displacement have led to chronic food insecurity. In 2022, Chad experienced its worst floods in 30 years,
dampening growth and leading to declaration of a national food emergency inJune 2022.
According to UNHCR, Chad was hostingnearly one million forcibly displaced persons at the end of 2022, including 593,000
refugees and nearly 400,000 IDPs. Since
April 2023, the war in Sudan has caused
a mass influx of new refugees, borderclosures and major disruptions in trade.
As of end-August 2023, 382,000 new
refugees have crossed into Chad, including 48,000 returnees. The Government
expects that by end-2023, new refugees
from Sudan could reach 600,000. In addition to the humanitarian challenges, expected economic impacts are higher expenditures (mostly military), reduced/
shortages of goods, and higher inflation.

In 2023, Chad’s economy is expected to
grow by 3 percent (-0.2 percent per capita), following subdued growth impairedby floods and insecurity in 2022. Nonoil GDP growth is estimated at 2.2 percent, up from 1.3 percent in 2022, driven
by increased public investment. Industry,
driven by the oil sector, is projected tocontribute 1.3 percentage points (ppts) to
growth, followed by services (0.9 ppts)
and agriculture (0.8 ppts). Gross fixed
capital investment, primarily government-driven, is projected to be the main
driver, contributing 1.4 ppts to growth.
Despite the Sudan border closure, thevalue of exports is expected to increaseby 0.6 percent, thanks to high oil prices
and an increase in oil production (6.6
percent), resulting in a current accountsurplus of 2.1 percent of GDP in 2023.
Inflation is projected to surge from 5.8
percent in 2022 to 13.2 percent in 2023,
with food inflation expected to reach 13.9
percent, mainly due to the Sudan war
as trade disruptions reduce supply andcause shortages, while demand for goods
from refugees has increased. This will exacerbate food insecurity with an estimated 1.9 million people (10.4 percent of the
population) in severe food insecurity asof June 2023. The extreme poverty rate
(US$2.15/ day per capita, 2017 PPP) is
expected to increase by 0.2 percentage
points in 2023, reaching 35.4 percent, an
increase of 228,000 people to a total of 6.4
million in extreme poverty.

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

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

Percent of GDP
6

Poverty rate (%)
100

45000049040000080

35000027030000060

025000050-220000040-415000030-6-8Real GDP per capita (constant LCU)

2020

2021

Fiscal balanceReal GDP growth

2022

2023

2024

20

100000

10

50000

0

2025

0
2011

Current account balance

2013

2015

2017

2019

International poverty rate
Upper middle-income pov. rate

Source: World Bank.

Source: World Bank. Notes: see Table 2.

MPO

18

Oct 23

2021

2023

2025

Lower middle-income pov. rate
Real GDP pc

Monetary and exchange rate policies
are managed by the regional Central
Bank (BEAC), which has maintained
tightening monetary conditions tocurb inflation and support the exchange rate. In March 2023, theBEAC raised its policy rate from 4.5
to 5 percent and ceased weekly injections after scaling back since June
2021, with the marginal lending raterising from 6.25 to 6.75 percent inMarch 2023.
The fiscal surplus, including grants,
is projected at 3.9 percent of GDP
in 2023 (a non-oil fiscal deficit of 7.8
percent). The surplus reflects a oneyear lag in the primary componentof oil-revenue tax collection, while thedowngrade in the projection, from 6.1
percent before the Sudan war, reflects
increased security (additional 9.2 percent of the initial budget) and humanitarian expenditures. Total public debt
is projected to decline to 44.4 percent
of GDP by end-2023.

OutlookDuring 2024-2025, growth is projected toaverage 2.8 percent (-0.3 percent per capita), driven by moderating oil prices andpersistent impacts of the Sudan crisis.
Non-oil GDP is projected to grow 2.9 percent during the same period. Inflation is
projected to remain elevated at 10.1 and 7
percent in 2024 and 2025 respectively, assuming borders with Sudan remain closed
for security reasons and agriculture production is subdued due to already observed effects of climate change.
Oil-sector driven growth is not expected tolead to poverty reduction without significant structural reforms, as there are few
linkages between the extractive sector andthe livelihoods of poor and vulnerable
groups. Moreover, the continued security
restrictions, the low coverage of social protection programs, and now the crisis in Sudan increasing inflation, will limit the pace

TABLE 2 Chad / Macro poverty outlook indicatorsof poverty reduction. Extreme poverty is
expected to increase by a further 0.1 ppt
between 2023-24 with an additional
214,000 projected to fall into extreme
poverty (totaling 6.7 million).
Reflecting lower oil prices, the fiscal surplus
is projected to narrow to 2.2 percent of GDP
during 2024-2025, while the current accountis expected to deteriorate, averaging -2.1
percent of GDP. Public debt is projected to
decline to 37.7 percent of GDP by end-2025.
This outlook is subject to multiple downside risks, including lower oil prices, political instability during upcoming elections,heightened insecurity, and climatic shocks.
A prolonged Sudan war beyond 2023
would worsen the humanitarian crisis,
strain public finances, and increase inflationary pressures. The coup in neighboring
Niger on 26 July 2023 and the response
from ECOWAS and WAEMU (economic
and financial sanctions) have increased regional instability with risks of negative
spillover effects on security, economic, andhumanitarian fronts.

(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
-14.5
1.1
1.8

2021
-1.2
1.6
3.7
-4.5
-0.4
5.1

2022
2.2
2.1
-1.8
-7.0
5.0
2.0

2023e
3.0
0.2
2.2
12.7
3.6
1.0

2024f
2.8
1.4
-2.9
5.5
3.6
1.5

2025f
2.7
2.0
-4.2
1.1
4.1
2.1

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

3.0
2.4
4.2
2.5

2.8
1.6
2.1
4.5

2.7
1.7
2.0
4.2

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

3.5
-7.8

1.0
-6.0

5.8
2.3

13.2
2.2

10.1
-1.5

7.0
-2.7

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

3.9
19.7
44.4
5.4

2.3
16.0
40.7
3.3

2.1
15.4
37.7
3.3

33.1
66.5
90.3

34.9
68.1
91.0

35.2
68.4
91.1

35.4
68.5
91.1

35.5
68.5
91.1

35.6
68.6
91.2

2.8
2.2

2.9
2.1

3.2
2.1

3.2
2.0

3.2
2.0

3.2
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 using neutral distribution (2018) with pass-through = 0.7 (Low (0.7)) based on GDP per capita in constant LCU.

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19

Oct 23

COMOROS

Key conditions andchallenges

Table 1

2022

Population, million

0.8GDP, current US$ billion

1.2

GDP per capita, current US$

1408.8International 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

63.4

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

in private investment is thus critical. An
improved business environment and astrong financial sector could help attract
foreign direct investment and spur domestic private investment.

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2014), 2017 PPPs.
b/ WDI for School enrollment (2018); Life expectancy(2021).

The Comoros’ economy continues to recover on the back of the resumption of private consumption and investments intourism and transport infrastructure, andgrowth is expected to average 3.5 percent
in 2023-25. The poverty rate has remained stable around 38 percent. Policy
priorities include fiscal consolidation andreforms to promote economic transformation. Risks to the outlook include slow
pace of reforms in a context of elevatedprices and upcoming elections.

Economic growth, which has been low for
decades (averaging 2.7 percent over
2001-20), slowed further to 1.6 percent over
2019-22, due to multiple shocks, including
Cyclone Kenneth in 2019, the COVID-19
pandemic, and the 2022 price shock. As aresult, poverty remains high at 38.5 percent in 2022. This weak economic performance reflects a growth model driven by
private consumption fueled by remittances, negative productivity growth, limited investment, and underperforming
state-owned enterprises (SOEs). The Comoros is at high risk of public debt distress, largely reflecting the issuance of nonconcessional loans, though public debt isassessed as sustainable.
Job creation is constrained by limited private sector, with the growth model relying heavily on private consumption.
Low human and physical capital andmisallocation of resources have hindered
growth in the tourism and fisheries sectors, which could be major sources of job
opportunities. Labor force participation is
also constrained by job market failures
and persistent forms of wage discrimination against women.
Recent shocks have highlighted the Comoros’ vulnerabilities and the need to implement reforms that increase productivity
and private investment to promote
growth. Creating the needed fiscal space toramp up public investment that will crowd

Recent developments
The economy expanded by 2.6 percent in
2022, driven by an increase in exports asnumerous members of the diaspora community came to celebrate “grand marriages,” a cultural tradition in Comoros. In
2023Q1, growth is estimated to have beenbolstered by accelerated implementationof public investment projects, increased
private consumption supported by substantial remittances, and a surge in exportsof cloves driven by a strong harvest. However, rising import bills widened the current account deficit to 2.4 percent of GDP
in 2022 (from 0.5 percent in 2021). This
trend continued in 2023Q1, but the external position remained broadly sound, with
net foreign assets estimated at €228.5 million in 2023Q1. Due to higher imported inflation and base effects, headline inflation
remained at 19.6 percent in April 2023(yoy). As a result, the Central Bank of theComoros continued to tighten the monetary stance, including by increasing its liquidity absorbing operations ceiling fromKMF 2.5 billion in June 2022 to KMF 10
billion in 2023Q1.
Slow progress on tax reforms, the underperformance of SOEs, and measures adopted toshield households from rising prices increased the fiscal deficit from 2.8 percent

FIGURE 1 Comoros / Selected macroeconomic imbalance
indicators, 2018-2025

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

Percent of GDP

Poverty rate (%)

Percent of GDP
0

50
40

560000-170550000-2

6054000050

53000040

520000305100002050000010

490000

30

-3

20

-4
-5

10

-6

0

-7
2018

2019

2020

Debt (lhs)
Fiscal balance (rhs)20212022e 2023f

2024f

Real GDP per capita (constant LCU)

80

0

2025f

4800002014

Current account balance (rhs)

2016

2018

2020

International poverty rate
Upper middle-income pov. rate

Sources: National authorities and World Bank estimates and forecasts.

Source: World Bank. Notes: see Table 2.

MPO

20

Oct 232022

2024

Lower middle-income pov. rate
Real GDP pc

of GDP in 2021 to 3.9 percent in 2022. The
deterioration in the fiscal position continued in 2023Q1 with higher public investment (114.6 percent, yoy), an increase ingoods and services expenditures (16.1 percent, yoy), and a higher public wage bill
(9.9 percent, yoy), while domestic revenues increased by 11.6 percent. Despite
the increase in the wage bill (due to government measures to increase salaries) andinvestment, these expenditures remain
within the budget at around the quarterof the budget in 2023Q1. However, goods
and services expenditures already accounted for 38.9 percent of the budget in
the first quarter. Due to the continuous disbursement of existing loans and SOEs’ financial difficulties, the public debt stock
reached 33.7 percent of GDP at end-2022,
compared to 18.1 percent at end-2018. Fiscal outturns and the public debt level are
expected to be monitored by a four-year
IMF Extended Credit Facility that was approved in June 2023.

Outlook
The recovery is expected to continue, withgrowth reaching 3 percent in 2023 and 3.8
percent over 2024-25, primarily driven by
private consumption and public investment. The construction of the El Maarouf
hospital and the Galawa hotel, as well as
the construction or restoration of roads
and ports, should significantly contributeto the recovery. In the medium term, productivity growth could be boosted as the2023 energy law promotes the productionof electricity from renewable sources. The
creation of a credit registry, a partial credit
guarantee scheme, and the operationalization of the leasing law in 2023-24 could
support the recovery in 2023-25. The
poverty rate is expected to decrease slowly
to 37 percent in 2025. Driven by imported
inflation, headline inflation is projected toaverage 10.3 percent in 2023, but it could

TABLE 2 Comoros / Macro poverty outlook indicators

fall to 2.6 percent in 2024-25 if global commodity prices decline and the central bank
improves its monetary policy framework.
Driven by the completion of major investment projects and low domestic resource
mobilization, the fiscal deficit is projected
to widen to 6.3 percent of GDP in 2023 before narrowing to 3.1 percent in 2025 on
the back of a fiscal consolidation program,enhanced SOE performance monitoring,and increased expenditure efficiency
through the use of an e-procurement system. Due to the disbursement of existingloans, public debt is projected to reach 45.2
percent of GDP in 2025 and the implementation of the 2023 debt management law
will help to contain it.
Driven by high commodity prices andstrong domestic demand, the current account deficit is projected to reach 5.2 percent of GDP in 2023, before slightly improving in 2024-25 on the back of higher
tourism service exports and lower commodity prices.

(annual percent change unless indicated otherwise)

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

2020
-0.2
3.8
4.1
-14.4
-46.3
-9.3

2021
2.1
1.0
5.0
9.6
48.2
7.7

2022
2.6
0.2
5.4
2.0
22.6
4.2

2023e
3.0
1.9
11.0
8.0
-4.2
3.0

2024f
3.5
3.2
-2.4
7.3
5.1
3.4

2025f
4.0
3.6
4.8
6.6
6.5
5.6

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-0.7
4.4
-5.6
-2.1

2.0
3.4
-0.2
1.8

2.4
3.3
0.4
2.4

3.0
4.7
2.3
2.3

3.5
4.3
1.0
3.5

4.0
4.5
1.5
4.3

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

0.8
-1.9

0.0
-0.5

12.4
-2.4

10.3
-5.2

3.0
-5.1

2.1
-4.5

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

-0.5
18.3
26.1
-0.3

-2.8
17.0
29.8
-2.5

-3.9
14.2
33.7
-3.7

-6.3
15.5
40.7
-6.0

-4.6
14.8
43.8
-4.2

-3.1
15.1
45.2
-2.7

18.4
39.0
68.2

18.2
39.0
68.2

18.1
38.5
67.9

18.1
38.2
67.2

17.9
37.9
66.5

17.4
37.0
65.7

1.6
45.2

2.1
44.7

2.4
44.4

2.8
44.3

3.4
44.5

4.0
44.9

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-EESIC. Actual data: 2014. Nowcast: 2015-2022. Forecasts are from 2023 to 2025.
b/ Projection using neutral distribution (2014) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU.

MPO

21

Oct 23

DEMOCRATIC
REP. OF CONGO
Table 1

Key conditions andchallenges

2022

Population, million

99.0

GDP, current US$ billion

63.3

GDP per capita, current US$

639.7

International poverty rate ($2.15)

a

69.9
a

87.8

a

97.4

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

a

42.1

School enrollment, primary (% gross)

b

123.9

b

59.2

Total GHG emissions (mtCO2e)

682.8

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 (2020); Life expectancy(2021).

Growth in DRC is expected to slow down in
2023 as terms-of-trade continue to deteriorate. Macroeconomic stability could be undermined by the increase in the twin-deficit(fiscal and external). Amidst elevated costof imports and a depreciating currency, inflation is surging and eroding households’
purchasing power, especially among thepoor. Medium-term growth prospects remain favorable, although vulnerabilities related to commodity price shocks and supply
chain disruptions persist.

Despite its considerable economic potential, including its rich endowment of natural resources, the Democratic Republicof the Congo (DRC)’s economy remains
concentrated in a few sectors, particularly
mining, and relies on exports of raw minerals (mainly copper and cobalt). In addition to its mineral wealth, the DRC isalso blessed with huge agricultural potential but remains a net food importer,
which exacerbates vulnerabilities to external shocks due to a lack of diversification of its economy. Despite an impressive growth over the past two decades(averaging 5.6 percent a year) and a significant return to macroeconomic stability, DRC has failed to live up to the fullpotential of its resources due to multiple
constraints the country faces.
Poverty remains widespread in the country despite some improvements in the past
decades, with the bulk of the poor livingin extreme poverty. While there are significant geographical disparities between
provinces, with most of the poor living
along two densely populated corridors
running from West to East, and North toSouth, poverty exceeds 50 percent even in
the wealthier provinces.
In addition, the fragile political context, fueled by complex dynamics of politicalcoalitions, will again be put to test by tensions preceding the legislative and presidential elections (scheduled for December2023), while the conflict in the East of thecountry persists.
Building resilience and sustaining highgrowth in order to significantly reducepoverty will require unlocking investments in infrastructure and human capitaland overcoming institutional and structural weaknesses, including the lack of human and financial resources. Reaching political consensus and increasing the presence and credibility of the state and of thebudget, including through improved governance, are key to attract investments andcreate jobs.

Recent developments
After peaking at 8.9 percent in 2022, real
GDP growth in DRC is expected at 6.8
percent in 2023. The mining sector remains the main driver of growth. However, given downwards trends for cobalt
prices and production, mining output
growth is projected to slow to 11.7 percent in 2023 (from 22.6 percent in 2022).
Growth in non-mining sectors (particularly services) is expected at 4.2 percent in
2023 (2022: 2.7 percent). On the demandside, expansion in exports is estimatedto slightly outweigh increase in imports
while private consumption is to weaken
as rising inflation weighs on real household incomes.
Despite a prudent fiscal policy, the continued exceptional spending for security andelection purposes causes the fiscal deficit
to widen in 2023 (-1.3 percent of GDP)
amid softening in revenue performance

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

100

1800009016000080

140000

8
6Real GDP per capita (constant LCU)

70

12000060

4100000

50

2

80000

40

60000

30

0
-2

20

40000

10

20000

0

-4
2019

2020

Non-Mining

2021

2022

Mining sector

2023

2024

SSA growth

0
2012

2025

2016

2018

International poverty rate
Upper middle-income pov. rate

GDP

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

MPO

2014

Source: World Bank. Notes: see Table 2.

22

Oct 23

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

(about 0.3 percentage points lower than2022). The current account deficit should
remain large, at 4.7 percent of GDP in
2023, in response to higher import prices
and persistent deterioration in the termsof-trade. Inflows from external financing
are expected to lead to the accumulation of international reserves, estimatedto reach 10 weeks of imports in 2023
(2022: 7.9 weeks).
Excess liquidity fueled by significant public spending put pressure on the currency
which could depreciate by 16.6 percent.
Exchange rate pass-through coupled withrising cost of imports led to inflation rising
at a faster pace by July 2023, and expected
to average about 20.7 percent in 2023. In response, the Central bank has tightened its
policy rate from 8.25 percent in late 2022 to
25.0 percent in August 2023.
The latest World Bank estimations put extreme poverty at 61.9 percent in 2022, a
2.2 percentage points decrease compared
to 2021, and further down to 60.7 in 2023.
This decrease is due to strong economic
growth, despite the negative effects of therising inflation.

Outlook
Growth is projected to moderate at 6.4 percent on average in 2024-25, as mining
growth slows down while the non-mining
sector catches up.
With fiscal consolidation efforts, the fiscal
deficit will be contained around 0.5 percent of GDP in 2024-25, as election-related spending subsides. The current account deficit is expected to gradually narrow, reflecting lower growth in importsof capital goods and improved terms oftrade. Further FDI inflows would contribute to building-up reserves and maintaining exchange rate stability while inflation rate is brought back down to its 7
percent medium-term target.
Extreme poverty is projected to decreaseby 1.8 percentage points by 2025 given
continued though lower economic
growth. The pace of poverty reduction
will however remain too slow to reduce
the number of people in poverty givenhigh population growth.

TABLE 2 Democratic Republic of Congo / Macro poverty outlook indicators

Amid limited buffers in terms of international reserves and revenue mobilization,
the risks to the outlook are associated to thecountry’s vulnerability to external shocks,
mainly from volatile commodity prices andgrowth performance of major trading partners which might be disturbed by geopolitical conflicts. The economic consequences ofa prolonged war in Ukraine, through rising
global food costs and higher oil prices, could
exert stronger pressure on fiscal deficit, on
inflation and on households’ consumption
thus exacerbating poverty and inequality.
Domestically, the escalating conflict in the
East of the country and pre- and post-election tensions may weaken the reform agenda and reduce the country’s capacity tomaintain macroeconomic stability and to diversify the economy.
Climate related risks, already being felt
through floods and their consequence onlosses of livelihoods and infrastructure,
could exacerbate fiscal pressure. DRC, a
low GHG emitter, is positioning as a solution country, and could benefit from developing its carbon market to generate revenue from its vast forests.

(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
9.3
11.7
6.8

2022
8.9
0.8
25.1
22.8
23.8
21.6

2023e
6.8
-5.3
10.9
17.8
11.1
7.7

2024f
6.5
6.0
9.1
4.9
6.0
4.6

2025f
6.2
7.2
0.5
5.1
5.6
4.4

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

2.3
2.5
4.2
0.1

6.2
2.4
7.8
5.8

8.9
2.4
16.1
2.7

6.8
2.5
10.1
4.0

6.5
2.5
7.6
6.3

6.2
2.5
6.7
6.8

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

11.4
-2.3

9.0
-1.0

9.3
-5.3

20.7
-4.7

12.2
-4.0

6.8
-3.3

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

-1.2
9.2
22.9
-1.0

-1.6
13.6
23.9
-1.2

-0.6
16.5
25.0
-0.3

-1.3
16.2
23.3
-1.0

-0.8
16.3
24.9
-0.5

-0.3
16.5
24.9
0.1

65.1
85.1
96.4

64.1
84.6
96.2

61.9
83.5
95.8

60.7
82.8
95.5

59.8
82.2
95.3

58.9
81.5
95.1

0.1
1.2

0.2
1.3

0.2
1.4

0.1
1.3

0.1
1.3

0.2
1.4

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 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.

MPO

23

Oct 23

REPUBLIC OFCONGOTable 1

Key conditions andchallenges
2022

Population, million

6.0GDP, current US$ billion

15.8

GDP per capita, current US$

2649.0International 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

63.5

Total GHG emissions (mtCO2e)

33.1

Life expectancy at birth, years

prospects. Attaining sustainable development in Congo urgently requires efforts todiversify national assets, focusing onstronger institutions, development of human and physical capital, and a more balanced exploitation of natural capital.

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2011), 2017 PPPs.
b/ WDI for School enrollment (2018); Life expectancy(2021).

Economic recovery is set to strengthen in
2023, with growth expected at 3.2 percent, driven by higher oil and non-oil activities. Elevated oil export receipts andongoing reforms will support the fiscal
and external surpluses. Inflation is accelerating in 2023 with the fuel price adjustment but should return to the 3.0 percent
target by 2025. Growth prospects, albeit
improved, remain vulnerable to unsteadyoil production, volatile oil prices, andweak reform implementation.

Between 2015 and 2021, Congo’s real GDP
declined by 19 percent and GDP per capita
by 31 percent. The 2014-16 collapse in oil
prices plunged the economy into a prolonged recession as a result of a massive
cut in public spending and investment andthe accumulation of domestic arrears to
private sector firms, which impacted private investment. The COVID-19 crisis further exacerbated the economic recessionthat began in 2016. GDP per capita has
now regressed to levels reminiscent of theearly 1970s, just a decade after gaining independence. The country’s reliance onvolatile oil revenue, weak governance, andhigh levels of non-concessional borrowing,
led its debt to be classified as “in distress”
and unsustainable in 2017, with its debtto-GDP ratio increasing from 42.3 percent
in 2014 to 103.5 percent in 2020. Higher oil
prices, improved debt management, anddebt restructuring agreements helped restore debt sustainability in the second halfof 2021, but the Republic of Congo (ROC)
remains in debt distress due to the accumulation of external arrears. The protracted recession and negative GDP per capita
growth rates since 2015 have resulted in
extreme poverty incidence (less than
US$2.15 PPP per day) increasing from 34.8
percent in 2015 to 46.4 percent in 2021. The
enduring reliance on oil revenues has leftthe economy vulnerable to oil price volatility and weakened long-term growth

Recent developments
After growing by an estimated 1.5 percent in 2022, the Congolese economy iscontinuing to recover in 2023, driven byboth the oil and non-oil sectors. Due
to higher investment, oil production increased by about 5.0 percent y-o-y in
2023H1 following three consecutive yearsof decline. Non-oil sector growth in
2023H1 was spurred by manufacturing(including beverages, mineral water, andcement), and services (including hotels,
restaurants and transport). Despite adrop in oil revenues due to lower oil
prices, the budget posted a surplus in
2023Q1. Fiscal discipline and strong reforms such as the 30 percent increasein gasoline retail prices since January2023 are helping sustain the budget surplus (expected at 3.1 percent of GDP at
end-2023). Lower export receipts and increased imports are anticipated to reducethe current account surplus to 6.4 percent
of GDP in 2023.
The banking sector remains solvent, butvulnerability to non-performing loans(NPLs) remains high. The NPL to grossloan ratio has been around 19 percent
over the past year, which is high by international standards. Bank deposits were

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 (%)

6

90

4

80

2

70

0

60

-2

50

-4

40

-6

30

-8

20

-10

10

Real GDP per capita (constant LCU)

100

1200000
1000000
800000600000400000200000

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. Note: Oil GDP growth rate in 2025 is projected at -0.1.

Source: World Bank. Notes: see Table 2.

MPO

24

Oct 23

2021

2023

2025

Lower middle-income pov. rate
Real GDP pc

up as of April 2023, but credit to theprivate sector declined partly due to thehigh cost of borrowing. The Bank of Central African States (BEAC) continued totighten its monetary policy to containinflationary pressures and support theexternal viability of the exchange rate
arrangement. The BEAC increased thepolicy rate in March 2023 by another 50
basis points to 5.0 percent, a cumulative
175 basis points increase since November 2021. Moreover, the BEAC ended its
weekly liquidity injections after steadily
scaling them back since June 2021.
GDP growth per capita remained negative in 2022 and poverty incidence consequently increased slightly to an estimated 46.6 percent. The fuel price adjustment and increased domestic demand arepushing up inflation, which averaged 3.5
percent (y-o-y) in 2023H1. Food inflation
decelerated in 2023H1 but remains elevated (averaging 4.6 percent, y-o-y), which
is likely to continue 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 to continue its gradual recovery. GDP is expected
to grow at 3.2 percent in 2023 and to average
3.5 percent in 2024-25. Oil sector growth (expected to average 3.8 percent in 2023-25) will
be driven primarily by increased investments by oil companies. Non-oil sector
growth (expected to average 3.6 percent in2023-25) will be spurred by growth in agriculture, non-oil industry and services, supported by the continued clearance of government arrears, gradual increase in social
spending and public investment, and theimplementation of reforms in governanceand the business environment. Overall inflation will initially accelerate to an averageof 3.4 percent in 2023-24 with the fuel priceadjustment but is expected to return to
BEAC’s 3.0 percent target by 2025. The
poverty rate is expected to marginally decrease to 46.4 percent in 2023 and to an average of 45.2 percent in 2024-25, consistent
with projected growth in GDP per capita.

TABLE 2 Republic of Congo / Macro poverty outlook indicators

With the ongoing fuel subsidy reform,
strengthening social protection interventions is necessary to mitigate the impact on
the most vulnerable. The fiscal balance is expected to remain positive, fueled by high oil
prices, increased oil production and fiscal
discipline.Thenon-oilprimarybalanceisset
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 a highlevel of non-concessional debt stock and domestic arrears), debt-to-GDP ratio is projectedtodeclineto83.6percentby2025thanksto
improved debt management, fiscal discipline, and significant oil revenues. The current account surplus is projected to decline
driven by lower oil prices and increased importstosupportoilinvestment.
Risks to the outlook are tilted to the downside and include volatile oil prices and unsteady oil production, an escalation of thewar in Ukraine and related spillovers, weaker-than-expected global demand, a further
tightening of global or regional financial
conditions, adverse weather conditions andweak reform implementation.

(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
-8.2
-38.8
-23.1
-9.4
-35.8

2021e
1.0
11.5
2.1
14.0
-1.0
25.0

2022e
1.5
5.0
-5.2
10.0
-0.7
5.9

2023e
3.2
4.9
0.6
8.0
4.0
9.2

2024f
4.1
4.9
2.6
7.0
6.2
9.7

2025f
3.0
4.4
0.8
6.0
1.8
4.2

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-5.4
3.9
-2.4
-11.7

1.0
1.9
-3.3
2.0

1.5
3.0
-0.6
3.1

3.2
2.8
4.1
2.9

4.1
3.0
6.1
3.1

3.0
3.4
3.0
3.2

Inflation (consumer price index)

1.4

2.0

3.0

3.5

3.3

3.0

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

12.3
-8.7

8.9
2.4

18.7
3.3

6.4
4.2

6.6
4.4

2.9
4.7

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

-2.2
19.7
103.5
-0.5

1.2
21.1
92.1
3.1

7.9
28.6
90.6
10.2

3.1
24.5
89.5
5.5

3.8
25.3
85.7
6.2

3.8
25.5
83.6
6.3

45.5
70.1
90.4

46.4
70.6
90.6

46.6
70.9
90.7

46.4
70.6
90.6

45.4
70.1
90.3

45.1
69.9
90.1

3.3
13.6

3.2
14.0

3.2
14.7

3.7
15.2

3.8
15.3

3.7
15.2

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 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

Oct 23CÔTE D'IVOIRE
Table 1

2022

Population, million

28.2

GDP, current US$ billion

69.9

GDP per capita, current US$

2482.6

International poverty rate ($2.15)

a

11.5
a

39.7

a

75.6

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

a

37.2

School enrollment, primary (% gross)

b

99.4

b

58.6

Total GHG emissions (mtCO2e)

56.9Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ WDI for School enrollment (2022); Life expectancy(2021).

Amid global and regional turbulence andtight financial conditions, economic
growth is set to ease to 6.3 percent in
2023 as inflation remains elevated (averaging 5.2 percent at mid-year 2023), impacting the most vulnerable. Macroeconomic imbalances should ease gradually:
domestic revenue mobilization should
help rebuild fiscal buffers and strengthen
debt sustainability, while improved termsof trade and structural reforms could sustain growth around potential.

Key conditions andchallenges
After almost a decade as one of thefastest growing economies in SSA –with real GDP growth averaging 8 percent over 2012–19 (5.5 percent in percapita terms) – the global crises brought
about by COVID-19 and Russia’s invasion of Ukraine, have underlined theneed for continued structural reforms tomove towards the objective of doubling
GDP per capita by 2030. Lifting productivity growth and creating better jobs
will require leveraging private investment, capital deepening, reducing allocative inefficiencies through pro-competition policies, improving human capital, as well as increasing resilience toclimate risks.
Downside risks predominate in the
short term. The war in Ukraine increases commodity price volatility andhas worsened external and fiscal balances of net commodity and oil importers. Heightened market uncertainties and tight monetary policy have
driven up costs of external and domestic debt, requiring active debt andfiscal management. Regional insecurity
and climate-related factors could also
dampen the outlook. Medium-term
prospects rest on the rollout of the national development plan (NDP), which
requires adequate financing throughgreater domestic revenue mobilizationand private investment.

Recent developments
Economic growth momentum moderated
in 2022 owing to the fallout from Russia's invasion of Ukraine, global monetary tightening, and increased politicalinstability in the WAEMU. Amid higher
import prices, rising global and domestic
interest rates and slowing external demand, economic growth softened to 6.7
percent in 2022 from 7 percent in 2021.
Real GDP growth is estimated to slow
to 6.3 percent in 2023 (3.6 in per capita
terms) mainly due to weakening externaland domestic demand. Private consumption showed signs of moderating in thefirst half of the year (with fuel consumption growth declining from 7.8 percent
in H1-2022 to 3.7 percent in H1-2023).
Low agricultural productivity, unfavorable weather conditions, and higher fertilizer costs are expected to weigh on the
sector. Cocoa production declined due tothe temporary halt to the distribution of
improved seeds in line with the government's decision to stabilize production at 2 million tons to ensure a fair
farmgate price. Industrial production is
expected to decelerate. By contrast, service growth will remain strong. Despite
the fiscal consolidation started in 2023,
the continuation of major public investments will continue to support growth(remain above pre-covid averages) andonly gradually slow down.
CPI averaged 5.2 percent in July 2023,
with core inflation increasing 2.5 percent year-on-year. To counter inflation

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

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

Percent of GDP
10

Poverty rate (%)
100

1000000

8909000006808000007070000060

60000050500000040400000-230300000-420200000-6

10100000

4
2

Real private consumption per capita (constant LCU)

0

-8
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Budget Balance

Government debt

02008 2010 2012 2014 2016 2018 2020 2022 2024
International poverty rate
Upper middle-income pov. rate

WAEMU fiscal rule

Source: World Bank.

Source: World Bank. Notes: see Table 2.

MPO

26

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

across WAEMU countries, the Central
Bank of West African States (BCEAO)
raised policy interest rates by a cumulative 125 basis points since the startof 2022 to 3.25 percent for liquidity
calls and 5.25 percent for the marginal
lending facility. However, the monetary policy stance remains broadly accommodative, inflation is still above
target and foreign exchange reserves
have been on a downward trend.
The fiscal deficit widened to a multidecade high of 6.8 percent in 2022, while
public debt rose to almost 60 percent of
GDP at end-2022. It is projected at 5.3 percent of GDP in 2023, containing the increase in public debt. The improvement of
the fiscal stance is backed by a revenuebased fiscal consolidation and lower
spending as inflation-related subsidies andforegone fuel revenues are scaled back,and electricity tariffs are raised.
Extreme poverty (less than $2.15 a day percapita in PPP) would reach 11 percent in
2023, 0.8 percentage points higher than in
2022. Contracting agriculture (employing
45 percent of the workforce, 74 percent ofrural workers and 70 percent of the poor)
and increased food prices offset the poverty-reducing effects of economic growth,from expanding services and industry, andincrease poverty in 2023.

Outlook
Assuming prudent macroeconomic policies and structural reforms, growth should
remain robust over the medium term, albeit below pre-pandemic levels amid continued adverse global and regional economic and political trends. Real GDP
growth should average 6.5 percent in2024-25. On the upside, continued investments in network infrastructure notably
on digital and transport sectors, and exploitation of the recent oil discoveries, together with prudent macroeconomic policies, should boost business confidence andincrease productivity. Plans to develop value chains could raise agricultural productivity and boost manufacturing, sustaining
growth potential. Inflation is projected tostart easing slowly in the second half of 2024
in line with global food and commodity
prices, reaching the WAEMU 1 to 3 percent
target band in the medium term.
Tax revenue should increase by close to
1 percentage point of GDP by end-2023,

TABLE 2 Côte d'Ivoire / Macro poverty outlook indicators

signaling continued progress on domestic
revenue mobilization efforts. This trend
would support the re-alignment of the fiscal deficit, achieving the 3 percent regionaltarget by 2025, stabilizing debt at around58 percent of GDP, and creating fiscal
headroom for sustained infrastructure development. Capital expenditures are expected to remain above pre-pandemic levels in the medium term. Private sector-led
export diversification should boost thetrade balance, and together with the lower
fiscal deficit, narrow the CAD.
On the downside, heightened regional tensions, including recent developments in
Niger, could curtail external capital inflows and foreign private investments.
Protracted tight financial conditions in
global and regional markets could weighon debt sustainability.
Extreme poverty should continue increasing in 2024 to 11.62 percent, driven by aweak agriculture sector and an above-target inflation rate, especially among fooditems (expected at 4.7 percent). Poverty reduction should resume in the medium
term, reflecting abated inflation and sustained economic growth, especially in agriculture and services. Extreme poverty
should fall to 10.7 percent by 2025.

(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

2022
6.7
3.3
8.0
9.8
10.2
6.8

2023e
6.3
3.0
6.8
14.3
10.5
12.9

2024f
6.5
3.9
5.5
12.1
8.5
9.5

2025f
6.5
4.3
4.4
11.1
6.5
7.0

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

6.3
-0.3
6.0
8.9

6.5
1.4
10.0
6.8

6.5
11.1
4.1
6.0

Inflation (consumer price index)

2.4

4.2

5.2

5.0

3.7

3.0

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-3.1
1.1

-4.0
1.5

-6.5
1.3

-4.7
1.7

-3.8
2.4

-3.7
2.0

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

-5.4
15.0
48.1
-3.6

-4.9
15.9
52.1
-2.9

-6.8
15.3
58.1
-4.5

-5.3
16.4
59.1
-3.0

-4.1
17.0
59.1
-1.8

-3.0
17.4
58.3
-0.7

9.6
36.9
74.3

9.6
36.4
73.3

10.2
37.2
73.6

11.0
38.0
73.5

11.6
38.3
73.0

10.7
36.9
72.3

3.6
25.7

3.7
27.6

2.9
28.7

1.7
28.9

1.9
29.0

2.1
29.3

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/ Projections using microsimulation methodology.

MPO

27

Oct 23

EQUATORIALGUINEA
Table 1

Key conditions andchallenges
As a result of declining oil reserves andfailure to diversify the economy, Equatorial Guinea’s output has been shrinking
steadily for almost a decade. Between
2013 and 2021, the country registered anaverage 5.0 percent negative growth per
year. Hydrocarbons accounted for nearly
50 percent of both exports and GDP andover 70 percent of government revenues
in 2022. Structural reforms are needed
to prevent long-term economic decline,
by diversifying growth drivers and building fiscal stability through domestic revenue mobilization efforts and more efficient public spending.
Reforms have been adopted in recent years
to improve governance and business conditions. An anticorruption law was enacted in 2022 and audits of state-owned oil
and gas companies were published. Measures are underway to boost trade with aone-stop shop, simplified work permits,
and a law reducing import and export duties and expanding port operating hours.
Yet, weaknesses persist in the governanceof extractive revenues and the business environment, preventing the country fromattracting investments, creating jobs, andunlocking trade to achieve sustained
growth and diversification goals.
Actions are also needed to better protect
and include the poor. Despite having oneof the highest incomes per capita in Sub
Saharan Africa, living standards remain

2022

Population, million

1.7

GDP, current US$ billion

11.8

GDP per capita, current US$

7053.5School enrollment, primary (% gross)

a

61.8

a

60.6

Total GHG emissions (mtCO2e)

19.3

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ WDI for School enrollment (2015); Life expectancy(2021).

Equatorial Guinea grew by 3.1 percent in
2022, mainly driven by stronger hydrocarbon output. However, the country is
expected to fall back into recession in
2023 due to declining petroleum reserves.
After benefiting from hydrocarbon windfalls in 2022, fiscal and external balances
are expected to decrease sharply over the
coming years. Meanwhile, severe development challenges remain, and are exacerbated by the impact of rising inflation onliving conditions.

low. Life expectancy at birth is estimated at60.7 years, considerably lower than the average of 75 years for countries of the same
income group. Around 40 percent ofhouseholds experienced at least one day
without electricity per month. Scarcepoverty data remain a challenge to an effective protection of vulnerable groups.
The data collection phase of the National
Household Survey II is expected to be overin September 2023 (with a minor delay in
Annobón province). The survey will fillout knowledge gaps in poverty and inequality, enabling evidence-based social
protection policies.

Recent developments
Equatorial Guinea grew by 3.1 percent in
2022. Stronger natural gas output drove
the rebound, following repairs on the Punta Europa complex after a devastating firein September 2021. Meanwhile, growth in
the non-oil sectors was supported by services, benefitting from oil windfalls andthe removal of COVID-19 restrictions. Demand-side GDP was driven by public investments and net exports. However, theeconomy has been showing signs of reverting to negative growth. In 2023Q1,
GDP contracted by 0.4 percent (q-o-q),
due to maturing oilfields and the decommissioning of a floating production unit
following flooding in September 2022.
High oil prices boosted hydrocarbon exports, bringing the current account balance to -1.0 percent of GDP in 2022 from
-2.1 percent in the year before.

FIGURE 1 Equatorial Guinea / Hydrocarbon production andrevenues

FIGURE 2 Equatorial Guinea / Non-income poverty
indicators

Percent of GDP
30

Percent
250

Thousand barrels per day
300

25

250

20

200

15

150

10

100

5

50

200

EqG relative to regional average
EqG relative to MIC average

150
100
50
0

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)

0
2015

2017

2019

Hydrocarbon revenue (lhs)

2021

2023f

2025f

Hydrocarbon production (rhs)

Sources: Official data and World Bank staff calculations.

Source: World Bank.

MPO

28

Oct 23

Also benefitting from the temporary recovery in hydrocarbons, in 2022 the fiscal balance reached a surplus of 13.2 percent ofGDP, due to higher than anticipated oil
windfalls. Public expenditures increased in
2022 and early 2023, pushed by higher investments in infrastructure and also fuelsubsidies, which reached 1.3 percent of GDP
in 2022 due to higher oil prices that were notpassed on to users. However, structurally
declining production and lower prices led toa 25 percent decline in oil revenues in
2023Q1 (y-o-y). The debt-to-GDP ratio continued to decline in 2022, thanks to economic
growth. While the Government settled ashare of arrears, outstanding domestic arrears with construction companies remainhigh at 10.8 percent of GDP.
As a result, high levels of non-performing
loans - 57.9 percent of total loans in 2023Q1- remain a source of banking system vulnerability. The Bank of Central African
States continued to tighten its monetary
policy to contain inflationary pressuresand support the exchange rate peg, increasing the policy rate in March 2023 byanother 50 basis points to 5.0 percent, andending its weekly liquidity injections.
Credit to the economy decreased by 2.0
percent in 2022. Meanwhile, the Russian
invasion of Ukraine is still impacting inflation, which stood at 4.2 percent in June

2023 (y-o-y). Rising costs are likely impacting food security and living conditions, although poverty data remains scarce.

Outlook
Following a brief recovery in 2022, Equatorial Guinea is expected to re-enter recession, with a projected annual average negative growth of 4.0 percent over 2023-2025.
Declining hydrocarbon production andlower commodity prices are expected tokeep impacting the Equatoguinean economy. Decreasing exports would lead to current account deficits over the coming
years. Albeit at a slower pace, imports
would also decrease, on account of declining public spending due to limited fiscal
space. The fiscal balance is projected toturn to deficits in 2024-2025, as public expenditure cuts would not be sufficient tocompensate for the larger drop in hydrocarbon revenues.
In the absence of growth, living standards would likely stagnate or deteriorate. Furthermore, projected lower public
spending would have negative economic
and social implications.
Several factors risk aggravating the
economic decline. A stronger decline in

TABLE 2 Equatorial Guinea / Macro poverty outlook indicatorshydrocarbon production or prices risks
undermining fiscal and external stability
given Equatorial Guinea’s overdependence on oil. Sustained global financial
tightening and lower demand from China
and India, its main export partners, could
also compromise growth prospects. Moreover, global trade disruptions affecting
commodity and food prices due to the prolonged conflict in Ukraine would increase
food insecurity, especially for the mostvulnerable, as the country relies heavily onfood imports.
Shrinking hydrocarbon reserves indicate
the need for Equatorial Guinea to moveto a new growth model, promoting resilient non-oil sectors capable of sustaining future growth. Ultimately, implementing the country’s economic diversification vision will require efforts to facilitate trade and improve business conditions. Actions are also needed to improve
public financial management, maximizing
the public benefit derived from oil revenues while preparing for a sustainable
post-oil fiscal model. Finally, a stronger
social protection system would help protect the most vulnerable and reduce inequities, especially as social spending inEquatorial Guinea is below 2 percent ofGDP, three times lower than the West
and Central Africa average.

(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
-0.9
3.4
-5.7
18.8
4.4
12.5

2022
3.1
3.4
-0.6
65.1
2.4
6.2

2023e
-2.5
-7.5
42.5
-76.1
-8.4
-7.0

2024f
-6.1
-0.3
-6.6
-11.6
-10.1
-6.5

2025f
-3.9
-2.6
-4.0
-5.0
-6.3
-6.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-4.2
-6.3
-4.4
-3.8

-0.8
5.9
-6.4
8.2

2.8
3.6
1.3
5.0

-2.5
-5.7
-49.5
63.2

-6.1
2.2
-18.0
-1.2

-3.9
2.0
-10.0
-1.9

Inflation (consumer price index)

4.8

-0.1

4.9

3.5

2.2

2.3

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-10.4
3.7

-2.1
5.1

-1.0
5.7

-2.9
4.9

-1.6
4.9

-1.5
5.6

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

-1.7
14.1
48.4
-0.4

2.6
15.4
42.8
3.6

13.2
30.7
40.0
14.5

8.2
26.8
33.9
9.6

-4.2
12.3
32.9
-3.0

-4.5
11.9
34.9
-3.3

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

-14.5
25.6

27.6
35.5

16.2
41.8

-9.9
38.6

-8.3
35.5

-3.9
34.1

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

MPO

29

Oct 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

66.5

Total GHG emissions (mtCO2e)

7.1Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ WDI for School enrollment (2019); Life expectancy(2021).

GDP growth is projected to recover modestly from 2.6 percent in 2023 to 3.2 percent in 2024 supported by mining andservice sector activity, while inflation
should moderate in line with global commodity prices. Risks to the outlook include production delays at the Colluli
mine, geopolitical tensions, and climate
vulnerabilities. National accounts andpoverty statistics have not been produced
over the last decade, although poverty is
expected to be widespread.

Eritrea emerged from a decade of international isolation with the lifting of UN sanctions in November 2018. During that period, the government followed a self-sufficiency policy. As a result, the economy
is dominated by large state-owned enterprises, limiting the participation of private
sector. Zinc, copper and gold account forover 90 percent of exports, underscoringrisks to metal price fluctuations. Monetary
policy is characterized by administrative
measures, fiscal dominance, and a fixed exchange rate regime pegged to the US dollar, enabled by severe import restrictionsin the context of low foreign exchange reserves. The financial sector is small and underdeveloped. The country is vulnerable
to climate change, 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 engagement with development partners, leaving it without muchneeded external funding. Informal crossborder trade seemed less affected as theconflict in northern Ethiopia ended.
The emergency conditions that prevailedin Eritrea over the past decade have led
to severe data production capacity constraints. National accounts data are limited to unofficial GDP estimates producedby the Ministry of Finance that are notendorsed by the government. Inflation estimates cover only the capital, Asmara,and full balance of payments accounts
are missing. The last population census
in Eritrea took place more than 25 years
ago, and the last official poverty rate forthe country dates from 1996/97, when
it was calculated that 70 percent of urban households lived in poverty. Limited
growth and the multiple economic shocks
since then suggest that this figure may
now be higher.

Recent developments
Real GDP growth had slowed to 2.5 percent in 2022, impacted by weak demand
from global trading partners, especiallyChina, while inflation had risen to over 7
percent in line with rising global commodity prices and supply chain disruptions.
Although data is limited, activity during
the first half of the year is likely to havebeen supported by a recovery in demandin China. Declines in global energy andgrains prices have helped to ease pricepressures, providing some respite forhouseholds, who have seen their purchasing power substantially eroded in past
years on account of the high inflation, andsupporting service sector activity. Although global zinc prices have fallen by athird relative to average prices last year,
gold and copper prices have remained relatively high helping to support export revenues; alongside lower fuel and food import costs, this is helping Eritrea maintainlarge double-digit current account surpluses. Notwithstanding such large surpluses, international reserves are estimated

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
0
100
-5

50
0

-10
2019

2020

Domestic debt

2021

2022
External debt

2023e

2024p

2025p

2019

Total public debt

2020

2021

Overall fiscal balance

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

2022

2023e

2024p

2025p

Primary fiscal balance

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

Oct 23

at around three months of imports. Continued mining export receipts have, inturn, supported government revenues.
Public debt was estimated at around 239.8
percent of GDP at end-2022, of which nearly 80 percent is owed to domestic banks,
and the country is in debt distress. As ofJanuary 2023, Eritrea was at a pre-decision
point in the Highly Indebted Poor Countries (HIPC) list.
Eritrea has recently begun to reengage
with development partners and revitalize
some bilateral relations. The African Development Bank Board approved US$49.9
million to build a 30 megawatt Solar Photovoltaic Power Plant in Dekemhare in
March 2023. In the same month, the Chinese company Sichuan Road and Bridge
Group (SRBG) has completed the acquisition of a 50 percent stake in the Colluli
potash project and the mine is anticipated
to come onstream in 2024. In addition, Eritrea has rejoined the East African tradebloc, the Inter-Governmental Authority on
Development (IGAD), nearly 16 years after
it pulled out of the body.

OutlookAfter remaining broadly flat in 2023, GDP
growth should increase by 3.2 percent in
2024, driven by mining exports, the services sector and as production from the
Colluli potash mine begins. In line witheasing global food prices, inflation is expected to ease further, reaching about 5
percent in 2024. The current account surplus is expected to widen to over 14 percent of GDP, helped by strong mining
sector performance amid tight importcontrols. A gradual fiscal consolidationand continued strong mining sector receipts should support a narrowing of the
fiscal deficit to below 4 percent of GDP
by 2025. The economic recovery should
support a reduction in the public debt-toGDP ratio, which is projected at 210 percent of GDP in 2024. Poverty is not expected to vary significantly in the coming
years, remaining very high. Significant
improvements in the agricultural sector

TABLE 2 Eritrea / Macro poverty outlook indicatorsand creation of productive employment
in urban areas will be critical to dent deprivation in the country.
Significant downside risks include weakerthan-expected global/Chinese demand for
Eritrean commodity exports and related
volatility in metals and minerals prices,
production delays at the Colluli mine, andspillovers from the conflict in Sudan. Finally, severe climate vulnerabilities that burden Eritrea could worsen in coming years,
posing high risks to food security.
Against this backdrop, Eritrea’s reengagement with the international community
could help to significantly reduce externalarrears and provide much-needed financing to build essential infrastructure overthe medium term, help abate the risks associated with climate change, and jumpstart the private and financial sectors. Development of the private and financial
sectors could enhance job creation andpromote inclusive growth. The production of reliable information for the economy and on living conditions remain a priority, as well.

(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

2022
2.5
3.6
5.7
13.1
9.2
11.0

2023e
2.6
4.0
3.7
22.7
5.1
5.3

2024f
3.2
4.3
4.1
6.6
3.7
4.1

2025f
3.3
4.1
4.1
14.5
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

2.6
3.5
2.9
1.5

3.2
3.6
3.3
2.7

3.3
3.2
3.1
3.8

Inflation (consumer price index)

5.6

6.6

7.4

6.4

5.1

5.2

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

14.4
1.1

14.6
1.0

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
27.8
210.2
-2.9

-3.3
28.0
195.3
-2.3

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

1.0
12.9

2.5
13.4

1.8
13.0

1.8
12.6

2.5
12.8

2.9
13.3

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

MPO

31

Oct 23

ESWATINI

Key conditions andchallenges

Table 1

2022

Population, million

1.2

GDP, current US$ billion

4.8

GDP per capita, current US$

3989.6

International 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

57.1

Total GHG emissions (mtCO2e)

2.9Life 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(2021).

Real GDP growth is projected to reboundto 3.6 percent in 2023, from 0.5 percent
in 2022, supported by higher SACU revenue and public spending. Nevertheless,industrial growth was muted while private consumption declined during
2023Q1, constrained by inflationarypressures which have persisted since2022. Higher SACU revenue will help reduce fiscal deficit. Poverty is projected todecrease slightly from 54 percent in 2022
to 52.7 percent in 2024 using the lowermiddle-income country poverty line($3.65/day, 2017 PPP).

Eswatini is trapped in a low growthpath, partly due to structural challenges,
business climate, and sociopolitical uncertainty. Limited private investment andweak trade diversification remains inadequate to generate growth and create
enough jobs to reduce the unemployment rate of 33 percent.
Given low private investment, the government has relied on public spending,despite volatile South African Customs
Union (SACU) revenue that have led tohigh debt, public expenditure arrears,
and low international reserves (Figure1). The severe decline in SACU revenues
observed in 2022 has negative ripple effects on the economy, moving the current account into deficit, reducing international reserves below three months ofimports, and worsening the fiscal deficit
to 5.0 percent of GDP. It also deepens
Eswatini’s reliance on South Africa, as
SACU revenue depends also on South
Africa’s economic performance. To mitigate this, Eswatini needs to boost
domestic revenue.
In 2022, an estimated 31 percent of the
population lived below the US$2.15/day(2017 PPP) international poverty line,
while 54 percent of the population fell
under the lower-middle-income country
poverty line (US$3.65/day, 2017 PPP).
High inequality (54.6 percent in 2016)
could fuel social tension.

Recent developments
The slowdown in economic growth, whichstarted in 2022 due to higher global inflation and supply chain disruptions, persisted in early 2023. Real GDP growth slowed
to 1.1 percent in 2023Q1, from 8.1 percent
in 2022Q1. The primary sector grew by 3.4
percent and the tertiary sector grew by 8.6
percent, while the industrial sector contracted by 10.1 percent during the quarter.
Inflationary pressures limited demand.
Inflationary pressures persisted in 2023,
with annual inflation averaging 5.4 percent
for the first seven months of 2023 comparedto 4 percent the previous year, driven by the
impact of elevated global prices (particularly energy and food), which were transmitted
to local prices. Food inflation breached thecentral bank’s threshold for the first time infive years in June 2022 and it has grown atdouble-digit levels since August 2022. In response, the Central Bank increased the repo
rate by 350 basis points, from 4 percent inJanuary 2022 to 7.5 percent in July 2023.
Non-performing loans are rising, reaching
7.5 percent in May 2023 from an average of
6.6 percent in 2022.
Implementation of the fiscal adjustment
plan (FAP) was uneven in 2022, resulting
in the overall fiscal deficit rising from 4.6
percent in 2021 to 5.0 percent in 2022.
SACU revenue declined while spending
increased in 2022, and public debt reacheda peak of 41.8 percent of GDP in 2022. The
current account registered a deficit of 2.4
percent of GDP in 2022 for the first timesince the 2010/11 crisis, reflecting the high

FIGURE 1 Eswatini / SACU revenues and macroeconomic
variables

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

Percent of GDP
14

Poverty rate (%)

Months of imports, % of GDP
4

12

2

10
8

Real GDP per capita (constant LCU)

100

45000

90

40000

80

35000

70

0

30000

60

6

-2

4
2

25000

50

20000

40

-4

15000

30

0

-6

-2
-4

-8
2018

2019

Current account (lhs)
Fiscal deficit (rhs)

2020

2021

2022e

20

10000

10

5000

0

2023 Proj.

02009 2011 2013 2015 2017 2019 2021 2023 2025

SACU revenue (lhs)International Reserves (rhs)International poverty rate
Upper middle-income pov. rate

Sources: Eswatini Ministry of Finance and World Bank projections.

Source: World Bank: Notes: see Table 2.

MPO

32

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

cost of imports and a sharp decline in
SACU revenues. External shocks are persisting in 2023 as imports prices remain
high, with the trade balance in deficit between April and June 2023. International
reserves remain low at 2.6 months of imports in July 2023, despite the almost doubling of SACU revenues in 2023 comparedto the previous year.
Higher transport and food prices disproportionately affect the poor, who spend ahigher share of their resources on these
items. The combination of slow economic
growth and high inflation have limited theprogress in poverty reduction, with estimated poverty rates only showing a slightincrease from 53.7 percent to 54 percent,using the lower middle-income country
poverty line, between 2021 and 2022.

OutlookThe medium-term economic outlook has
improved, with growth expected toreach 3.6 and 2.9 percent in 2023 and2024, respectively. The public sector is
likely to drive growth, buoyed by analmost doubling of SACU receipts. The
projected increase in government expenditure will boost economic activity, including the beginning of major investment projects such as the MkhondvoNgwavuma dam. However, unfavorable
weather conditions as well as socialand political uncertainty may affect thegrowth outlook. Inflation is projected toincrease to 5.1 percent in 2023, reflecting
continued external shocks, and should
gradually return to 4.5 percent annually
over the medium term.
High SACU receipts are projected tohelp reduce the fiscal deficit to 2.1
percent of GDP in 2023 and 1.4 percent in 2024. This is despite higher
election spending and higher publicwages in 2023. If authorities implement the FAP, the deficit is projected
to decline further to about 0.7 percent of GDP in 2025. The growing
public-sector wage bill might pose

TABLE 2 Eswatini / Macro poverty outlook indicators

risks in future should SACU receipts
decline. Nevertheless, the government’s commitment to put about E1.5
billion (1.8 percent of GDP) into the
new SACU Revenue Stabilization
Fund is a step in the right direction
to protect the economy against future
volatility. Debt is projected to stabilize in the medium term, as the fiscal
deficit declines. The current accountis projected to return into surplus in
2023 and 2024, on the back of higher SACU receipts and expected fiscal
consolidation from 2024 onwards.
Poverty, based on the lower-middle-income country poverty line (US$3.65/day,2017 PPP), is projected to decline slightly
from 54 percent in 2022 to 52.1 percent
in 2025. While the projected economic recovery will have a positive impact onhouseholds, such improvement will be
constrained by the negative impact ofhigher food and energy prices on lowerincome households, with poverty estimated to hover around 52 percent 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
1.1
7.3
-8.2
-2.4
-1.3

2021
10.7
5.7
-10.6
11.4
8.8
14.0

2022
0.5
-5.3
-0.3
-10.8
-0.4
3.4

2023e
3.6
4.1
9.7
-5.8
8.0
7.0

2024f
2.9
2.8
2.2
4.7
2.6
2.7

2025f
2.8
2.6
0.8
4.4
2.4
2.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-1.5
-7.5
-9.7
5.5

10.7
4.6
17.9
7.1

0.2
5.1
-0.3
-0.1

3.6
2.7
2.6
4.4

2.9
1.5
2.5
3.3

2.8
3.0
2.1
3.2

Inflation (consumer price index)

3.9

3.7

4.8

5.1

4.9

4.5

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

7.1
1.2

2.6
1.2

-2.4
0.7

3.7
0.8

2.1
0.8

0.4
0.7

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

-4.6
29.4
39.6
-2.4

-4.6
25.1
37.9
-2.7

-5.0
23.9
41.8
-2.7

-2.1
28.9
39.1
-0.3

-1.4
28.0
35.8
0.1

-0.7
26.6
34.0
0.6

35.2
57.4
77.7

30.9
53.7
76.1

31.0
54.0
76.2

30.1
53.3
75.4

29.4
52.7
75.0

28.6
52.1
74.8

0.3
35.3

4.0
38.0

2.4
39.4

0.6
39.8

1.6
40.6

2.1
41.6

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

Oct 23

ETHIOPIA

Key conditions andchallenges

Table 1

2022

Population, million

123.4

GDP, current US$ billion

131.8

GDP per capita, current US$

1067.9International 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

65.0

Total GHG emissions (mtCO2e)

196.5Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2015), 2017 PPPs.
b/ Most recent WDI value (2021).

Growth is estimated to have slowed to 5.8
percent in FY23 from 6.4 percent in
FY22 as fiscal and external pressures intensified. Amid heightened macroeconomic vulnerabilities and depleted buffers,
growth remains lower than before
COVID-19, and poverty and inequality
have increased due to multiple, compoundshocks of conflict, droughts and inflation.
The peace agreement to end the conflict in
the north provides an opportunity to advance reforms to support macroeconomic
stability and economic transformation forsustained and inclusive growth.

State-led economic development lifted
growth to over 10 percent between
2004-19, placing Ethiopia among thefastest-growing economies in the world.
However, overvalued exchange rates, financial repression, and regulatory andother policy distortions that underpinned
this SOE-led growth model undermined
external competitiveness, depleted macroeconomic buffers, depressed productivity
and stalled the country’s structural transformation. The 2019 Home-Grown Economic Reform Agenda sought to course
correct by prioritizing reforms that unlocked greater private sector participationand market orientation. However, implementation was slowed by multiple shocks
including COVID-19, soaring global foodand energy prices and conflict in the norththat exacerbated macroeconomic vulnerabilities. As a result, growth slowed toabout 6 percent since FY20. In 2021, thecountry applied for debt treatment under
the G-20 Common Framework amid growing external and fiscal financing pressures.
The November 2022 peace agreement has
ended conflict in the north, but conflict ofvarying intensity remains widespreadthroughout the country. The government
is seeking to revive reform momentum: therevised Home-Grown Economic Reform
Agenda (HERA 2.0) announced in June
2023 targets reforms in four pillars: macroeconomic stabilization, investment and

FIGURE 1 Ethiopia / Gross foreign exchange reserves

Growth slowed to an estimated 5.8 percent
in FY23 (ending June 2023) from 6.4 percent in FY22 as good harvests supported
agricultural growth despite protracted
drought in pastoral areas. Service activity
also held up, offsetting the drag on manufacturing and construction from worsening forex shortages, restrictions on non-essential imports and the suspension of preferential US market access.
The current account deficit in FY23 narrowed to 3.1 percent of GDP from 4 percent in FY22 due to lower imports related
to forex shortages and strong service exports. It was largely financed through FDI,

Poverty rate (%)

Real GDP per capita (constant LCU)

100

3.0

25000

90

4,000

2.5

3,500
3,000

80
60

15000

50

1.5

2,000

20000

70

2.0

2,500

40

1,500

1.0

10000

30
20

1,000

0.5

500
0
Jul-16

Recent developments

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

Months of imports

Million US$
4,500

trade, productivity, and climate resilience.
Implementation of these reforms, including swiftly addressing the distortions in
the forex market, is key to support macroeconomic stability, private sector led
growth and over the medium term, todampen fragility and conflict risks.
Already acute food insecurity has worsened due to global food and energy priceshocks, disruptions to grain supply due tothe war in Ukraine, and below-average local crop production. Humanitarian conditions in Ethiopia are deteriorating due tothe combination of climate shocks, disease
outbreaks, armed conflict, and the socioeconomic impacts of COVID-19. In 2023,
about 28.6 million people – around onefourth of the country’s population – needhumanitarian assistance, an increase ofabout 2.7 million from 2022.

0

0.0
Jul-17

Jul-18

Jul-19In million US$

Jul-20Jul-21

5000

10
0
2010

Jul-22

2012

2014

2016

2018

International poverty rate
Upper middle-income pov. rate

In months of imports

Source: National Bank of Ethiopia.

Source: World Bank. Notes: see Table 2.

MPO

34

Oct 23

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

which continued to decline, and the drawdown of FX reserves, which fell to less than
two weeks of import cover by June 2023.
Fiscal space tightened further amid declining revenues and donor flows. At 7 percent
in FY23, Ethiopia’s tax-to-GDP ratio is insufficient to fund essential spending andanchor fiscal sustainability, let alone finance additional growth-enhancing healthand education investments. To contain fiscal deficits, public spending has beensteadily cut, falling to 10 percent of GDP
in FY23 (less than half the levels in the early-2000s). With financing options severely constrained, the deficit narrowed from
4.2 percent of GDP in FY22 to 2.9 percent
in FY23, and was financed mainly throughdomestic borrowing, including from thecentral bank. Public debt-to-GDP ratios
continued to decrease in FY23 as external
disbursements remained constrained.
Despite some easing in recent months, inflation remained high at 28.8 percent in July, driven mainly by nonfood inflation due
to the phased removal of fuel subsidies,monetary financing of deficits and widening of premiums in parallel currency markets (that reached over 100 percent in recent months). Overlapping crises – persistent droughts and a surge in global food,

fuel and fertilizer prices – have further exacerbated inflation.
Armed conflict, back-to-back droughts inlowland regions, and high food prices
have contributed to a stagnation and reversal of poverty reduction in recent years.
The number of poor people increased byabout 410 thousand in 2022. Moreover, thepoor, who are net consumers of food, remain at high risk of falling into extreme
poverty and food insecurity.

OutlookA modest increase in growth to 6.4 percent is
expected in FY24 as recent domestic and external shocks wane and service activity remains strong. Over the medium term,
growth is anticipated to rise to about 7 percent amid slow progress in reform implementation with continued policy distortions, notably overvalued exchange rate
policies, expected to reduce the payoff fromthe ongoing liberalization of telecom andbanking sectors and to continue to drag on
domestic and foreign private investment.
With fiscal and external pressures expected
to persist, and amid constrained financing

TABLE 2 Ethiopia / Macro poverty outlook indicators

options, both fiscal and current accountdeficits are projected to narrow further overthe medium term. A gradual deceleration in
inflation is projected, supported by reduced
monetary financing in line with narrowing
fiscal deficits.
Faster implementation of critical macroeconomic and structural reforms could
lead to better growth outcomes in themedium term. However, the resumptionof conflicts could complicate reform implementation and forex inflows from development assistance and investment. Addressing the significant distortions in the forex
market is critical to restoring productivity-led growth by improving resource allocation and alleviating external payment
risks. Debt treatment and the resumptionof official external flows will also be criticalto ease external financing pressures.
Substantial poverty reduction in the medium term will depend on a strong performance in the agricultural sector, which employs over 70 percent of the labor force, andthe creation of economic opportunities inother sectors. Additional shocks could pushmillions more into poverty and increase spatial inequalities. The acceleration of 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

2021/22
6.4
4.5
1.5
11.0
11.7
10.8

2022/23e
5.8
6.8
-13.5
9.2
2.7
2.7

2023/24f
6.4
6.8
-6.4
7.3
2.5
3.2

2024/25f
7.0
5.6
12.7
7.1
2.7
3.4

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

5.8
5.8
2.3
8.2

6.4
4.8
4.7
8.8

7.0
5.8
4.8
9.3

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

19.9
-4.1

20.2
-2.7

33.7
-4.0

32.6
-3.1

26.3
-2.3

17.2
-2.1

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

-2.9
7.6
50.4
-2.3

-2.0
6.7
44.6
-1.5

-1.8
7.1
35.2
-1.3

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

2.0
15.2

2.4
14.8

2.6
14.3

2.5
13.6

2.7
13.0

2.7
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 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.

MPO

35

Oct 23

GABONKey conditions andchallenges

Table 1

2022

Population, million

2.4

GDP, current US$ billion

21.1

GDP per capita, current US$

8820.3

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

65.8

Total GHG emissions (mtCO2e)21.9Life 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(2021).

Benefiting from positive developments inthe commodities sector, Gabon grew by 3.0
percent in 2022, with fiscal and externalbalances boosted by higher oil revenues.
However, rising food prices impacted living
standards. Following the August 2023
coup d’état, the economic outlook is highly
uncertain and will depend on a political settlement that avoids conflict and disruptions to economic activities and restores investor confidence. Confronted with declining oil reserves, structural reforms are urgently needed to achieve stability, resilient
growth and poverty reduction.

Gabon faces a challenge of reversing adecades-long trend of insufficient resource-based growth and persistent poverty. The already difficult situation has been
compounded by the August 2023 coupd’état that happened without bloodshed
immediately after election results were announced, declaring the incumbent president as winner. The head of the Presidential Guard was installed as Transition President, borders were reopened and economic life resumed briefly after the coup. However, economic uncertainty increased, andfinancing and investments could be compromised. Establishing and following aclear and credible path for returning toconstitutional order is key for stability.
Improving governance is much needed.
Publishing the first Extractive Industries
Transparency Initiative report in April 2023
was a positive signal, but further strengthening transparency of extractive revenues
would highly benefit public finances.
Moreover, regaining reform momentum,
improving the business environment, andpromoting jobs remain essential to movethe economy up in global value chains andinto diversified sectors. To achieve its development and poverty reduction goals,
Gabon needs to rebalance public finances,
repurposing expenditures from costly tax
exemptions and regressive fuel subsidies
toward targeted social support and productive public investments, enabling it toprotect the poorest while fostering sustainable job-based growth.
Improved access to health, power and water
services, and education are also key to tackle
high unemployment and poverty, while
better and climate-resilient infrastructure,especially energy, roads, and railways, areneeded to boost business activity and trade.
Heavy rains and landslides caused transport disruptions that affected the economy
in early 2023, from halting manganese exports to causing shortages in drinking waterand sugar supply.

Recent developments
Gabon’s economy grew by 3.0 percent in
2022, intensifying the recovery from theCovid-19 crisis. Strong demand from China, lower OPEC+ restrictions, and previous investments boosted oil production.
Growth was also driven by the wood,
manganese, agriculture, and services sectors. Private investments, especially in theoil sector, and net exports boosted by commodities supported demand-side growth.
However, in 2023Q1, GDP contracted by 1.5
percent (q-o-q) due to weaker manganese
production amid transport disruptions.
Thanks to stronger commodity exports anda smaller increase in imports, the current account balance reached a surplus of 6.7 percent of GDP in 2022. Likewise, higher oil revenues resulted in a fiscal surplus of 2.5 percent of GDP in 2022, the highest since the2014 oil price shocks. Tax collection efforts
and cuts in tax exemptions also contributed
to improved government revenues in 2022.

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

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

Percent, percentage points
5

Poverty rate (%)
40

2.58

4

35

2.56

3

30

2

25

2.50

1

20

2.48

0

15

2.46

-1

10

-2

5

Real GDP per capita (constant million LCU)

2.54
2.52

2.44
2.42
2.40

0

-3
Agriculture

Industry

Services

2.38
2017

2015 2016 2017 2018 2019 2020 2021 2022 2023f 2024f 2025f

2019

2021

International poverty rate
Upper middle-income pov. rate

Real GDP growth

Sources: Official government data and World Bank calculations.

Source: World Bank. Notes: see Table 2.

MPO

36

Oct 232023

2025

Lower middle-income pov. rate
Real GDP pc

Overall public expenditures remained under control, but the cost of fuel subsidies
grew exponentially, despite the removal offuel subsidies for industrial consumers
since July 2022. While public debt continued to decline, the recurrent accumulationof arrears, which stood at 81 billion CFAF
in March 2023 (0.6 percent of GDP), remains a challenge for public finances. Public financial management weaknesses anda slow reform pace led Fitch Ratings todowngrade Gabon’s outlook from positive
to stable in August 2023.
Credit to private firms expanded by 13.6
percent in December 2022 (y-o-y). Yet, theregional regulatory forbearance was removed in July 2022, and non-performing
loans rose by 27 percent in 2022, reaching
10.5 percent of loans. The Bank of Central
African States continued to tighten monetary policy, raising the policy rate by 50 basis points to 5.0 percent in March 2023, andending weekly liquidity injections. Inflation started to abate, dropping to 3.9 percent in June 2023. Despite tax exemptions
and price ceilings being expanded under
the La Vie Chère program in July 2023,
living costs remain high. While the postCovid recovery led to a decline in poverty
in 2021, rising food prices resulting fromthe war in Ukraine led poverty to increaseslightly, to 32.3 percent in 2022.

Outlook
Following the coup d’état, the economic
outlook is highly uncertain; this section
reflects the assessment and projections
made prior to the coup. Heightened political instability risks and diminished investor confidence after the coup could
adversely impact the near-term outlook.
Rating agencies already downgraded
Gabon’s outlook. Regional sanctions
could jeopardize growth and financing
sources, especially as Gabon increasingly
relies on regional markets.
Just prior to the coup, Gabon was projected
to grow by 2.8 percent on average over2023-2025. Expanding manganese andwood production, along with the oil palm,
public works, and services sectors would
compensate for the impending decline inhydrocarbon production, as oilfields reachmaturity. Investments are underway in oilpalm refineries and biodiesel generation.
Over the years, strong commodity exports and a lower growth in imports
were expected to translate into current
account surpluses. Commodity revenues
were projected to remain high, resulting
in continued fiscal surpluses, althoughdeclining to 2.0 percent of GDP over

TABLE 2 Gabon / Macro poverty outlook indicators

2023-2025. Public debt was to maintain its
gradual downward path.
However, with modest growth projections
and population increase, poverty was expected to rise. Hence, 36.3 percent of
Gabonese would be living under the upper
middle-income poverty rate of US$6.85 per
day by 2025, above the average for countries in Gabon’s income group. Furthermore, Gabon remains exposed to fragile
growth drivers and strong export concentration. Stricter OPEC+ quotas, priceshocks, decreased Chinese demand, tradedisruptions amid prolonged conflict, andclimate shocks could impact macroeconomic performance, food prices, exports,
and fiscal stability.
Faced with increased uncertainty during
the political transition, reforms will be key
to improve governance of public financesand spending efficiency, further mobilize
domestic revenues, and reduce reliance onoil. Implementing the recently adopted
public sector hiring methodology andadopting further measures to contain fuelsubsidies are needed to avoid spending
slippages. Forest and biodiversity conservation could also play a role in mobilizing
future financing. In August 2023, Gabon
launched a tender for a USD 500 million
debt-for-nature swap, with a lower coupon
rate than the bonds that were repaid.

(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
-2.0
30.9

2022
3.0
-0.3
3.8
8.3
7.4
8.6

2023e
2.7
1.4
3.8
1.1
6.2
3.3

2024f
3.0
1.7
-0.8
2.1
5.4
2.4

2025f
2.8
1.6
1.3
2.9
4.0
2.8

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

3.4
9.5
3.4
2.4

2.7
6.2
3.3
1.7

3.0
4.9
3.9
2.1

2.8
5.7
2.3
2.5

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)

-0.5
-0.7

3.3
-2.1

6.7
-1.3

7.1
-2.4

8.6
-2.4

12.1
-2.4

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

2.5
19.5
55.3
5.0

1.7
18.5
56.4
4.1

2.3
18.9
55.1
4.8

2.2
18.2
53.1
4.8

3.0
9.8
35.9

2.3
8.3
32.1

2.4
8.5
32.3

2.6
9.5
34.3

2.8
9.9
35.2

3.0
10.4
36.3

4.0
15.6

4.2
16.3

2.6
16.5

-0.7
15.5

0.5
14.9

1.0
14.4

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 2017-EGEP. Actual data: 2017. Nowcast: 2018-2022. Forecasts are from 2023 to 2025.
b/ Projections using microsimulation methodology.
MPO

37

Oct 23

THE GAMBIA
Table 1

Key conditions andchallenges
2022

Population, million

2.7

GDP, current US$ billion

2.2

GDP per capita, current US$

797.8

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

103.0

b

62.1

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 (2022); Life expectancy(2021).

Growth is projected to rise to 4.8 percent
in 2023, driven by increased activity
across all sectors, supported by private investment and public infrastructure. The
medium-term outlook faces several challenges, including large external imbalances, fiscal pressures, high public debt
levels, and spillovers from weak global demand and persistent inflation. Poverty is
estimated to have increased in 2023, reflecting weak per capita growth and highfood prices and could remain elevated.

The Gambia has made progress in macroeconomic stabilization, with implementation of structural reforms and higher investment levels, benefiting from substantial support from development partners.
However, structural challenges continue tohamper economic growth, including thedominance of low-productivity agriculture, limited economic diversification(high dependence on a low value-added
tourism), constrained fiscal space for public investments, weak infrastructure, andhuman capital challenges compounded byhigh population growth.
The result has been depressed growth, limited job creation, and high poverty. Between 1991 and 2020, real GDP growth averaged 3 percent, below the Sub-SaharanAfrica (SSA) average of 3.4 percent, withannual population growth of 3.1 percent.
With real GDP per capita stagnating for
more than three decades, an estimated 17.2
percent of the population were in poverty
in 2020, using the international poverty
line of $2.15 (in 2017 PPPs).
These weaknesses are coupled with downside risks such as high external imbalances, with high dependence on importsof basic goods and services putting persistent pressure on the balance of payments
and forex market and exacerbating the vulnerability to global shocks in commodity
markets. Fiscal risks also remain substantial given State-Owned Enterprises (SOEs)

FIGURE 1 The Gambia / Fiscal deficit, current accountdeficit, and real GDP growth

Recent developments
Growth is projected at 4.8 percent in 2023
(2.2 percent per capita), driven by increased activity across all sectors. Agriculture and services benefited from favorable
rainfall and a gradual recovery in tourism.
Private sector investment, supported by remittance inflows, and public investment,
are also expected to drive growth. Inflation
increased to 18.4 percent (year-on-year) in
July 2023, the highest level in decades, driven by food prices due to both imported
food and poor domestic production due toclimatic conditions, utility tariffs increases,
and currency depreciation.
Rising food prices are expected to lead toan increase poverty to 18.5 percent in 2023,
from 17.7 percent in 2022 - an increase ofover 33,000 people, using the international
poverty line of $2.15 (in 2017 PPPs). The
sharp increase in poverty is largely due

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

Percent
18

Percentage points
6

contingent liabilities and the high dependence on external grant financing due to
low tax collection, which averaged 10.3
percent of GDP over 2017-2023. High domestic debt also crowds out private credit.
Against this backdrop, the Government
has adopted the National Development
Plan (NDP) 2023-2027, building on the
NDP 2018-2021, to consolidate gains in democratic governance, accelerate green economic and social transformation, andbuild resilience to shocks and crises. Implementing this agenda poses significant
financing needs and political commitment
to reforms.

5

15

4

12

Poverty rate (%)

Real GDP per capita (constant LCU)

100

30000

90
25000

80
70

20000

60

3

9

2

50

15000

40

6

10000

30

1

20

3

5000

10

0

0
2020

2021

2022

Real GDP growth (lhs)
Overall fiscal deficit (rhs)

2023e

2024f

0

2025f

0
2010

Current Account Deficit (rhs)

2012

2014

2016

2018

International poverty rate
Upper middle-income pov. rate

Sources: The Gambian authorities and World Bank estimates.

Source: World Bank. Notes: see Table 2.

MPO

38

Oct 23

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

to weaker growth in per capita GDP, andhigh prices eroding the purchasing powerof households.
The fiscal deficit is expected to remain
high, at 4.2 percent of GDP in 2023, despite
revenue collection efforts, including increases in some excise and ad valorem taxes. Public expenditure is set to remain highowing to increased investment spendingin road infrastructure and higher debt servicing, as yields on government securities
rose due to monetary tightening. Public
debt is projected to decrease to 81 percent
of GDP in 2023, and the Gambia remains athigh risk of debt distress.
The current account deficit (CAD) is projected to remain large in 2023 at 12.3 percent ofGDP, as imports pick up due to private andpublic construction projects. The Central
Bank maintained a tight monetary stance,increasing its policy rate by 1 ppt to 17 percent in August 2023 – the 6th increase since
May 2022. International reserves are projected to decline to 4.4 months of imports in
2023, from 5.1 months in 2022.

OutlookGDP growth is projected to average 5.4
percent 2024-25, driven by increased activity in all sectors. Agriculture and services
are expected to sustain growth, assuming
favorable rainfall and continued recovery
in tourism. Robust remittances will support the recovery in private sector demand
which, together with infrastructure programs, are expected to drive growth. Inflation is expected to gradually ease to an average of 9.2 percent in 2024-2025, reflecting
the restrictive monetary policy and easingof global supply conditions.
Projected agriculture growth and the expansion of cash transfers are expected tohave a positive effect on household wellbeing. However, sustained increases in foodprices are likely to undermine such gains,given poor households spend 65 percent
on food. Consequently, the international
poverty rate is expected to increase to

TABLE 2 The Gambia / Macro poverty outlook indicators

18.8 percent in 2024, before declining to17.9 percent by 2025.
The CAD is expected to gradually narrow,although remaining high at 9 percent in2024-25, reflecting robust remittances
trend, a decrease in investment-related imports, and robust export growth, especiallyin tourism. The tightening of the monetary
policy is set to remain as inflation persists.
The fiscal deficit is projected to narrow to 2.7
percent of GDP over 2024-25 supported by
the completion of major infrastructure projects, and domestic revenue mobilization efforts, including simplification of the tax system to reduce compliance costs, introduction of electronic tax stamp traceability on
excisable goods and fuel products, andstrengthening customs borders and inland
controls. Public debt is projected to decrease
to 74.9 percent of GDP in 2024, but The Gambia is expected to remain at high risk of debt
distress and the end of the debt-service deferrals scheme, negotiated with some creditors, in 2024 could weigh on debt sustainability and economic 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
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

2022
4.3
3.3
2.3
16.6
-0.4
10.9

2023e
4.8
3.2
2.4
15.3
13.0
13.0

2024f
5.3
3.7
2.5
11.5
16.0
11.1

2025f
5.5
3.9
2.4
11.1
16.0
11.0

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

4.8
7.0
6.5
3.3

5.3
5.3
6.3
4.9

5.5
5.1
6.1
5.5

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

5.9
-3.7

7.4
-8.0

11.5
-14.7

17.0
-12.3

12.3
-9.7

6.1
-8.3

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

-2.2
22.7
85.1
1.0

-5.7
18.5
83.8
-2.7

-5.6
18.9
83.9
-3.6

-4.2
23.4
81.0
-1.0

-3.1
22.6
74.9
0.4

-2.4
22.9
69.9
0.9

17.2
47.0
80.6

17.5
47.3
81.1

17.7
47.8
82.3

18.5
49.0
83.6

18.8
49.4
84.0

17.9
48.1
83.0

5.9
20.1

4.3
20.4

3.5
20.9

3.1
21.4

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/ Projections using microsimulation methodology.

MPO

39

Oct 23

GHANAKey conditions andchallenges

Table 1

2022

Population, million

33.5

GDP, current US$ billion

72.8

GDP per capita, current US$

2175.9International 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

63.8

Total GHG emissions (mtCO2e)19.8Life expectancy at birth, years

The government has completed a Domestic Debt Exchange Programme (DDEP),
implemented an external debt repayments
standstill, and sought official debt restructuring under the Common Framework.

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2016), 2017 PPPs.
b/ WDI for School enrollment (2020); Life expectancy(2021).

Since 2022, Ghana has been in a macroeconomic crisis caused by macroeconomic
imbalances and external shocks. The
economy stabilized in 2023H1 in response to reforms including public debt
restructuring, fiscal consolidation, andmonetary policy tightening. However, inflation remains over 40 percent, public
debt is unsustainable and in distress, andgrowth will slow down to 1.5 percent in
2023. In 2022, poverty worsened by 2.2
ppts from 2021 levels as inflation eroded
the purchasing power of Ghanaians.

Ghana’s economy entered a full-blown
macroeconomic crisis in 2022 on the back ofpre-existing imbalances and external
shocks. Large financing needs and tightening financing conditions exacerbated debt
sustainability concerns, shutting-off Ghanafrom the international market. Large capitaloutflows combined with monetary policy
tightening in advanced economies put significant pressure on the exchange rate
which, on top of monetary financing of thebudget deficit, resulted in high inflation.
The authorities resorted to domestic borrowing causing an upward pressure on interest rates and crowding out the private
sector. These developments interrupted thepost COVID-19 recovery of the economy as
GDP growth declined from 5.1 percent in
2021 to 3.1 percent in 2022. Public debt rosefrom 76.7 percent in 2021 to nearly 90 percent of GDP in 2022, as debt service-to-revenue reached 117.6 percent in 2022.
To help restore macroeconomic stability,
Ghana has secured a three-year IMF Extended Credit Facility (ECF) program ofabout US$3 billion and has embarked on
a comprehensive debt restructuring. The
authorities have committed to a frontloaded
fiscal consolidation while pursuing a tightermonetary policy, complemented by structural reforms in the areas of tax policy, revenue administration, and public financial
management, as well as steps to address
weaknesses in the energy and cocoa sectors.

Recent developments
In Q1 of 2023, GDP growth surprised to theupside with a rebound of 4.2 percent, compared to 3.0 percent in Q1 of 2022, on theback of strong growth in services (10.1 percent) and agriculture (4.8 percent), while
the industrial sector contracted by 3.2 percent as all industry sub-sectors (extractives, manufacturing, water and sewerage,
and construction) shrank, with the exception of electricity.
The January-June 2023 fiscal balance improved to a deficit of 0.8 percent of GDP,significantly below the H1 target of 3.5 percent of GDP; the primary balance (commitment basis) recorded a surplus of 1.1 percent of GDP. Revenues, at 7.4 percent ofGDP, were below the 8.1 percent target as
oil revenue and international trade taxes
underperformed. To make up for the
shortfall, the government cut down capital
expenditures and benefited from lower interest payments, thanks to the external
debt service standstill.
Inflation, driven by food prices, remained
elevated at 43.1 percent in July 2023, significantly above the Bank of Ghana target rangeof 8±2 percent. The Bank of Ghana has cumulatively increased the monetary policy rateby 15.5 points since the beginning of 2022, to
30 percent in July 2023, and signed an MoU

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

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

Percent, percentage points

Poverty rate (%)

25

90

4000

20

80

3500

15

70

3000

10

Real private consumption per capita (constant LCU)

60

5

2500

50

0

2000

40

-5

1500

30

-10
-15
-20
2020

2021

Gov. cons.
Inventories
Statistical disc.

2022

2023

Exports
Private cons.
GDP

2024

2025

20

1000

10

500

0

0
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

Oct 23

2020

2022

2024

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

with the government to halt monetary financing of the fiscal deficit. The cedi has stabilized at around GH¢11 per US$ since thesecond quarter of 2023, after having lost approximately more than 20 percent of its value against the dollar earlier this year.
The current account for H1 2023 recorded
a surplus of 1.1 percent of GDP comparedwith a deficit of 1.5 percent for H1 2022,
due to higher gold receipts, lower imports,
and lower investment income payments(thanks to the moratorium on external debt
service). Gross international reserves (excluding Ghana Petroleum Funds, pledged
and encumbered assets) stood at US$2.4
billion (1.1 months of imports) at the endof June 2023, compared with 0.7 months ofimports in December 2022.
The banking sector performance for the firsthalf of 2023 reflects the lingering impact of
the DDEP which resulted in significant banklosses at the end of 2022. Nevertheless, there
has been a strong rebound in profitability as
total assets of the banking industry grew by
21.2 percent in January-June 2023, boosted
by the robust growth of total deposits. Key
financial soundness indicators remained
positive on the back of the temporary regulatory reliefs in the wake of the DDEP. The
industry’s NPL ratio deteriorated in June

2023, reflecting higher loan impairments
and elevated credit risks.
Poverty has worsened. The “international
poverty” rate is estimated at 27 percent in
2022, an increase of 2.2 percentage points
since 2021. Ghanaian households havebeen under pressure from high inflationand slowing economic growth.

Outlook
Growthisexpectedtoslowfurtherto1.5percent in 2023 and to remain muted in 2024 at
2.8 percent. The ongoing fiscal consolidation, corrective monetary policies, high inflation, interest rates, and macroeconomic
uncertaintieswillkeepprivateconsumption
and investment low, leading to muted nonextractive growth. Extractives are expected
to support 2023 growth thanks to the opening of large new gold mines and a planned
expansioninoilandgasproduction.Growthis projected to recover to its long-term potential of about 5 percent by 2025 as conditions
normalize. The balance of payments is expected to continue to deteriorate in 2023, on
the back of continued capital outflows, beforerecoveringinthemedium-term.

TABLE 2 Ghana / Macro poverty outlook indicators

Reflecting the government’s consolidation
efforts, the fiscal deficit for 2023 is projected at 7.5 percent of GDP (primary deficitof 0.5 percent of GDP), thanks to measuresgenerating 1 percent of GDP in additional
revenues and 2 percent of GDP in expenditure savings. By 2025, the authorities expect to generate 1.5 percent of GDP of primary surplus, implying a fiscal adjustmentof more than 5 percentage points of GDP
for the period (2023-2025).
Risks to the outlook include financial sector
stress following the DDEP, contingent liabilities in the energy and cocoa sector, domestic policy slippages with the 2024 elections being a particular risk, delays in external debt restructuring, commodity priceand other external shocks, and sharperthan-expected monetary policy tightening
in advanced economies.
Poverty is projected to worsen between now
and 2025, increasing to nearly 34 percent (international poverty line) by 2025, consistent
with a muted outlook on growth in services
and agriculture and rising prices which are
outpacing the income growth of those at thebottom of the distribution. Despite considerable inflation in the country, its minimum
wage has only increase by 10 percent – insufficient given the pace 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
0.5
-1.0
10.1
1.8
-50.7
-54.5

2021
5.1
0.8
82.1
4.5
69.1
113.8

2022
3.1
4.8
-31.7
24.3
9.6
13.0

2023e
1.5
4.5
2.6
-2.1
13.2
15.1

2024f
2.8
5.0
4.7
-4.7
18.0
15.1

2025f
5.0
5.5
5.4
11.4
13.2
16.3

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

0.8
7.3
-2.5
0.7

5.4
8.5
-0.5
9.4

3.6
4.2
0.9
5.5

1.6
1.8
1.7
1.4

2.9
3.3
4.0
1.8

5.1
5.0
3.7
6.3

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

-2.1
2.0

-2.8
2.0

-2.3
2.8

-2.4
3.5

-14.7
14.1
74.4
-8.4

-11.4
15.3
76.7
-4.1

-11.0
15.7
89.1
-3.6

-7.5
16.8
98.1
-0.5

-8.0
17.3
92.0
0.5

-6.7
17.8
90.2
1.5

25.4
48.1
77.5

24.8
47.0
76.7

27.0
50.4
79.4

30.8
56.5
83.8

33.3
59.7
85.0

33.5
59.7
84.9

24.6
136.5

12.7
126.8

10.4
119.2

6.2
114.6

6.2
110.4

7.0
106.6

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/ Projections using microsimulation methodology.
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GUINEA

Key conditions andchallenges

Table 1

2022

Population, million

13.9

GDP, current US$ billion

20.3

GDP per capita, current US$

1463.0International 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

58.9

Total GHG emissions (mtCO2e)45.6

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 (2020); Life expectancy(2021).

Mining activity will boost growth to 5.1
percent in 2023, poverty rates will decrease, and the fiscal deficit widen to 2.6
percent of GDP as expenditures rise.
Mining-FDI-related imports sustain
current account deficits and mediumterm growth. Downside risks include
delays to the political transition and to
implementing productivity-enhancing
reforms. Extreme poverty is expected to
decline to 9.1 by 2025, as food prices
moderate and agricultural and service
growth strengthens.

Growth was robust over 2018-22, averaging 5.2 percent (2.6 percent per capita) driven by the mining sector, supporting low
fiscal deficits (1.5 percent on average).
However, weak linkages to non-mining
sectors limit job creation and poverty reduction. 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. About
32 percent of the population lacked access to
education, health, and basic infrastructure
in 2018, with a rapid phone survey in deprivation (September-October 2022) reporting
9 percent of households being unable to access medicines when needed, since the beginning of Russia’s invasion of Ukraine.
The recent mining boom, high inflation
and associated real appreciation of the local currency, adversely affects the competitiveness of the non-mining sectors andhampers efforts to diversify the economy
to create more and better jobs. Guinea has
low human capital levels, weak institutional capacity, and large gender gaps in education, earnings, agriculture productivity,and political representation. Major structural constraints include weak fiscal revenue mobilization that constrains public
investment, an underdeveloped financial
sector, and large infrastructure gaps. Recent increases in digital access and e-government transactions have helped bolster
economic activity during the pandemic

FIGURE 1 Guinea / Debt, fiscal deficit, and inflation

Percent of GDP
50

and streamlined tax collection; yet further digitalization and structural reforms
are needed to spur diversification andinclusive growth. Guinea has moderaterisk of external debt distress with somespace to absorb shocks, but must maintain prudent borrowing by maximizing
concessional financing.

Recent developments
Growth is projected to accelerate to 5.1
percent in 2023 (2.6 percent per capita) due
to a strong mining sector, and the postpandemic recovery of non-mining activity
was sustained by favorable rainfall.
Nonetheless, output decline in the large artisanal gold sector contributes to a sharp
fall in private consumption projected for2023. External price pressures are only partially offset by the Guinean franc appreciation vis-à-vis the US dollar, prudent fiscal
and monetary policy, and the absence ofcentral bank fiscal financing. Inflation persists—buoyed by supply constraints, fuelcosts and road-network deficiencies hampering food distribution—although it isprojected to decelerate from 12.1 percent
in 2022, to 9.1 percent in 2023 due to theappreciating real exchange rate and tightmonetary policy, including limiting central
bank lending to the government. At thesame time, food price inflation is projected
to decelerate from 13.9 percent in 2022 to
9.7 percent in 2023, leading to an expected
decrease in the US$2.15 international
poverty rate to 11.1 percent in 2023, down
0.8 percentage points from 2022.

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

Percent
14

45

6.5
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0

90

12

40

Real GDP per capita (constant million LCU)

100
80

35

10

30

8

70
60
50

25
20

6

15

4

40
30
20

10
5
0
2020

2021

Debt (lhs)20222023 eFiscal defit (rhs)2024 f2

10002007 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.

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42

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

The fiscal deficit (including grants) is
projected to widen to 2.6 percent of
GDP in 2023, from 0.9 percent in 2022,
due to increases in current and capital
expenditures. Tax revenues are set toincrease one percentage point to 12.1
percent of GDP, buoyed by tax administration reforms and mining revenues from the bauxite-transfer-pricemechanism enacted in July 2022. Subsidies (electricity and petrol) will remain high, due to low electricity tariffs and the cost of a widened supplydemand gap in hydropower generation, pending extension of powertransmission lines to customers. Debtto-GDP is projected to decrease slightly
to 35.9 percent. The current accountdeficit (CAD) is projected to deteriorate
to 7.3 percent in 2023, as lower export
prices reduce the trade surplus. Miningrelated FDI, the main source of externalfinancing, is projected to decline slightly
to 11.1 percent of GDP in 2023 while
the real effective exchange rate is likely
to continue to appreciate.

OutlookMining-related (foreign direct) investment
will continue to drive growth and, as
non-mining sectors recover, growth isprojected to accelerate to 6 percent on average in 2024–2025, about equal to its potential of 5.9 percent. Commensurately,
extreme poverty is projected to decline
to 10.1 percent in 2024 and 9.1 percent
in 2025, consistent with recovery in agriculture and services. Given the limited
poverty impact of mining-driven growth,
redistribution mechanisms to vulnerable
populations and generalized productivity
gains in non-mining sectors will be required for inclusive growth. Public investments to expand access to electricity, roads,
and telecom services, in addition to increasing agricultural productivity, human capital, and urban and local development,
should support non-mining growth. Better
provisioning of fertilizers to farmers could
further improve agricultural productivity,

TABLE 2 Guinea / Macro poverty outlook indicators

although higher fertilizer prices may dampen earnings. Poor quality transport infrastructure is likely to keep food prices high,reducing household purchasing power andthereby undermining poverty reduction.
The CAD is projected to improve in
2024-2025 to an average 2.6 percent of
GDP following a 7.3 percent deteriorationin 2023. Reductions in the mining-relatedtrade surplus are projected to be lower
than the projected fall in net outflows of
non-factor services and transfers during2024-25. Fiscal space would be rebuilt as
recent tax administration reforms, including digitalized tax declarations and payments, start bearing fruit from 2024. Inflation is expected to decline gradually to
8.7 percent by 2025. Risks are tilted tothe downside as political transition uncertainties in the lead up to elections in
2025 could slow implementation of reforms to strengthen SOE corporate governance, potentially reducing private investment. 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
-4.0
57.0
37.0

2021
4.3
0.6
16.8
4.1
0.8
-6.2

2022
4.7
7.6
-22.4
11.9
5.8
6.7

2023e
5.1
2.0
11.5
17.8
8.3
10.2

2024f
5.8
4.7
17.9
14.8
5.6
10.3

2025f
6.2
4.7
4.2
24.4
5.6
10.3

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

5.1
4.0
7.4
3.7

5.8
5.0
6.9
5.2

6.2
5.0
6.4
6.6

Inflation (consumer price index)

10.6

12.6

12.1

9.1

8.8

8.7

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-9.8
10.8

-3.0
11.1

-6.1
12.0

-7.3
11.1

-3.9
10.7

-1.4
11.9

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

-3.2
14.0
47.3
-2.3

-1.9
15.2
41.7
-0.8

-0.9
13.1
36.6
0.0

-2.6
13.4
35.9
-1.4

-2.5
14.5
37.3
-1.4

-2.2
15.3
37.4
-1.3

10.9
43.5
85.4

11.7
45.0
86.0

11.9
45.4
86.8

11.1
43.8
85.9

10.1
41.9
84.6

9.1
39.3
82.7

3.8
9.9

4.2
10.0

3.8
10.2

3.8
10.5

3.8
10.8

3.8
11.1

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 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
b/ Projections using microsimulation methodology.

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GUINEA-BISSAU
Table 1

2022

Population, million

2.1

GDP, current US$ billion

1.8

GDP per capita, current US$

832.7

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

59.7

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(2021).

Weak cashew exports and high inflation
will slow growth to 2.8 percent in 2023,
increasing poverty. Budget overspends
and lower revenues will limit fiscal consolidation while debt increases due to infrastructure investment, rice subsidies
and energy arrears. Growth is set to improve as infrastructure comes online, butsustainability depends on institutional
reforms. The outlook is subject to downside risks from continued inflationarypressures, shocks to the cashew sector,
and climatic shocks.

Exports of raw cashew nuts, which account for 90 percent of merchandise exports, determine economic performance.
Cashew production is dispersed amongsmallholder farmers, whose income supports overall economic activity. Poverty remains widespread, with high levels of inequality and increasing rural-urban disparities. Human development indicators
remain among the lowest in the world,and low access to basic services contributes to exclusion and marginalization.
Despite a gradual recovery of the economy post-pandemic, rising global foodand fuel prices after the Russian invasionof Ukraine are a concern, especially forthe poor who spend nearly 60 percent of
their income on food.
The weak enabling environment for private sector-led growth is due to poor infrastructure, low levels of human capital,and limited public services. Access to credit is limited, and infrastructure is in a poor
state, but there have been recent investments to improve this, mostly donor financed as fiscal space is limited by low domestic revenue mobilization and the relatively high wage bill.
Transparency and governance of StateOwned Enterprises is limited, especiallythe national utility company, EAGB, which
accrued substantial public debt in the energy sector through government-guaranteed
letters of credit that only partially cover

mounting arrears. Identifying contingent
fiscal liabilities is difficult, increasing fiscal
risks despite the high risk of debt distressand little capacity to absorb shocks. Nonperforming loans continue to make thebanking sector another possible source ofcontingent liabilities.

Recent developments
Economic activity is likely to slow to 2.8
percent in 2023 (0.7 percent per capita) following another weak cashew campaign.
Agriculture drives growth with government investment stimulating the construction sector. Global inflation pressure (8.6
percent y/y for 2023) and a weak cashew
season will dampen private consumption.
Lower cashew exports, rice subsidies
worth 0.2 percent of GDP, and higher than
anticipated capital expenditure have put
further pressure on the fiscal accounts.
Cashew production reached a record
255,000 tons, but a 35 percent increase inexport tariffs (owing to a freight container
issue) has meant that only 100,000 tons
have been officially exported, with 130,000
tons smuggled through Senegal andGuinea. Consequently, as a percentage ofGDP, the fiscal deficit (including grants)
will deteriorate to 9.6 percent in 2023,
with the current account deficit (CAD)
rising to 17.9 percent, mostly financed byconcessional loans and grants. EAGB arrears, rice subsidies, the 2023 legislativeelections, and road infrastructure investments will cause public debt to rise to
83.1 percent of GDP.

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

Poverty rate (%)

8100500000904500008040000070

35000060

30000050

250000-840200000-123015000020

100000

10

50000

4
0
-4

-16

Real GDP per capita (constant LCU)

0

-20
GDP growthFiscal balance020102014 2015 2016 2017 2018 2019 2020 2021 2022e 2023f 2024f 2025f

2012

2014

2016

2018

International poverty rate
Upper middle-income pov. rate

Current account balance

Sources: Ministry of Finance and World Bank.

Source: World Bank. Notes: see Table 2.

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44

Oct 23

2020

2022

2024

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 125 basis points since thestart of 2022 to 3.25 percent for liquidity
calls and 5.25 percent for the marginal
lending facility. However, the monetary
policy stance remains broadly accommodative, inflation is still above target andforeign exchange reserves have been on a
downward trend.
Using the international poverty line of$2.15 (in 2017 PPPs), poverty is estimated to increase to 23.4 percent in2023- equivalent to over 39,000 additional poor people. The sharp increasein poverty is partly due to weaker
growth in per capita GDP, high foodprices, and weak performance of the
cashew sector. Rising food prices andlow returns from cashew production
are expected to disproportionately affect the well-being of the poor.

OutlookReal GDP growth is projected at 5.6 percent
in 2024 (3.4 percent per capita) as international demand for cashew recovers and local
supply issues are addressed, with private
consumption also increasing as inflation
eases, and road and energy infrastructure
open. Inflation is expected to decelerate to 2
percent in 2025, as the spillovers from theRussian invasion of Ukraine ease.
The CAD will narrow to 5.7 percent of GDP
in 2024 as imported inflation falls andcashew exports increase but could reach 7
percent by 2025 as imports for highway construction begin. External financing needs
will continue to be met by concessional loans
and grants. The commitment to mediumterm fiscal consolidation includes enhanced
management of fiscal risks, notably from
SOEs, domestic revenue mobilization, andTABLE 2 Guinea-Bissau / Macro poverty outlook indicators

control of the wage bill. The fiscal deficit
is projected to decline to 2.9 percent of
GDP by 2025, in line with the WAEMU
convergence criteria, while the debt-toGDP ratio remains high but falls to 77.8
percent of GDP.
The poverty rate is expected to decline in linewith higher agricultural growth and lower
inflation, falling to 22.1 percent (lifting over
16,000 out of poverty) in 2024 and reaching
20 percent by 2025. However, high foodprices will remain a concern for the poor.
While the instituted price controls on basic
food items—notably rice—could cushion
the short-term impact for poor net consumers, this is a market-distorting, untargeted, and costly instrument, especially given the limited fiscal space.
The outlook is subject to substantial downside risks stemming from political instability, climate, and other agricultural shocks,
uncertainty of EAGB operations, and financial sector non-performing loans.

(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

2022
3.5
5.0
16.6
11.3
-20.0
9.5

2023e
2.8
1.9
13.7
18.4
-30.0
8.5

2024f
5.6
2.5
-12.8
9.0
80.0
6.2

2025f
4.5
2.5
9.7
6.6
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

3.1
5.1
4.4
1.0

5.5
5.1
4.4
6.1

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
-9.6

8.6
-17.9

4.5
-5.7

2.0
-7.0

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

-9.6
16.0
83.1
-7.4

-4.0
17.3
80.3
-1.7

-2.9
18.2
77.8
-0.8

22.8
56.3
86.4

21.6
56.0
86.7

22.0
57.4
87.5

23.4
59.1
88.4

22.1
56.9
87.2

20.0
54.1
85.7

1.3
8.0

1.6
8.3

1.4
8.5

1.5
8.7

1.5
9.0

1.5
9.2

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/ Projections using microsimulation methodology.

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Oct 23

KENYAKey conditions andchallenges

Table 1

2022

Population, million

54.0

GDP, current US$ billion

113.4

GDP per capita, current US$

2099.3

International poverty rate ($2.15)

a

36.1
a

70.1

a

91.3

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

a

38.7

School enrollment, primary (% gross)

b

77.3

b

61.4

Total GHG emissions (mtCO2e)

89.1

Life expectancy at birth, years

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

Kenya’s growth remains strong despite
multiple shocks. Elevated cost of living
and climate shocks have slowed down
poverty reduction. The economy faces exchange rate pressures, debt vulnerabilities, and tight financial conditions. In themedium term, continued recovery in agriculture and consistent fiscal consolidation
policies are expected to support private
sector-led growth supporting households’
income. GDP growth is projected at 5.2
percent in 2024-25.

Kenya’s economy has demonstrated resilience in the face of multiple shocks, withreal GDP growing on average by 5.0 percent
before the pandemic and rebounding
strongly in 2021 and 2022 with an average
growth of 6.2 percent. Nevertheless, ensuring sustainable and inclusive economic development has proven to be challenging.
Decades of public investment-driven
growth have led to rapid debt accumulation
without substantially strengthening thecountry’s growth potential and resulting ina high risk of debt distress. Coupled with alarge, inefficient public sector marred bycorruption, this state-driven development
model has failed to create opportunities for
greater private investment and more productive jobs. Levels of international tradeand foreign direct investment (FDI) fallshort of peers’, depriving Kenya of an engine of growth. Closing the gap between the
projected one million workers entering theworkforce annually over the next decadeand private sector wage job creation ofaround 100,000 jobs annually registered on
average in 2021 and 2022 is a key priority.
Government’s sustained commitment tomulti-year fiscal consolidation and governance reforms are imperative for maintaining macroeconomic stability and creating
conditions for private sector-driven growth.
Furthermore, Kenya’s high climate vulnerability, as demonstrated by the recent longdrought, hasbecomeamajorthreattooutput

and livelihoods calling for sustained investments for resilience and adaptation.
Prior to the COVID-19 pandemic, the contribution of economic growth to poverty reduction had weakened because of enduring
inequalities that have resulted in poverty becoming more concentrated in arid anddrought-prone parts of the country. The
COVID-19 pandemic sharply increased
poverty in urban areas with the number ofpoor doublings in cities and towns. The
post-pandemic recovery has been interrupted by a severe drought and a spike in foodprices inflation. The poverty rate is expected
to decline marginally in 2023 to 35.2 percent.

Recent developments
Economic activity has been stable in 2023
despite political tensions in part fueled byincreased cost of living. The economy expanded by 5.3 percent in Q1 2023 driven
by a recovery in agriculture coupled with arebound in households’ consumption. The
economy is expected to grow 5 percent in
2023. The current account deficit narrowed
to 4.7 percent of GDP as of May 2023, reflecting increased exports (of tea, manufactures, and tourism) as well as a slowdown
in imports due to decline in public investments and depreciation of the shilling.
Kenya’s foreign exchange reserves declined to the equivalent of 4.0 months ofimports as of July 2023 as tight global financing conditions reduced net financial
inflows. Global credit rating agencies
downgraded Kenya’s outlook to negativein July 2023, citing investors’ concerns

FIGURE 1 Kenya / Annualized quarterly real GDP growthand contributions to annualized real quarterly GDP growth

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

Percentage points
12

Poverty rate (%)

8

Real private consumption per capita (constant LCU)

100

16000090

1400008012000070
4
060

100000

50

80000

40

60000

30
-4

40000

20

20000

10
-8
2020Q1

2020Q3

Agriculture
Taxes

2021Q12021Q32022Q12022Q3

Industry
GDP growth02023Q1

0
2015

2017

2019

International poverty rate
Upper middle-income pov. rate

Services

Sources: World Bank and Kenya National Bureau of Statistics

Source: World Bank. Notes: see Table 2.

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46

Oct 23

2021

2023

2025

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

about high financing needs and declining
international reserves.
The Central Bank of Kenya (CBK) raised thepolicy rate by 175 basis points cumulatively
in March and June to respond to the headline
inflation which remained above the ceilingof inflation target band of 7.5 percent. The
government maintained the pace of fiscal
consolidation in FY2022/23, reducing the
primary deficit to 0.6 percent of GDP by rationalizing non-priority spending and unwinding subsidies, despite a low growth inrevenue (16.4 percent of GDP in FY2022/23
compared to 17.6 percent the previous year).
Improved agriculture harvests and easing of
global food prices coupled with the tightening macroeconomic policy stance helped toreduce inflationary pressures bringing theheadline inflation to 7.2 percent in July 2023.

OutlookReal GDP is projected to grow ataround 5.2 percent on average in

2024–25 increasingly driven by the private sector. Improved investor confidence and credit to the private sector—helped by reduced domestic borrowingbythegovernment—will
strengthen private investment over the
medium term. The government projects
to reduce the fiscal deficit substantiallyin 2023 and 2024 and achieve primaryfiscal surplus and positive public savings in FY2024/25. New tax administration and policy measures; including
among others increased tax on employment income above KSh 6 million, VAT
on petroleum products, and withholding
tax on digital content, are expected togenerate 1.6 percent of GDP in additional revenue and complement continued
expenditure rationalization.
Real per capita incomes are expected
to grow, and poverty incidence is expected to resume its pre-pandemic
downward
trend,
decliningbyaround a percentage point each year.
The $2.15 poverty rate is expected tofall to 34.4 percent in 2024.

TABLE 2 Kenya / Macro poverty outlook indicators

The outlook is subject to elevated uncertainty because of domestic and externalrisks. Spending pressures, driven in partby political tensions, such as reintroduction of main consumption subsidies, andfailure to achieve fiscal consolidation
could significantly exacerbate Kenya’s
debt vulnerabilities and hamper the economic outlook. Drought or floods would
resume inflationary pressures and foodinsecurity, dampening growth. Lower
than anticipated growth in Europe
could undercut ongoing recovery intourism and other exports and remittances. Persistent inflation in advanced
economies remains and elevated commodity prices driven by international
conflicts would further tighten financial
condition, weaken external balances,and elevate the cost of reducing CPI inflation. Upside risks are mostly linked
to faster than expected normalization in
global financing conditions and lower
international fuel and food prices, which
would strengthen Kenya’s external balances and ease domestic price pressures.

(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
-1.5
3.1
2.3
-14.9
-9.4

2021
7.6
6.2
6.0
10.8
15.3
22.2

2022
4.8
3.1
7.4
-1.1
10.7
4.5

2023e
5.0
4.5
3.3
7.7
8.1
5.2

2024f
5.2
5.1
3.0
9.1
7.8
7.3

2025f
5.3
5.4
2.9
9.5
7.6
8.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

0.4
4.6
3.3
-1.8

7.1
-0.4
7.5
9.6

4.5
-1.6
3.9
6.7

5.0
3.8
4.9
5.3

5.2
4.2
5.1
5.5

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
0.6

-5.2
0.0

-5.1
0.3

-5.0
0.9

-5.5
1.0

-5.5
1.0

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

-7.9
16.4
66.0
-3.7

-7.2
16.6
68.3
-2.8

-5.8
16.7
67.4
-1.1

-5.1
17.2
66.2
-0.2

-4.4
18.1
60.9
0.5

-3.8
17.9
58.2
0.7

35.0
68.6
91.0

36.1
70.1
91.3

35.8
69.8
90.9

35.2
69.3
90.2

34.4
68.6
89.3

33.6
67.8
88.3

9.3
32.0

7.7
32.7

3.2
33.3

2.6
33.7

3.6
34.2

4.3
34.5

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 2015-IHBS and 2021-KCHS. Actual data: 2021. Nowcast: 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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Oct 23

LESOTHO

Key conditions andchallenges

Table 1

2022

Population, million

2.3

GDP, current US$ billion

2.3

GDP per capita, current US$

997.9

International poverty rate ($2.15)

a

32.4
a

54.6

a

81.0

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

a

44.9

School enrollment, primary (% gross)

b

108.4

b

53.1

Total GHG emissions (mtCO2e)

2.6Life 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(2021).

Lesotho’s economy continues to recoverslowly. GDP growth is projected to accelerate in 2023 and 2024, driven by the Lesotho
Highlands Water Project, but will stabilize
around 2 percent in the medium-term.
Poverty is expected to remain high at about
36 percent (using the international povertyrate). The outlook is subject to downside
risks from weak global and regional
growth, geopolitical tensions, adverse climate change shocks, and delays in implementing the domestic reforms needed toboost resilience and inclusive growth.

Growth has lost momentum over the past
decade. A large and increasingly inefficientpublic sector, accounting for nearly half ofGDP, has constrained economic growth andcrowded out the private sector, which islargely informal and concentrated in lowproductivity sectors. The formal sector is
weakly diversified as mining, textiles andapparel industries account for two-thirds ofexports. Southern African Customs Union(SACU) receipts are the main source of fiscal
revenue and foreign exchange, but havebeen extremely volatile. This has put significant pressure on international reserves andfiscal accounts, as public expenditure is
rigid, mainly driven by a high public sector
wage bill, which, at 15 percent of GDP, is thelargest in Sub-Saharan Africa.
Economic performance is vulnerable toshocks given the economy’s small size, andlarge dependences on a few sectors andSouth Africa’s economy. Such vulnerability
has been exacerbated by the procyclical fiscal policy and severe and frequent weather
events. The increasing frequency of these
events underscore the need to invest in climate risk management and resilience.
The weakness of the private sector contributes to high unemployment, estimatedat 22.5 percent in 2019 but can reach 38.3 percent when discouraged job seekers are included, and high poverty rates. Over onethird of the population was estimated to liveon less than $2.15 per day (2017 PPP) in 2022.

FIGURE 1 Lesotho / Fiscal dynamics

Recent developments
In the aftermath of the COVID-19 pandemic and adverse climatic shocks, the economy recovered at a modest pace at 1.6 and1.8 percent in 2021 and 2022. Such recovery
was largely driven by construction, mining, manufacturing, business services, andpublic administration. Agriculture has also
contributed positively to growth due to favorable seasonal rainfalls in these years
and the introduction of seed and fertilizer
subsidies, which increased yields. Following delays, construction activities associated with the mega Lesotho Highlands Water Project (LHWP-II) accelerated, further
supporting growth.
Headline inflation decreased from 9.8 percent in July 2022 to 4.5 percent in July 2023
due to the decline in fuel and food prices,which limited the impact of the introductionof the levy on alcohol and tobacco levy in

FIGURE 2 Lesotho / Actual and projected poverty rates andreal GDP per capita
Percentage of GDP
6

Percentage of GDP
60

Lesotho is in the top quintile of countries
with the most unequal income distribution.
Improving the efficiency of fiscal policy andboosting private sector investment are,therefore, key to stimulating growth andspurring job creation. Containing the large
public sector wage bill and strengthening
public sector financial management are priorities to ensure efficient use of public resources. Enhancing entrepreneurship andreducing the high costs of doing business bystreamlining business regulations and facilitating access to credit would incentivize
business entry and investment and increase
job opportunities.

50
40

Poverty rate (%)

Real GDP per capita (constant LCU)

90

10200

4

80

10000

2

70

9800
9600

60

0

9400

50

30

-2

20
10
0
2020

2021

2022e

2023f

Total expenditures

2024f

9000

-4

30

-6

20

8600

-8

10

8400

8800

0

-10
Total revenues

9200

40

8200
2017

2025f

2019

2021

International poverty rate
Upper middle-income pov. rate

Fiscal balance (rhs)

Source: World Bank.

Source: World Bank. Notes: see Table 2.

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48

Oct 232023

2025

Lower middle-income pov. rate
Real GDP pc

early 2023. However, the level of domestic
food prices remain elevated, owing to persistently high imported inflation driven by
the weaker South African rand, and hence
the Lesotho loti. The Central Bank ofLesotho’s monetary policy stance has remained broadly aligned with the regionalmonetary policy stance and maintained
the cost of domestic funds in line with theregional average.
The current account deficit widened from
1.0 percent of GDP in the first quarterof 2022 to 2.8 percent in the first quarterof 2023, primarily due to higher importsof capital goods and services related to
LHWP-II. The fiscal balance deteriorated
from 1.2 percent in May 2022 to 1.7 percent of GDP in May 2023 due to higher
government spending.

Outlook
Growth is projected to moderately accelerate in 2023 and 2024, driven by direct

and indirect effects of LHWP-II, and decelerate in 2025, in tandem with the
LHWP-II investment cycle. By 2025, theeconomy will still not have restored its
pre-pandemic GDP level. Consequently,
the US$2.15 per day (in 2017 PPP terms)
poverty rate is projected to fall only
slightly from 36.3 percent in 2022 to 35.1
percent in 2025.
Inflation is expected to continue declining, reflecting the easing of global energy and food prices. The fiscal position
is projected to improve, with the deficit
projected to decline from 7.6 percent of
GDP in 2022 to 1.4 percent of GDP in
2023, driven by higher SACU revenues(which have doubled between 2022 and2023) and lower government expenditures in line with announced consolidation measures. SACU revenues will continue to determine the fiscal trajectory
over the medium term.
The current account deficit will remain
high, narrowing slightly in 2023 owing
to the completion of import-intensive
public construction projects such as

TABLE 2 Lesotho / Macro poverty outlook indicators

Maseru district hospital and road infrastructure upgrades, which counterbalance the increased imports for LHWP-II.
The deficit is expected to widen in 2024
as LHWP-II construction peaks. Exports
are projected to remain stable, assuming the African Growth and Opportunity Act (AGOA) is extended.
Domestic and external risks are tilted
to the downside. Weaker-than-projected
global and regional growth would reduce diamond exports and remittances,curbing household consumption. Failure
to renew the AGOA could lead to foreign direct investment outflows, increasing unemployment and reducing exports. A prolonged or severe El Niño
carries the risk of reduced water availability and deteriorating livestock conditions, negatively affecting livelihoods, the rebound in economic activity, and the external balance. On theother hand, the swift implementationof a bold reform agenda could lift private sector investment and the country’s growth prospects.

(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

2022
1.8
9.1
2.4
14.8
36.7
22.5

2023e
2.2
3.6
5.0
38.8
2.2
10.3

2024f
2.5
3.5
-1.8
54.0
2.2
11.5

2025f
2.0
3.2
-0.7
32.8
2.2
10.2

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
12.5
5.0
0.3

2.2
2.4
5.0
1.4

2.5
2.4
5.3
1.6

2.0
2.4
5.0
1.0

Inflation (consumer price index)

5.0

6.0

8.3

6.5

5.3

5.0

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-1.9
1.3

-4.9
1.2

-7.1
1.2

-6.4
1.4

-8.5
1.7

-7.3
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

-7.6
39.1
59.0
-6.6

-1.4
45.8
56.2
-0.6

1.0
44.0
54.5
1.6

0.1
39.3
51.8
0.7

36.6
59.0
84.3

36.6
59.0
84.3

36.3
58.7
84.1

35.8
58.5
83.7

35.4
58.1
83.4

35.1
57.8
83.3

-2.2
28.2

-0.9
28.1

4.6
27.2

3.6
26.7

3.6
26.3

3.6
25.9

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 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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Oct 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

60.7

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/ WDI for School enrollment (2020); Life expectancy(2021).

Despite shocks, Liberia’s recovery remained strong in 2022, but inflationarypressures are rising. Medium-term
growth prospects are promising as thecountry benefits from mining and consolidates gains from macroeconomic stability
and ongoing structural reforms in key enabling sectors. However, the outlook is
subject to considerable downside risks
from inflationary pressures, fiscal risks
ahead of the 2023 elections, and fluctuations in commodity prices. The poverty
rate is expected to decline moderately
reaching 33.8 percent by 2025.

Liberia has recorded positive economic
growth and maintained broad macroeconomic stability in the last two years, but inflationary pressures have increased in 2023
due to higher food costs and a weaker Liberian dollar. The country’s medium-term outlook is promising, but long-term growth is
not enough to quicken the pace of poverty
reduction as the population continues togrow. Liberia still faces multifaceted socioeconomic challenges, including high poverty
rates, limited access to healthcare and education, and inadequate infrastructure. The
country has low levels of electricity access,paved roads, and human capital. Only approximately 30 percent of Liberia’s population has access to electricity, 7 percent of thetotal road network is paved, and the country’s human capital index, at 0.32, is among
the lowest in the world.
Investing in both human and physical capital, improving productivity and economic
efficiency in vital sectors such as agriculture, and creating a better environment forbusinesses are all necessary for achieving
sustainable and inclusive growth.

Recent developments
Liberia’s recovery remained strong in
2022 despite the external headwinds(from Russia’s invasion of Ukraine, highglobal inflation, and depressed demand inadvanced economies). The country experienced a 4.8 percent growth in real GDP,
driven by mining and agriculture, particularly in the production of gold, rice, andcassava. However, in agriculture, there
was a decline in rubber and palm oil production in the first half of 2023 by 12.1 percent and 7.7 percent, year-on-year (y/y), respectively. In industry, gold production increased by 13.6 percent (y/y), but iron ore
production declined by 4.5 percent (y/y),reflecting the trend in international prices;
cement production also declined by 11.6
percent (y/y) as construction activity
scaled down. Electricity production morethan doubled and beverages output remained broadly stable, reflecting the
uptick in services. Liberia’s international
poverty rate (US$2.15 per person/day 2017
PPP) is projected to decline by 0.7 percentage points to 34.8 percent in 2023.
Headline inflation decreased slightly in
2022 to 7.6 percent, from 7.9 percent in 2021,
despite higher global fuel and food prices,
but inflationary pressures are rising in 2023.
In July 2023, y/y inflation was 11.0 percent,driven by food prices and a weaker Liberian
dollar – the Liberian dollar to US dollar exchange rate increased by 19.1 from January
to July 2023. The increase in food prices disproportionately affects the poor, who remain at risk of becoming even poorer and experiencing food insecurity. The WFP
HungerMap Live 2023 shows the highprevalence of insufficient food consumption in Liberia, affecting 37.0 percent of the
population in the second quarter of 2023,
and chronic malnutrition in children under
the age of five is still high at 30.1 percent.

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

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

Percent, percentage points
8

Poverty rate (%)

6

100

4

80

2

60

0

40

-2

20

Real private consumption per capita (constant LCU)

120

1000
900
800
700
600
500
400
300
200
100

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 and World Bank staff estimates and projections.

Source: World Bank. Notes: see Table 2.

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50

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

In July 2023, the Central Bank of Liberia(CBL) raised the policy rate by 250 basis
points to 20.0 percent to rein in inflation.
To strengthen its monetary policy operations, the CBL also lifted the ceiling on theoffered amount of CBL bills. The lifting of
the ceiling on the offered amount of CBLbills would accommodate the growing
oversubscription and help absorb the excess liquidity in the banking system.
Liberia’s fiscal position worsened in 2022,
due to declines in revenue and grants, an increase in consumption spending, and theneed to provide subsidies, grants, and social
benefits to offset the effect of higher food andfuel prices on households and the economy.
This resulted in a higher fiscal deficit thatwas financed through concessional resources and borrowing from commercial
banks. In July 2023, a “Recast Budget” wassubmitted to the National Legislature for approval, proposing a reduction in consumption spending, grants and subsidies, andcapital expenditures due to lower-than-expected revenue performance. The proposed
spending is 3.5 percent lower than the original budget for 2023.
In 2022, the current account deficit stabilized at 17.7 percent of GDP, despite booming gold exports and slower import
growth. However, in the first half of 2023,
the trade balance worsened, resulting in a

deficit of 4.7 percent of GDP compared to
2.2 percent in the same period in 2022. In
June 2023, the gross external reserves fell
to US$533 million (about 2.9 months of imports), from US$644 million (3.1 months ofimports) in December 2022.

Outlook
Liberia’s medium-term growth prospects
are positive on balance. The economy is projected to expand by 4.5 percent in 2023 andan average of 5.8 percent in 2024–25 due tocontinued expansion in mining, as well as
ongoing reforms in key sectors such as energy, transportation, trade, and financial services. The expansion and extension of operations of existing mining projects and improved access to affordable energy androads are expected to drive output growth invarious sectors of the economy.
Inflation is expected to increase in 2023
due to a weaker domestic currency andhigher food prices but stabilize around 6.6
percent in 2024-25 as the CBL tightens
monetary policy. The fiscal deficit is projected to narrow to 2.8 percent of GDP in
2023 as the government strengthens expenditure controls and stays below 4 percent in the medium term as it mobilizes

TABLE 2 Liberia / Macro poverty outlook indicators

domestic resources and boosts investment
and consumption. The current accountdeficit is expected to increase to 22.5 percent of GDP in 2023, from 17.7 percent in
2022, and remain high over the medium
term as aggregate demand propels import
growth. The deficit will be financed by foreign direct investments in mining, private
financing, and project grants and loans.
The poverty rate is expected to decrease
from 34.8 percent in 2023 to 33.6 percent
in 2025. However, the continued decline in
agricultural value added per worker since2013 could hinder efforts to reduce poverty
as agriculture is the primary livelihood forover 60 percent of the workforce. Increased
vulnerability due to severe climate andhigh food prices could also pose risks topoverty reduction.
The outlook is subject to significant risks.
On the downside, inflationary pressuresfrom higher prices of imports (food andfuel), and a decline in prices of exports(rubber, iron ore, and gold) could undercut macroeconomic stability and slow recovery. It may also be difficult to safeguard public finances ahead of the 2023
elections due to spending pressures,
which could increase fiscal risks and debt
vulnerabilities. Upside risk could stemfrom improved external demand for
Liberian exports.

(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

2022
4.8
3.3
-5.7
9.4
7.7
3.1

2023e
4.5
3.5
-21.0
8.3
9.8
2.3

2024f
5.4
3.0
4.5
6.8
13.6
5.5

2025f
6.2
3.9
9.4
2.4
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

4.8
5.9
6.7
2.8

4.5
3.0
6.9
4.8

5.4
5.0
6.3
5.3

6.2
5.7
7.9
5.8

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

17.0
-15.6

7.8
-17.8

7.6
-17.7

10.4
-22.5

7.7
-21.4

5.6
-22.3

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

-5.6
21.5
53.4
-4.6

-2.8
21.4
52.6
-1.8

-3.0
22.8
53.8
-2.1

-3.4
23.0
52.4
-2.5

37.0
70.1
92.8

36.0
69.3
92.5

35.4
69.1
92.3

34.8
68.3
92.2

34.5
68.0
92.1

33.6
67.1
91.7

0.6
6.8

3.2
6.6

3.2
6.4

3.0
6.2

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.

MPO

51

Oct 23MADAGASCAR
Table 1

Key conditions andchallenges

2022

Population, million

29.6

GDP, current US$ billion

15.3

GDP per capita, current US$

516.6

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

64.5

Total GHG emissions (mtCO2e)39.6

Life expectancy at birth, years

line. However, extreme poverty has reduced slightly, declining from 52.6 percent
in 2012 to 51.8 percent in 2022, supported
by slight increases in rural rice prices.

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2012), 2017 PPPs.
b/ WDI for School enrollment (2019); Life expectancy(2021).

After a robust recovery in 2021, growth declined to 3.8 percent in 2022, reflecting
weakening global growth and natural hazards. Growth is projected to recover to 4.5
percent over 2023-25, supported by improved global demand and structural reforms in key sectors. Yet, persistent doubledigit inflation poses challenges. Poverty affects more people in urban areas as job
prospects deteriorate following a drop in
firm productivity. Risks remain substantial, including uncertainty around the upcoming presidential elections, elevatedprices, and the vanilla sector crisis.

For decades, Madagascar has grappledwith sluggish growth and enduring poverty, primarily due to governance shortcomings, inadequate human and physical capital, and slow economic transformation.
The situation is further strained by increasing climate crises and heightened vulnerability to external shocks. However, thegovernment’s commitment to fiscal consolidation, coupled with low budget execution rates, helped lower the fiscal deficit
to an average of 1.4 percent of GDP over
2016-19, with total public debt falling to38.7 percent of GDP by 2019.
Madagascar has been unable to effectively
leverage its rich natural resources, open
trade policies, and young workforce, withweak economic growth falling short of significantly improving living standards. Additional challenges arise from an unconducive business environment marked bydeteriorating connectivity infrastructure,
restricted market competition, and limitedaccess to essential resources like energy,
land, and finance. This environment hinders growth even in sectors that have historically driven GDP growth – like mining,
construction, telecommunications, banking, and utilities.
Weak economic growth, combined with
rapid population growth, has resulted in
Madagascar having one of the highest
poverty rates in the world, reaching 75 percent in 2022, using the national poverty

Recent developments
Economic growth decelerated from 5.7
percent in 2021 to 3.8 percent in 2022, reflecting weakening global growth and climate shocks. Moreover, inflationary pressures have intensified, with rates increasing from 6.9 percent in June 2022 to 11.3
percent in June 2023. Rice prices increasedby 12.2 percent, while energy costs rose by
14.5 percent. Meanwhile, core inflation, adjusted for rice and energy price increases,
increased from 8.3 percent to 10.8 percent
over the same period.
Madagascar’s central bank adopted a more
stringent monetary policy, narrowing theinterest rate corridor. From January 2022,
the central bank increased its policy rates
considerably by 520 basis points for deposits (reaching 9 percent in August 2023)
and 380 basis points for marginal lending
facilities (reaching 11 percent by August2023). Furthermore, the reserve requirement ratio was reduced from 13 percent to
9 percent in April 2023.
The current account deficit widened from 5
percent of GDP in 2021 to 5.6 percent in 2022.
The first half of 2023 saw merchandise exports plunge by 8.1 percent compared to2022, primarily due to a sharp decline in key
spices and strategic minerals exports. Conversely, merchandise imports declined marginally by 1 percent, with a rise in petroleum

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 (%)

20

95

Real GDP per capita (constant LCU)

100

820000800000780000

10

90

760000085

740000-1072000080-2070000075-302014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Gov. cons.
Inventories
Statistical disc.

Exports
Private cons.
GDP

68000070

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.

MPO

52

Oct 23

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

product volumes being counteracted by adip in their import prices.
The overall fiscal deficit increased from 2.8
percent of GDP in 2021 to 6.4 percent in
2022, and total public debt rose to 56.9 percent of GDP by 2022. This deterioration in
the fiscal balance was largely a result of deferred oil customs tax payments by oil distributors. Preliminary figures for the first
four months of 2023 suggest a subdued tax
revenue collection. According to the latest
debt sustainability assessment, Madagascar is at moderate risk for both external
debt distress and overall debt distress.

Outlook
Growth is anticipated to stabilize at 4 percent in 2023, before picking up pace toabout 4.7 percent in 2024-25. Inflation,
meanwhile, is expected to hover at 10.5
percent in 2023 before easing to around 8.5
percent during 2024-25. This moderation
will likely mirror global trends and be influenced by the effects of a tightening monetary stance. However, the poverty rate is
projected to show little sign of improvement, remaining steady at 80.1 percent in
2023, with a larger increase in urban areas
as job prospects deteriorate due to a sharp
drop in business productivity.
A decline in global oil prices is projected
to further contribute to the narrowing of
the current account deficit to 4.6 percent of
GDP in 2023-25, as the drop in imports surpasses the deceleration in exports. However, the recovery of exports may face challenges as restrictive import directives – likelowering permissible nicotine levels in imported food products – from Madagascar’s

TABLE 2 Madagascar / Macro poverty outlook indicators

primary vanilla trading partners are likely
to hinder progress.
The fiscal deficit is forecast to shrink to 3.8
percent of GDP in 2023, as the resolutionof cross-liabilities between the governmentand oil distributors is expected to boost
tax revenues to 12.8 percent of GDP from
9.6 percent in 2022. Moreover, the projected gradual increase in capital expenditure,from 5.1 percent of GDP in 2021 to 8.7 percent in 2025, reflects improved budget execution and the implementation of the government’s priority projects.
Several risks could impact these projections,
including recurring natural hazards, fluctuations in commodity prices, financial instability, and lower global demand for Madagascar’s exports. The upcoming presidential elections add a layer of uncertainty, withrising political tensions and potential social
unrest exacerbated by high 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
-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

2022
3.8
2.5
-8.0
-19.1
27.5
19.8

2023e
4.0
2.5
9.6
2.8
3.4
1.9

2024f
4.8
3.5
5.7
5.8
3.8
2.8

2025f
4.7
3.5
7.2
7.0
4.2
4.0

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

4.0
2.3
8.6
3.4

4.8
3.1
8.9
4.3

4.7
3.6
9.1
3.8

Inflation (consumer price index)

4.2

6.2

8.2

10.5

8.8

8.1

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-4.8
1.8

-5.0
1.7

-5.6
1.9

-4.4
1.6

-4.6
2.2

-4.6
2.3

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

-6.4
10.8
56.9
-5.6

-3.8
14.9
56.2
-2.8

-3.1
13.9
55.4
-2.2

-5.0
13.6
56.5
-4.1

81.7
93.0
98.3

81.0
92.6
98.2

80.6
92.4
98.1

80.1
92.1
98.1

79.6
91.9
98.0

78.7
91.6
97.9

-2.1
14.8

-0.1
15.2

0.7
15.4

0.9
15.5

1.5
15.9

1.7
16.4

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 2012-ENSOMD. Actual data: 2012. Nowcast: 2013-2022. Forecasts are from 2023 to 2025.
b/ Projection using neutral distribution (2012) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU.

MPO

53

Oct 23

MALAWI

Key conditions andchallenges

Table 1

2022

Population, million

20.4

GDP, current US$ billion

13.5

GDP per capita, current US$

660.3

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

62.9

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(2021).

Amidst continued imbalances, Malawi’s
economic challenges are only easing gradually. Growth is projected to increase in
2023 to 1.6 percent as electricity supply
improves. However, severe and persistent
shortages of foreign exchange continue tosubdue growth. While the economy isexpected to grow at 2.8 percent in 2024,
supported by ongoing and announced
reforms, such growth remains insufficient to substantially mitigate the prevailing high levels of poverty, estimatedat 72 percent in 2023.

With low agricultural productivity andlimited commercialization, the majorityof Malawians face stagnant incomes.
Structural challenges faced by the sector
include market distortions such as pricecontrols, trade restrictions, poorly targeted subsidies, and low access to imported
inputs, which constrain investment andexport-led growth. These effects are magnified by increasingly frequent and destructive tropical cyclones, including Cyclone Freddy in February 2023, which resulted in estimated losses and damages
in excess of USD$ 500 million.
External imbalances impede more rapid
economic growth. Exports as a share of GDP
have been declining over decades, driven by
weak demand for tobacco and an overvalued exchange rate, which has resulted in
low foreign exchange reserves and a risingspread between the official and parallel
rates. The imbalance has made foreign exchange scarce, in turn constraining imports.
Recently increased exchange rate flexibility
is a tepid step to alleviating external balancechallenges, though plans to increase capital
controls could further disincentivize the accumulation of foreign exchange through investment and remittances.
Fiscal balances remain unsustainable.
Large fiscal and external deficits have led
to high public debt levels at 74.7 percent of GDP in 2022. Weak public financial management systems have meantthat government has often missed its fiscal targets, resulting in unexpected andhigh deficits. High and rising domestic
interest rates mean that debt servicing
costs continue to erode fiscal space. Interest payments were 34 percent of revenues
in FY2022/23, and domestic debt service
was 94 percent of interest payments.
Persistent inflation, coupled with the potential for further price increases and recurrent climate shocks, poses a considerable risk for exacerbating food supply
shortages. Consequently, the proportion of
the population living below the poverty
threshold of USD $2.15 per day (2017 PPP)
has seen an uptick, rising from 70 percent
in 2019 to 71 percent in 2022.

Recent developments
Malawi’s economy is estimated to grow by
1.6 percent in 2023. The resumption of electricity production at the Kapichira hydropower plant has bolstered economic activity. However, production inputs have often
been unavailable due to foreign exchange
shortages, which has dampened growth.
Following Tropical Cyclone Freddy,
agriculture output is only marginallylarger than last year. Domestic foodprices are increasing rapidly, reaching
39.4 percent year-on-year in August2023 due to supply constraints. Imports
are also becoming increasingly expensive
as the kwacha depreciates. Inflation has remained high at 28.6 percent in August. In
turn, the policy rate was increased to 24
percent, from 14 percent a year earlier.

FIGURE 1 Malawi / Fiscal deficit and public debt

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

Percent of GDP
12

Poverty rate (%)

Percent of GDP
90

Real GDP per capita (constant LCU)

120

39000080

108370000

60

80

50

6

380000100

7036000060

35000040

43300002023400004030

20320000

10

0

0

0
2010

2013

2016

Fiscal Deficit (lhs)

2019

2022

310000
2010

2025

2012

2014

2016

2018

International poverty rate
Upper middle-income pov. rate

Public Debt (rhs)

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

MPO

Source: World Bank. Notes: see Table 2.

54

Oct 23

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

With higher interest rates, the fiscal burdenof debt service has increased.
Foreign exchange reserves have exhibited amodest improvement, but they remained
low at 0.9 months of import cover in June
2023. The Reserve Bank of Malawi commenced foreign exchange auctions to support reserve accumulation and align the official and market rates. Despite these efforts,
the spread between official and parallel rate
has increased to 64 percent in August 2023.
An IMF Extended Credit Facility (ECF) iscurrently under negotiation and withbroader macroeconomic reforms and concomitant donor support, this has the potential to alleviate foreign exchange challenges.
The implementation of fiscal consolidation reforms is expected to result in amodest decrease in expected deficits,from 10.2 percent in 2023 to 9.2 percent
in 2024. Public debt is still in distress andunsustainable, estimated to reach 79.5
percent of GDP in 2023. Amidst risingrates and continued borrowing, interest
expenditure is expected to consume 24
percent of the current budget. Negotiations with commercial and bilateral international creditors on external debt restructuring are ongoing.

Due to rising domestic prices and an anticipated decline in per capita income, thepercentage of individuals subsisting on
less than USD $2.15 per day (2017 PPP) isestimated to increase to 72 percent in 2023.

Outlook
The economy is projected to grow by 2.8
percent in 2024 on the basis of ongoing
and announced macroeconomic reforms toaddress the current crisis. However, theshare of people living on less than
USD$2.15 a day (2017 PPP) is expected toremain close to 72 percent in 2024 due tostagnant per capita growth.
A favorable agriculture season supported
by improved foreign exchange inflows can
support economic activity in 2024, though
this assumes conclusion of a program with
the IMF and increased donor support. The
government remains committed to continue forex auctions to support the realizationof a market-determined exchange rate.
This would improve the trade balance inthe short term. However, downside risks
from El Niño and delayed access to inputs,

TABLE 2 Malawi / Macro poverty outlook indicators

as well as a continued exchange rate misalignment may weigh on growth.
Inflation will remain relatively high inthe near term and is expected to average
29.2 percent in 2023. Domestic foodprices are high and still rising, which
will contribute to upward inflationarypressures. Successful implementation of
fiscal consolidation may further contribute to reduced growth in money supply and contain inflation, especially for
non-food products.
The fiscal deficit for FY2023/24 is expected
to remain within the target for the fiscal
year. However, there are risks that may
widen the deficit. Disruption in economic
activity, especially from lower supply of
raw materials due to forex shortages could
negatively impact revenues.
Successful implementation of fiscal andstructural reforms will be key to containthese pressures, and a potential ECF
arrangement could unlock increased budget support and enable increased investment. Finally, the implementation of external debt restructuring, improved expenditure management and reduced domestic borrowing are essential for easing
the public debt burden going forward.

(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

2022
0.9
0.6
4.3
-6.5
3.6
0.1

2023e
1.6
3.8
13.9
-17.7
1.5
3.6

2024f
2.8
5.4
-0.2
2.3
5.5
9.3

2025f
3.3
4.6
-11.0
11.4
5.9
5.8

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

1.6
0.6
1.6
2.1

2.8
2.4
2.7
3.0

3.3
3.0
3.2
3.4

Inflation (consumer price index)

8.6

9.2

21.8

29.2

19.2

11.9

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-14.0
3.4

-14.4
0.8

-1.5
1.2

-3.0
1.1

-8.6
1.5

-8.9
1.7

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

-6.4
14.7
53.4
-3.4

-6.9
14.7
60.5
-3.1

-8.7
14.6
74.7
-3.5

-10.2
15.2
79.5
-3.9

-9.2
15.7
78.1
-2.4

-8.3
16.5
79.1
-2.2

70.7
89.4
97.4

70.6
89.4
97.4

71.3
89.5
97.5

71.7
89.7
97.5

71.5
89.6
97.5

71.3
89.5
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.

MPO

55

Oct 23

MALI

Key conditions andchallenges

Table 1

2022

Population, million

22.6

GDP, current US$ billion

18.8

GDP per capita, current US$

833.3

International poverty rate ($2.15)

a

15.2
a

48.2

a

81.0

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

a

36.0

School enrollment, primary (% gross)

b

78.7

b

58.9

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/ WDI for School enrollment (2020); Life expectancy(2021).

GDP growth is projected to reach 4 percent in 2023 (0.9 percent per capita),
supported by the recovery of cash crops
and agri-food manufacturing. Poverty is
expected to resume a gradual decline after rising in 2022. The fiscal deficit isexpected to remain elevated with rising
security outlays and the outlook is subject to downside risks related to the political transition, regional instability, insecurity, climate-related shocks, andhigh borrowing costs.

Mali’s economy remains under-diversified
and dominated by agriculture and lowproductivity services. Manufacturing absorbs little employment and is concentrated in agro-industries and cotton ginning,reflecting low levels of physical and human capital. Exports are dominated bygold and cotton, exposing the economy tocommodity and climatic shocks. Per capita
growth stagnated during the last decade(0.4 percent average) limiting progress inpoverty reduction while human development indicators show mixed results withimprovements in school attendance but
deteriorating access to healthcare.
Persistent insecurity and a weakened social contract are key bottlenecks for inclusive growth, with the absence of the Statein remote areas undermining service delivery. Political instability following thecoups in 2020-2021 and delays in the political transition leading to the six-month
ECOWAS commercial and financial sanctions in 2022 have constrained growth. The
adoption of a new constitution in June
2023 paves the way for general elections,currently scheduled for 2024.

Recent developments
Despite the ECOWAS sanctions, Mali’s
economy showed resilience with real GDP

growth of 3.7 percent in 2022 (0.7 percent
per capita), reflecting the strong performance of gold mining and subsistence
agriculture – sectors less impacted by the
sanctions – and public services. Growthslowed in Q1-2023 due to insecuritylinked transport bottlenecks and weak
cotton ginning output. However, growthis expected to reach 4 percent in 2023 (0.9
percent per capita), supported by agriculture exports, agri-food manufacturing,trade and financial services.
The current account deficit (CAD) narrowed to 7 percent of GDP in 2022 despite a terms of trade deterioration as
the ECOWAS trade embargo reduced imports while gold exports continued. Bothexports and imports are expected to recover in 2023, maintaining a CAD of 7
percent of GDP.
Inflation rose to 9.7 percent in 2022, due
to sanctions and high global food and energy prices but decelerated in 2023 (averaging 4.2 percent y/y over January-July) as
food inflation declined (1.8 percent overthe period), due to higher supply from lastyear’s agricultural campaign. With lower
inflation, the extreme poverty rate ($2.15/
day 2017 PPP), estimated at 18.5 percent
in 2022, is projected to decrease slightly to
18.1 percent in 2023, mainly in rural areas where poverty is expected to decline
by 0.7 percentage points. However, the humanitarian situation remains serious withan estimated 1.26 million people severely
food insecure during the 2023 lean season.
Population displacement continues, particularly in the border areas with Burkina Faso and Niger with over 375,000 internallydisplaced persons at end-April 2023.

FIGURE 1 Mali / Real GDP growth, current account andfiscal balances

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

Percent, Percent of GDP
6

Poverty rate (%)

4Real GDP per capita (constant LCU)

120

270000100

26000080

25000060

24000040

23000020220000

2
0
-2
-4
-6

0

-8
2017

2018

Fiscal balance

Current Account Balance

2100002006 2008 2010 2012 2014 2016 2018 2020 2022 20242019 2020e 2021e 2022p 2023p 2024p 2025p

International poverty rate
Upper middle-income pov. rate

GDP growth growth

Sources: Malian government and the World Bank.

Source: World Bank. Notes: see Table 2.

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56

Oct 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 125 basis points since thestart of 2022 to 3.25 percent for liquidity
calls and 5.25 percent for the marginal
lending facility. However, the monetary
policy stance remains broadly accommodative, inflation in the region is still
above target and foreign exchange reserves have been on a downward trend.
The fiscal deficit is expected to stay elevated at 4.9 percent in 2023 with higher revenues from tax administration andpolicy measures offset by higher expenditures, driven by wage bill, security outlays and interest payments. With limited external concessional financing available, the deficit will be primarily financed through domestic borrowing on
the regional market, where interest rates
have risen to around 8 percent for 3and 5-year bonds, compared with around
6 percent earlier this year. Public debt,
now dominated by relatively more expensive domestic debt (55 percent of thedebt stock), is projected to reach 51.3
percent in 2023.

OutlookGDP growth is expected to average 4.5 percent over 2024-25 (1.4 percent per capita) underpinned by agriculture and services, andby private consumption and the recovery ofcapital investments. However, the withdrawal of the MINUSMA peacekeeping
force by end-2023 could have localized
economic impacts where the bases are located. The CAD is expected to gradually
narrow to 4.9 percent of GDP by 2025, as newlithium exports come onstream in 2024.
Annual inflation is projected to graduallyfall, with the recovery of food production,
towards the regional target of 2 percent
by 2025. Consequently, the extreme poverty incidence is expected to gradually decrease to 16.3 percent by 2025.
A gradual fiscal consolidation could beachieved with sustained tax policy and

TABLE 2 Mali / Macro poverty outlook indicators

administration reforms and improved
public expenditure efficiency. Fiscal
deficits will continue to be mainly financed through domestic borrowing as
the availability of external financing islimited. Public debt is expected to increase to 52.3 percent of GDP by 2025.
The outlook is subject to multiple downside risks. Further election delays could
trigger economic sanctions again and reduce private investments. Other economic risks relate to intensified insecurity
following the withdrawal of MINUSMA
and climatic shocks. Contingent liabilities, notably of the energy utility (EDM),
domestic arrears and continued growthof the wage bill constitute significant fiscal risks. The coup in neighboring Niger
on 26 July 2023 and the response fromECOWAS and WAEMU (economic andfinancial sanctions) have increased regional instability with risks of negative
spillover effects on security, economic,
and humanitarian fronts, including further increasing the cost of financing on
the regional market.

(annual percent change unless indicated otherwise)

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

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

2022
3.7
3.2
7.1
-10.4
8.0
-2.5

2023e
4.0
3.2
17.2
-1.6
4.2
5.0

2024f
4.0
3.0
0.6
11.1
5.0
4.0

2025f
5.0
4.0
-0.5
12.4
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

4.0
1.7
5.4
5.0

4.0
5.0
6.0
2.5

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

4.0

2.5

2.0

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-2.2
3.1

-7.7
3.0

-7.0
2.6

-7.0
2.5

-5.5
3.1

-4.9
3.0

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

-5.4
20.7
46.9
-4.2

-4.9
22.0
50.4
-3.5

-4.8
19.8
51.7
-3.3

-4.9
21.4
51.3
-3.2

-4.5
21.7
51.9
-2.6

-3.6
22.5
52.3
-1.7

14.9
47.3
79.8

16.2
48.6
80.3

18.5
51.0
81.4

18.1
50.6
81.5

17.7
50.0
81.1

16.2
48.8
80.2

2.3
14.5

3.4
15.7

3.2
16.2

3.0
16.3

3.9
16.7

4.5
17.5

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 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
b/ Projections using microsimulation methodology.

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Oct 23

MAURITANIA
Table 1

Key conditions andchallenges
2022

Population, million

4.7

GDP, current US$ billion

11.1

GDP per capita, current US$

2334.0International 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

64.4

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/ WDI for School enrollment (2020); Life expectancy(2021).

Economic activity is expected to remainrobust in 2023 after the economy rebounded sharply in 2022, weathering
the impact of rising prices and expansionary fiscal conditions. Inflation eased
in mid-2023 as monetary and exchange
rate policy helped to absorb excess liquidity. Poverty is expected to peak at 6
percent in 2023 and decline to 4 percent in 2025 as the medium-term
growth outlook remains favorable, but
subject to downside risks.

Mauritania's economic performance reflects structural weaknesses related to its
heavy dependence on extractives, low capacity to implement investment projects
and rising quasi-fiscal recurrent expenditures. Potential output growth has tripledover the last decade due to its rich natural resources, making it a lower middle-income country subject to commodity priceshocks. The ripple effects of global shocks
on prices of iron, gold and copper are
currently constraining resources needed
to implement the national strategy(SCAPP, 2016-2030) which focuses onachieving strong, inclusive, and sustainable economic growth.
Central to the development agenda is theimpact of climate change. Hazards include droughts, floods, wildfires, and extreme heat. Over 2000-2021, Mauritania
ranked third highest in SSA on the levelof human impact from climate-related
events, after Somalia and Eswatini. Losses and damages from the July 2022
floods reached 2.7 percent of GDP and
may get higher for future floods due tounplanned urbanization and inadequate
drainage. Deadly floods occur at least
once every two years, resulting in estimated annual average losses of 0.25 percent of GDP over the last two decades.
The government is developing a mitigation strategy to safeguard livelihoods
and the budget.

The macroeconomic outlook is subject
to various risks. Regional insecurity persists with multiple military coups andrefugees migrating from neighboring
countries. Weak global demand could
affect exports and extractive revenues.
Poverty reduction remains dependent
on agricultural performance and foodinflation; the poor depend on agriculture for 45 percent of their total income,and food products comprise 57 percentof their consumption.

Recent developments
Economic activity is expected to remain robust at 4.3 percent in 2023 (1.6 percent percapita), supported by the expansion of services and higher mineral exports. Industrial production had a slow start in the firstquarter, contracting by 18 percent due to
weak mining, manufacturing, and construction activity. This was mostly offset
by the services sector, while growth remained weak in the primary sector. Industry and primary sectors recovered in thesecond quarter thanks to increases in iron,copper and electricity production andgood rainfall. Inflation continued its
downward trend, driven by lower increases in food prices, reaching 3.7 percent (y/y)
in August 2023, compared to 11.1 percent(y/y) in 2022. The downward trend is expected to continue through 2023 to reachan annual average inflation of 6 percent(y/y). The Central Bank increased the policy rate from 5 to 7 percent in August
2022, and intervened in the forex market

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

-2
-4
2017

2019

GDP growth (lhs)
Current account balance (rhs)

2021

2023p

60000

-10

40

-12

30

-14

20

-16

10

-18
2015

70

50000

50

-8

0

70000

60

-6

2

Real GDP per capita (constant LCU)

80

40000
30000
20000
10000

0

2025p

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

Primary fiscal balance (lhs)

Source: World Bank.

Source: World Bank. Notes: see Table 2.

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58

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

to absorb excess liquidity, in an effort to
subdue inflation.
The fiscal balance registered a deficit of 3
percent of GDP in 2022, due to higher
transfers, and lower revenues. Comparedto the first seven months of 2022, the fiscal
balance worsened in 2023 to about -1 percent of GDP from a surplus of 0.26 percent
of GDP, driven by strong growth in recurrent expenses (45.2 percent, y/y). Debtto-GDP fell by 4.4 percentage points to reach44.7 percent of GDP in 2022 although the accumulation of debt could be higher in 2023
given the government’s ambitious investment plan. External debt remains sustainable and at moderate risk of debt distress.
The current account deficit (CAD)widened in 2022, to 12.7 percent of GDP,on account of higher imports of equipment
for the extractive sector. A current accountdeficit of 6.1 percent of GDP in H1-2023,
driven by lower exports of gold, and higher imports of extractive industry equipment and petroleum products, is projected
to narrow the CAD to 11.9 percent of GDP
in 2023 with lower extractive equipment
imports and falling food import prices.

The decline in food inflation in 2023, alongwith growth in agriculture and services,
is expected to reduce the US$3.65 a day
poverty rate. However, this decline will betempered by higher non-food inflation anda decline in industrial prices, which will reduce labor incomes of industrial workers.
These make up 14 percent of the employed
population and 12 percent of the poor.

OutlookDuring 2024-2025, growth should average
6 percent (3.4 percent per capita) supported by higher gold and iron production, thecommencement of gas exports, and higher
agriculture output. The onset of gas production could yield fiscal space of 0.5-1.2
percent of GDP per annum to support infrastructure expenditures. Average inflation could reach 6 percent in 2023, driven
by lower food and energy prices, and gradually fall to 2.5 percent by 2025.
The US$3.65-a-day poverty rate is expected to fall to 23.5 percent in 2024 in line withTABLE 2 Mauritania / Macro poverty outlook indicators

lower food and non-food inflation (-3.4 pp
and +2.6 pp respectively) and higher value
added per capita growth in all sectors. Thisdecline should continue in 2025.
The CAD is projected to narrow after 2023
with higher production of iron, gas exports
and stronger growth in Europe (2025),
which should compensate for lower commodity prices and decelerating demand
from the main trading partners in 2024.
FDI related to the extractive industry
should finance the current account deficits.
Fiscal pressures are expected to decreasein 2024-2025 leading to an average fiscal
deficit of 1.4 percent of GDP, supported byhigher revenue mobilization, lower energy subsidies and lower current transfers.
However, increases in the wage bill in 2023
and the government’s ambitious public investment program may pose a risk to adownward fiscal and debt-to GDP path between 2023 and 2025.
Risks to the outlook remain from a slowdown in the Euro Zone and China, if
external demand decelerates, as well asfrom vulnerabilities to climatic shocks,
and regional insecurity.

(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
2.4
9.2
3.7
-8.6
2.1

2021
2.4
2.4
26.1
35.2
-11.7
25.1

2022
7.1
2.5
22.3
11.9
6.8
13.6

2023e
4.3
2.4
11.6
4.2
6.7
5.4

2024f
5.7
2.6
9.3
4.8
7.0
4.5

2025f
6.2
2.7
8.5
7.0
9.9
6.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-0.2
-2.6
2.4
-0.5

2.0
-3.8
-8.2
10.2

7.1
7.7
9.2
6.0

4.3
5.0
2.8
4.7

5.7
5.5
7.2
5.1

6.2
5.7
8.4
5.4

Inflation (consumer price index)

2.4

3.6

9.5

6.0

3.0

2.0

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-6.9
11.0

-8.1
10.6

-12.7
12.7

-11.9
12.1

-7.8
9.2

-6.0
5.8

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

2.3
20.2
55.8
3.0

1.4
20.5
49.1
2.2

-3.0
21.9
44.7
-2.3

-2.9
24.6
46.8
-2.1

-2.0
25.3
46.8
-1.1

-0.8
26.8
45.9
0.1

5.6
25.8
67.5

5.7
25.1
65.7

5.8
25.3
66.0

5.8
25.1
65.5

5.0
23.5
63.9

4.4
21.3
61.7

3.4
31.1

2.8
31.3

2.9
31.6

3.2
32.2

3.2
32.8

3.4
33.7

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/ Projections using microsimulation methodology.

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59

Oct 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

73.7

Total GHG emissions (mtCO2e)

7.1Life expectancy at birth, years

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

Real GDP is expected to grow by 5 percent in 2023, as the economy continues torecover from the deep recession in 2020.
Inflation reached a projected 7.3 percent
in 2023, but is forecast to ease in themedium term. Higher pension and social
benefits spending will add pressure to thefiscal deficit in 2023. The poverty rate is
projected to decline from 17 percent in2020 to 13 percent in 2023. The growth
outlook is subject to downside risks.

Mauritius sustained spectacular growthsince its independence in 1968, reaching
high-income status in July 2020. But real
GDP plunged by 14.6 percent due to the
COVID-19 pandemic, causing Mauritius
to fall back into the upper-middle-income
category in 2021. The economy continues to recover following efforts to containthe pandemic and has demonstrated resilience against external shocks from thewar in Ukraine.
But Mauritius’ growth prospects face challenges. Mauritius is highly dependent on
tourism, while export competitiveness has
been eroded by rising labor costs and skills
shortages. The pandemic responses and the
expansive fiscal stance created mountingpressure on public finances. High and increasing social spending, partly driven by
the aging population, has led to persistentfiscal deficits and an elevated public debt-toGDP ratio, which reached 94.6 percent in
FY20/21 before declining to 88.4 percent in
FY21/22. During the pandemic, the Bank of
Mauritius (BOM) established the Mauritius
Investment Corporation to channel support
measures to minimize the crisis’ impact on
the private sector. Avoiding policy distortion and strengthening monetary policy effectiveness will require phasing out BOM’s
involvement in financing firms.
Mauritius faces significant risks fromclimate change and natural disasters, affecting its growth potential. It is also

highly vulnerable to global energy shocks.
In 2021, about 80 percent of its electricity
was generated from imported coal and petroleum products.
The labor market has seen a significant recovery post-pandemic, with lower unemployment rates for both men and womenand increased female participation, suggesting a diminished burden from households chores. Youth unemployment has also
shown signs of reduction over the last year.

Recent developments
Real GDP expanded by 5.5 percent (yoy) in
2023Q1 compared to 6.1 percent during thesame period in 2022, supported by domestic demand and services exports. On the
demand side, gross fixed capital formation
grew by 8.3 percent (yoy), driven by higher
investments in construction and machinery in Q1. Meanwhile, consumption
spending only grew by 0.5 percent yoy,
due to weaker growth in household consumption spending. On the supply side, astrong rebound in the tourism sector supported growth in accommodation andfood services.
The revival in international tourism andpositive inflow of primary income contributed to the narrowing of the current
account deficit in Q1 of 2023 to $97 million compared to $333 million last year.
International tourist arrivals in Mauritius
reached 685,000 in the first half of 2023,
substantially higher than the same period last year and close to the 2019H1 level
before the pandemic.

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

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

Percent
12

Poverty rate (%)

Real private consumption per capita (constant LCU)

25

350000930000020

62500003

15200000101500000-3100000-6Agriculture
Industry
Services
Gross value added at basic prices

-9
-12
-15

5

2018

2019

2020

2021

2022

2023e

2024f

50000

0

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

2025f

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

Source: World Bank. Notes: see Table 2.

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60

Oct 23Upper middle-income pov. rate

The BOM has kept the key repo rate at
4.5 percent after increasing it by 265 basis
points in 2022. Monthly headline inflation
declined to 5.8 percent yoy in August 2023,
compared to 12.1 percent in December
2022, supported by lower global energy
and food prices, of which Mauritius is a
net importer, and a slower depreciation of
the Mauritian rupee. Higher domestic interest rates led to declining householdloans and stagnant loans to private corporations. However, banking loans to public
non-financial corporations increased by 54
percent yoy in July 2023, reflecting higher
activities of state-owned companies. Gross
official international reserves remained
broadly adequate at $6.6 billion (10.3
months of imports) as of July 2023.
In July, the government introduced a newincome tax regime, which nudges income
tax policy progressivity. However, the revenue impact will depend on securing collection from the tax base, particularly thosefacing a higher effective tax rate. The
strong economic rebound will likely increase VAT receipt. Meanwhile, social
spending is projected to increase by 11.5
percent in FY23/24, owing to higher social
and welfare measures.

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
that year is projected to increase by over 6
percentage points before falling to around
13 percent by 2023.

OutlookReal GDP is projected at 5 percent in
2023, driven by a strong rebound in
tourism and investments before decelerating to 4.6 percent in 2024. Annual inflation is expected to decline to 7.3 percent
this year, aided by lower inflation in key
trading partners, and the introduction ofa new monetary framework should help
anchor inflation expectations. The softening of commodity prices and the rebound of international tourism in Mauritius will likely narrow this year’s current
account deficit to 7.6 percent of GDP.
Sustained spending will likely widen thefiscal deficit to 5.8 percent of GDP in
FY23/24 and set the public debt-to-GDP

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
-15.7
-4.7
-25.8
-27.6
-28.5

2021
3.4
2.1
-3.1
13.9
9.8
8.0

2022
8.8
5.3
4.9
6.0
22.7
12.8

2023e
5.0
3.2
2.0
7.0
9.9
6.8

2024f
4.6
3.0
2.0
3.2
9.5
5.8

2025f
3.6
3.0
1.5
2.8
7.6
5.9

-14.1
-1.9
-19.7
-13.2

4.0
7.2
10.9
2.2

9.8
3.6
6.5
10.9

5.0
3.2
4.1
5.3

4.5
3.0
3.8
4.7

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)ratio to 78.7 percent. Meanwhile, theamendment to the BOM Act will likely
curb BOM’s financing of the government’s budget deficit.
The economic outlook remains subject
to downside risks from the tightening of
global financing conditions, slower global GDP growth, and geopolitical risks
from the war in Ukraine. The reboundin international tourism in Mauritius
could reach its peak, with the country facing competition from other destinations. The return of El Niño could
negatively affect food production in certain parts of the world, leading to increased prices of imported food andadding pressure to domestic inflation.
The government should continue strengthen macroeconomic resilience by rebuilding
fiscal buffers by raising revenue and lowering the public debt-to-GDP ratio. Bettertargeting of social spending for those mostin need will improve spending efficiency,
improve fiscal sustainability, and free up
scarce resources for human capital investments. Structural reforms and policies toimprove climate adaptation and mitigation can help strengthen Mauritius’
growth trajectory.

2.5

4.0

10.8

7.3

6.2

4.8

-8.8
111.7

-13.0
21.1

-12.3
-8.3

-7.6
-21.4

-8.2
-21.4

-8.2
-21.6

-18.7
21.6
94.6
-16.0

-6.8
24.0
88.4
-4.3

-5.0
23.6
81.0
-2.5

-5.8
22.5
78.7
-3.4

-5.2
22.2
79.1
-2.8

-3.7
22.2
78.8
-1.3

2.4
17.2

2.3
16.4

2.0
14.3

1.8
13.3

1.7
12.3

1.4
11.1

-12.0
61.2

10.3
60.6

7.6
62.3

3.3
62.7

3.8
63.0

3.6
63.4

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 = 1 (High (1)) based on private consumption per capita in constant LCU.

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Oct 23

MOZAMBIQUE
Table 1

Key conditions andchallenges

2022

Population, million

33.0

GDP, current US$ billion

19.2

GDP per capita, current US$

582.9

International poverty rate ($2.15)

a

74.4

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

a

a

88.6
50.5

School enrollment, primary (% gross)

b

118.4

b

59.3

Total GHG emissions (mtCO2e)109.7Life expectancy at birth, years

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

Growth is expected to reach 6 percent in
2023, largely reflecting the start of liquefied natural gas (LNG) production.
Fiscal pressures have increased due to ahigher public sector wage bill and debt
service. The poverty rate remains highbut is projected to fall slightly from 74.5
percent to 72.9 percent between 2023
and 2025. Medium-term prospects are
subject to substantial fiscal risks stemming from a large wage bill in a context
of upcoming elections, and the insecurity in northern Mozambique.

Mozambique faces substantial development challenges, including widespreadpoverty and inequality, and limited structural transformation. Three-quarters of
the population live in poverty andMozambique is one of the most unequalcountries in Sub-Saharan Africa – partly
reflecting low and uneven human andphysical capital accumulation, and vulnerability to climatic shocks. The economy’s dual focus on labor-intensive, lowproductivity agriculture and capital-intensive extractives, with limited economic
links, constrains inclusive growth.
Over half a million people enter the labor
force each year, but less than 30,000 new
formal jobs are created annually. The private sector’s potential for job creation andeconomic transformation has been hampered by regulatory bottlenecks, a large
infrastructure deficit, and the high costof credit, among other factors. Lending
interest rates in Mozambique are among
the highest in Sub-Saharan Africa, reflecting a shallow financial sector, rising government domestic borrowing, and highrisk premia. Mozambique is at high riskof debt distress, with the country lacking
access to international capital markets,and concessional financing remains limited. The government’s capacity to financedevelopment is heavily constrained, withthe wage bill and debt-service costs absorbing 95 percent of tax revenues.

Mozambique needs more diverse andgreen sources of growth and jobs. Policy
priorities include enhancing macroeconomic stability and governance, promoting private sector participation, andstrengthening resilience to shocks. Given
the upcoming LNG revenues, managing
the vast LNG resources efficiently, improving
spending
efficiency,andstrengthening domestic revenue mobilization can help generate fiscal resources
to finance development. Rising foodprices undermine the welfare of the poorand most vulnerable, who spend a large
portion of their budget on food. Highvulnerability to climate shocks, andfragility and conflict are enduring structural challenges, particularly for the poor.
Sustained, broad-based, and inclusive
growth will require, among other things,
raising agricultural productivity, including through improved availability and accessibility of inputs and access to markets
for smallholder farmers.

Recent developments
The economy grew by 4.4 percent (yoy)in the first half of 2023, driven by thestart of LNG production at the Coral
South offshore facility. Higher growthin agriculture and services, particularlytransport, also contributed to the expansion of the economy. Inflation moderated
from a peak of 12.9 percent yoy in August2022 to 5.7 percent in July 2023, as global
food prices continued to subside. Nevertheless, per capita GDP growth remains

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

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

Percent, percentage points
8

Poverty rate (%)

Real GDP per capita (constant FDJ)

100

25000

90

6

80

20000

70

4

60

2

15000

50
40

0

10000

30
20

-2

5000

10

-4

0

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023e 2024f 2025f

Agriculture
Services

Extractives
Tax02008 2010 2012 2014 2016 2018 2020 2022 2024

Manufacturing
GDP

International poverty rate
Real GDP pc

Source: World Bank estimates.

Source: World Bank. Notes: see Table 2.

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Oct 23Lower middle-income pov. rate

low at 1.3 percent. As a result, the poverty
rate remains high at 74.5 percent.
Fiscal pressures remain elevated. Total expenditure reached 32.3 percent of GDP in
2022, up from 30.9 percent in 2021, mainlyreflecting overrun in the cost of ongoingwage bill reform, which aims to unify salaryscales to better control public sector compensations. Total revenues decreased from25.5 percent to 23.4 percent of GDP between
2021 and 2022, due to lower collection of value-added tax on goods and services andnon-tax revenue. Domestic debt rose from24 percent to 26 percent of GDP over thesame period, as the country’s access to international capital markets remains limited.
Pressures from higher wage bill expenses
and debt-service costs persist in 2023, withthe overall fiscal deficit increasing by 30 percent in the first quarter yoy.
The current account deficit increased from
22.3 percent to 32.9 percent of GDP between
2021 and 2022, driven by imports of LNG
equipment, fuel, and food. The external financing gap in 2022, estimated at 2.5 percent
of GDP, was covered by World Bank Development Policy Financing, IMF credits, debt,
and a drawdown in reserves. In the firstquarter of 2023, the current account deficit

declined by 90 percent y/y to US$586 million, as LNG imports moderated. This contributed to a recovery in gross international
reserves from US$2.6 billion to US$2.9 billion (3.3 months of non-megaproject imports) over the same period.

OutlookMedium-term prospects remain positive
despite being subject to substantial risks.
Growth is projected to average 5 percent
over 2023-25, driven by higher offshore
LNG production and the resumption of
the Total-led LNG project. Inflation is expected to decline as global pressures onfood and fuel prices ease. Poverty is projected to decline from 74.5 percent to 72.9
percent of the population by 2025, although the total number of poor people
is expected to continue to rise owing topopulation growth.
Despite ongoing spending pressures, thefiscal deficit is expected to improve, as thegovernment takes measures to strengthen
fiscal sustainability. Measures including
the downward adjustments of base salaries

TABLE 2 Mozambique / Macro poverty outlook indicatorsand supplements are expected to generatesavings amounting to 1 percent of GDP. As
a result, the overall fiscal deficit is projected to decline from 4.9 percent of GDP in
2022 to 2.3 percent of GDP over 2023-25.
The current account deficit is expected
to increase, averaging 31.9 percent of
GDP in the medium term, as LNG-related imports rise. Total imports of goods
are projected to average 44.8 percent
of GDP over 2023-25, higher than the
37 percent of GDP observed in 2022.
Gas exports, foreign direct investment
inflows, grants, and concessional financing will help support sustainable levelsof gross reserves (around $3.3 billion,
roughly 5 months of imports).
Key risks to the outlook stem from thelarge wage bill and debt service, climate
shocks, waning commitment to reforms
in the run-up to the elections, and uncertainty around the security situation in
the north. On the fiscal side, concentration of government domestic bond repayments between 2024 and 2026 could absorb about 8 percent of total revenues,
and the realization of contingent liabilities under legal dispute could undermine
debt sustainability indicators.

(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

2022
4.2
3.0
17.2
-6.4
10.2
1.9

2023e
6.0
3.7
-25.4
10.1
19.5
3.3

2024f
5.0
9.2
-3.5
0.0
4.7
4.1

2025f
5.0
7.0
-8.1
6.0
5.1
5.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-1.8
3.6
-5.7
-2.9

2.2
3.7
1.6
1.6

4.2
4.4
3.8
4.3

6.0
6.0
7.6
5.4

5.0
4.0
8.2
4.2

5.0
4.0
8.1
4.3

Inflation (consumer price index)

3.1

5.7

9.8

7.4

6.5

6.3

-27.4
21.5

-22.3
31.6

-32.9
10.3

-15.9
4.3

-37.6
13.4

-42.4
14.4

-5.7
27.5
120.0
-2.6

-4.6
27.4
105.0
-1.9

-4.9
27.4
95.2
-2.0

-3.4
27.6
91.0
-0.2

-2.5
26.2
93.4
0.6

-1.1
26.3
91.5
1.8

75.8
89.2

76.0
89.2

75.6
89.1

74.5
88.6

73.6
88.3

72.9
87.9

1.0
8.5

1.5
9.3

0.3
8.9

1.1
9.0

2.2
9.9

3.0
10.8

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 2019-IOF. Actual data: 2019. Nowcast: 2020-2022. Forecasts are from 2023 to 2025.
c/ 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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NAMIBIA

Key conditions andchallenges

Table 1

2022

Population, million

2.6

GDP, current US$ billion

12.6

GDP per capita, current US$

4911.3

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

59.3

Total GHG emissions (mtCO2e)

21.2Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2015), 2017 PPPs.
b/ Most recent WDI value (2021).

After a strong expansion in 2022, Namibia’s economy is projected to grow at a
slower pace of 2.8 percent in 2023 asgrowth in the mining sector moderates
and other sectors continue to recover fromthe pandemic. Higher import costs led tohigher inflation, which has compoundedsocio-economic challenges. The projectedinternational poverty rate remains highat 18.4 percent.

Namibia’s growth averaged 4.4 percent between 2001 and 2015, favored by the commodity super cycle, which spurred mining
investment and services linked to mining
and boosted exports. During this period,
growth was primarily driven by investment and a growing labor force, while total factor productivity declined due to persistent structural bottlenecks, including
highly segmented input and output markets and severe skills shortages. Resource
wealth allowed for an increase in public
spending, which expanded householdsupport and the delivery of public services, although access to services remains
low among the poorest segments of the
population. Stronger economic growthand improvements in education outcomessupported reductions in the national
poverty rate from 35.9 percent in 2003 to
15.6 percent in 2015 (based on the US$2.15
per day international poverty line) – one of
the fastest declines in Sub-Saharan Africa.
The expanded social programs partly
drove a decline in inequality.
Growthcametoahaltin2016asthecommodity cycle ended, major investment projects
were completed, severe drought took its
course, and the government embarked on fiscal consolidation after the debt ratio morethan doubled from 2010 to 2015. This brought
to the fore Namibia’s structural weaknesses,
andthesubsequentpre-pandemicyearswere
mostly marked by recession. Authorities

successfully contained spending until the
COVID-19 pandemic, but reducing public
debt proved difficult in a context of low
growth. Debt increased markedly during
the pandemic as spending increased tosupport households.
The slow post-pandemic recovery underscores Namibia’s long-standing dependence on mineral extraction, fiscal constraints, and structurally high unemployment, which limits poverty reduction andefforts to reduce high inequality. Estimated at 18.8 percent in 2022, the poverty rate(using the international poverty line) ishigh for a country of Namibia’s income
level. The country remains one of the mostunequal in the world (with the Gini index
at 59.1 in 2015).

Recent developments
In the first six months of 2023, economic
activity expanded by about 4 percent. The
mining sector contributed most to thisgrowth, supported by mineral exploration
activities, higher uranium output, and robust growth in diamond production. Fromthe expenditure side, higher investment
and net exports underpinned growth.
Household spending declined amid highinflation, substantial increases in the interest rate since the start of 2022, and estimated weak employment growth.
Namibia’s twin deficits have narrowed
from their post-pandemic peaks. Higher
exports, particularly of diamonds and other minerals, helped to narrow the current
account deficit from 15.2 percent of GDP in

FIGURE 1 Namibia / FDI inflows and real GDP growth

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

Percent of GDP
10

Poverty rate (%)

Percent (y/y)
683Real GDP per capita (constant LCU)

80

70000

70

60000

60

6
4

50000

50

0

40000

40

2

-3

30000

30

0
-2

20000

20

-6

10000

10

-4

-9
2015

2016

2017
FDI (lhs)

2018

2019

2020

2021

2022

0

Q1
2023

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

GDP growth (rhs)

Sources: Bank of Namibia and World Bank staff estimates.

Source: World Bank. Notes: see Table 2.

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Real GDP pc

2022Q1 to 8.2 percent in 2023Q1. The current account deficit is being adequately financed by foreign direct investment, leading to an increase in foreign exchange reserves to $3 billion in July 2023 from $2.8
billion in December 2022. The reserve levels were comfortable at 5.3 months of imports and above 20 percent of GDP. There
was progress on fiscal consolidation in
FY2022/23 – the primary deficit was reduced by 3.8 percentage points and the fiscal deficit narrowed to 5.1 percent of GDP.
Amid better-than-expected growth and enhanced tax administration measures, revenues were higher than predicted, offsetting higher-than-budgeted expenditure.
The public debt ratio, including guarantees, was contained at 72.5 percent of GDP,
supported by stronger GDP growth.
Monetary policy remains broadly alignedwith the one adopted by the South African
Reserve Bank given that the Namibian dollar is pegged to the South African rand.
The Bank of Namibia hiked its policy rateby a further 100 basis points in 2023H1,
adding to the cumulative 300 basis points
in hikes in 2022. The restrictive policy
stance and lower fuel prices supported

moderation of headline inflation to a
16-month low of 4.5 percent in July 2023.

OutlookNamibia’s economic growth is projected toreach 2.8 percent in 2023, and to remainaround this level over the next 2-3 years.
Relatively moderate growth is due to stillhigh inflation and monetary tightening,sluggish growth in South Africa and Europe, and base effects from the launch ofa new diamond recovery vessel, which
boosted mining output from 2022Q2.
Against a tepid recovery, unemployment
is expected to remain elevated. Severe skill
shortages will require an increase in services imports to support energy investments. As the recovery in jobs continues tolag, the international poverty rate is projected at 18.4 percent in 2023.
Inflation is projected to decline as fuelprices decrease and food price pressuresease. Foreign direct investment-related imports are expected to drive a large deficit
in the current account. The fiscal deficit

TABLE 2 Namibia / Macro poverty outlook indicators

is projected to narrow further in FY 2023/
24, supported by stronger SACU inflows.
Spending will increase in FY2023/24, driven by higher cash transfers, costs related
to the census and national elections, andhigher capital expenditure in transport
and water. The wage bill growth is expected to remain contained, although its magnitude, representing 40 percent of expenditure, and a high debt service, will continue
to constrain fiscal policy flexibility. Givenhigh debt levels, fiscal policy should build
on recent gains and remain prudent andsupport the stabilization of the debt ratio
in the medium term.
Risks to the recovery remain elevated. A
weaker global outlook and a tighter monetary policy stance could lower export demand. While global oil prices are projected
to stabilize at high levels, supply concerns
and renewed food price pressures could
generate new bouts of inflation, with negative impacts on households’ purchasing
power. Water and electricity supply disruptions and an intensification of thedrought could also weigh on the recovery, with severe impacts on mining andagricultural output.

(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
-8.1
-9.8
0.3
-17.7
-16.6
-15.0

2021
3.5
12.7
1.5
18.4
1.4
20.3

2022
4.6
14.4
0.7
-10.7
20.0
23.6

2023e
2.8
1.7
1.3
9.0
9.8
5.8

2024f
2.9
3.4
1.0
8.8
3.9
4.5

2025f
3.1
3.8
1.0
7.7
3.1
4.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-6.8
6.3
-12.8
-5.6

1.7
1.3
1.6
1.8

4.4
2.6
10.4
2.2

2.8
0.5
4.0
2.6

2.9
2.0
2.6
3.1

3.1
2.0
3.2
3.2

Inflation (consumer price index)

2.2

3.6

6.1

5.5

4.8

4.5

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

2.8
-1.9

-9.9
5.5

-12.6
7.4

-7.7
8.1

-7.9
5.2

-8.2
5.2

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

-8.9
33.4
70.0
-4.7

-8.7
29.6
72.7
-4.4

-5.1
31.4
72.5
-0.6

-4.4
33.7
74.4
0.5

-4.3
32.8
74.6
0.5

-4.3
31.6
73.7
0.5

20.2
38.7
62.7

19.7
38.0
62.3

18.8
36.9
61.4

18.4
36.7
61.0

18.2
36.2
60.5

17.5
35.9
60.0

-1.5
17.9

-0.2
18.0

1.9
18.3

0.5
18.3

2.0
18.4

2.0
18.4

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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NIGERIA
Table 1

2022

Population, million

218.5

GDP, current US$ billion

477.4

GDP per capita, current US$

2184.4

International poverty rate ($2.15)

a

30.9

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

a

b

63.5
35.1

School enrollment, primary (% gross)

c

85.7

c

52.7

Total GHG emissions (mtCO2e)

389.9Life expectancy at birth, years

Recent developments

Key conditions andchallenges

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(2021).

Nigeria faced several economic challenges
in H1-2023, including a growth deceleration in the first quarter and rising inflation,
which pushed more people into poverty.
Recognizing the need to change course, the
new administration undertook crucial reforms to restore macroeconomic stability byremoving the fuel subsidy and liberalizing
the exchange rate. If sustained, these reforms will yield large fiscal savings and lift
Nigeria’s growth prospects. Risks to theoutlook include policy reversals, protracted
decline in oil production, insecurity, andclimate shocks.

To rise to its potential and reverse its increasing trend in poverty, Nigeria needs togrow faster and create more quality jobs,
which is predicated on a stable macroeconomy and a conducive business environment. Macroeconomic stability in Nigeria
has steadily deteriorated over the past
decade due to several factors. First, overreliance on volatile oil exports, which account for more than 90 percent of total exports. Second, limited fiscal space that
stemmed from very costly petrol subsidies,
low tax rates, and weak tax administration
hindered the government’s ability to deliver quality public services. Third, restrictive trade policies, weaknesses in exchange
rate management, monetization of the fiscal deficit by the Central Bank of Nigeria(CBN), and surging food prices led to double-digit
inflation.
Other
external
shocks—including the lingering effects of
the COVID-19 pandemic, and Russia’s invasion of Ukraine—contributed to themacroeconomic deterioration.
The new administration, faced withmounting fiscal and external pressures andpoverty, has undertaken key reforms to restore macroeconomic stability by removing the fuel subsidy and unifying and significantly liberalizing the exchange rate.
These reforms should help free up fiscal
space, unwind critical macroeconomic distortions that hold back growth, and reduce
the space for rent-seeking.

Weak economic performance in H1 2023
largely reflected the difficult pre-reformconditions. After growing by 3.6 percent in
2021, GDP growth slowed to 3.3 percent
in 2022 and further to 2.4 percent year-onyear (y-o-y) in H1 2023. The deceleration
was driven by the continued weakness inoil production, lower agriculture output
stemming from the sustained impact of severe floods in Q3 2022, and a disruptive
and costly demonetization policy, which
adversely impacted the non-oil industrial
and service sectors.
Nigeria’s chronically high inflation
reached a 17 year high of 24.1 percent (yo-y) in July 2023, partly reflecting surging food prices and the temporary impactof the removal of the fuel subsidy. A
cumulative 725 basis points hike in themonetary policy rate since May 2022 has
had little effect to rein in inflation due
to clogged transmission channels, also
weakened by direct credit allocation by
the central bank, and the continued monetization of the fiscal deficit. By the endof 2023, the rise in inflation and low economic growth will have contributed to anincrease of 2.8 million people in poverty(y-o-y), a 0.4 percentage points bump to37.5 percent of the population.
The federal fiscal deficit was 63 percent
higher between January and May 2023
than in the same period in 2022, due
to increasing interest payments, higher
capital spending ahead of the elections,and the continuous large cost of the fuel

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

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

Percent, Percent of GDP
20

Percent
5

US$/bbl
110

15

90

4

70

3

10

50

2

5

30

1

10

0

-10

-1

-30

-2

0
-5
2014

2016

2018

GDP growth (lhs)
Revenues (lhs)
Oil price (rhs)

2020

2022

2024f

-3
2020

GDP growth (lhs)
Revenues (lhs)
Oil price (rhs)2021

Agriculture
Services

Sources: WDI, NBS, and World Bank.

Sources: NBS and World Bank.

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Oct 23

2022

2023f

Oil Industry
Real GDP growth

2024f

2025f

Non-oil Industry

subsidy. Although non-oil revenues increased, they are still among the lowest
globally as a share of GDP. The fiscal financing need and the devaluation of thenaira are expected to push the public debt
to 45 percent of GDP and keep the debt
service above total revenues in 2023. The
current account balance (CAB) recorded asurplus of 2.2 percent of GDP in Q1 2023,
driven by lower imports and income outflows. However, the small CAB surpluses
and capital flows since 2022 have been insufficient to increase foreign reserves, as
oil export FX flows to CBN contracted,
likely as a result of the direct crude sale-direct fuel purchase arrangements.

Outlook
Future economic growth in Nigeria will
depend on the continued implementationof macro-fiscal and inclusive structuralreforms. Benefiting from the recent reforms, the economy is expected to growat an average of 3.4 percent in 2023-2025,

higher than the past average of 1.4 percent in 2015-2022 and the estimated population growth, driven by services, trade,
construction, and agriculture. Inflation
will further increase to 24.4 percent in
2023 due to the removal of the fuel subsidy but gradually moderate from early2024. The revenues-to-GDP ratio will rebound to 7.6 percent of GDP in 2023 andincrease further to 8.8 percent of GDP
in 2024-2025, thanks to the fuel subsidy
and the FX reforms. Although spending
will increase as the Government rolls out
compensating measures to shield households from the initial impacts of the subsidy reform, the fiscal deficit is projected
to still shrink from 5.0 percent of GDP
in 2022 to about 4.0 percent in 2025.
Debt servicing is expected to drop toabout 68 percent of revenues by 2025.
On the external front, exports and capital
inflows are expected to remain subdued
in the short-term but could rise substantially if further macroeconomic and regulatory reforms are pursued. Consequently, the CAB is expected to remain positive over the projection period. The share

TABLE 2 Nigeria / Macro poverty outlook indicatorsof Nigerians living below the international poverty line is expected to peak in
2024 at 38.8 percent before beginning a
gradual decline, as inflation cools down
and economic growth picks up. Targetedmeasures, including cash transfers, could
mitigate short-term adjustment costs tothe poor and vulnerable and mitigate
their risk of falling into intergenerational
poverty traps.
Several risks could result in weaker than
expected economic performance. Internally, policy reversals and weaker reform
impetus could lower the expected payoffs. A further decline in oil production
or inability to ramp-up non-oil revenues
quickly could also affect the external andfiscal balances. Externally, continued
monetary tightening globally, the war in
Ukraine, unilateral food export bans, andclimate events could undermine economic activity in Nigeria. Regional instability
sparked by the recent coup in Niger
could also weigh on the recovery. Sustaining the reform momentum and unwinding structural constraints to inclusive growth offers a path forward.

(annual percent change unless indicated otherwise)

Real GDP growth, at constant market prices

2020
-1.8

2021
3.6

2022
3.3

2023e
2.9

2024f
3.4

2025f
3.9

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
1.5
1.0
4.3

3.4
2.0
1.8
4.7

3.9
2.5
2.0
5.2

Inflation (consumer price index)

13.2

17.0

18.8

24.4

14.5

10.9

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-3.7
-0.2

-0.7
-0.3

0.2
0.0

0.6
-0.1

0.6
-0.5

0.8
-0.6

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

-5.1
6.5
36.1
-2.8

-6.6
6.7
38.8
-3.9

-5.0
6.9
40.3
-1.8

-5.1
7.6
42.8
-1.2

-4.1
9.0
45.6
-0.4

-4.0
8.6
44.4
-0.6

34.0
67.2

36.3
69.1

37.1
70.0

37.5
70.4

38.8
71.6

38.1
70.8

0.3
36.6

4.8
37.8

4.7
38.8

3.1
39.0

4.2
39.7

4.6
40.4

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 2018-LSS. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
b/ Projections using microsimulation methodology.

MPO

67

Oct 23

RWANDAKey conditions andchallenges

Table 1

2022

Population, million

13.8

GDP, current US$ billion

13.3

GDP per capita, current US$

963.8

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

66.1

Total GHG emissions (mtCO2e)

7.4Life expectancy at birth, years

involve access to public and private finance to increase investment to naturebased solutions and renewable raw material production as well as improve capacity to utilize the financing.

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

Rwanda’s strong growth momentum
continued in early 2023—led by services
and manufacturing. Inflationary pressures started easing but remained elevated, thus monetary policy rate wasraised to 7.5 percent in August. Persistently high food inflation is a threat topoverty reduction, especially in rural areas. Real GDP growth is projected atabout 7 percent in 2023, then to 7.6
percent on average in 2024–2025.

In the decade to 2019, Rwanda’s GDP
per capita increased steadily at a rateof 4.5 percent a year, surpassed only by
Ethiopia among SSA economies. Rwanda has also achieved substantial gains
in poverty reduction, educational attainment, health conditions, and access tobasic services. Nevertheless, the economy confronts significant challenges.
While efforts have been made to establish a regulatory framework, constraints
on competition and the dominant roleof public investment have limited innovation and impaired allocative efficiency. Many households, particularly inrural areas, have received little benefit
from the overall development progress.
Mounting public debt presents serious
challenges to sustainability. Rapid urbanization and depletion of forest andwater resources in recent years led toincreased vulnerability to flood risks,
land degradation, and biodiversity loss.
Overcoming these challenges will require greater reliance on private sector
investment to enhance productivity
growth, raise the income of poor farmers and the supply of off-farm employment in rural and urban areas, and provide financing to address infrastructure
shortfalls in the face of constraints on
government expenditures and increasingclimate change related shocks. Strengthening resilience to climate shocks will

Recent developments
GDP growth is expected to soften to
about 7 percent in 2023, due to weakeragricultural output and recent floods,
despite stronger than expected real GDP
growth of 9.2 percent in the first quarter(Q1). Heavy rainfall in late April andearly May caused loss of life, flooding,landslides, and significant damage to infrastructure and agricultural production.
In Q1, growth was fueled by strong private consumption and improved net exports as well as services and industry.
Despite floods, early economic indicators point to continued growth in thesecond quarter. The industrial production index increased by 6.8 percent compared to 0.1 percent in the same periodof 2022. Similarly, the composite indicator of economic activities rose by 6.8
percent. Merchandise exports rose by
40.3 percent, outpacing a 21.6 percent
increase in imports. As in the first quarter, the momentum in the tourism sector
continued with Rwanda hosting morethan 20 events in the second one. Strong
tourism activity is expected to narrow
the trade deficit in 2023.
The National Bank of Rwanda (NBR) tightened further its monetary stance, raising
the policy rate by 50 bps to 7.5 percent

FIGURE 1 Rwanda / Headline and core inflation and central
bank rate

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

Percent
25

Poverty rate (%)

20

15

10

5

Real private consumption per capita (constant LCU)

100

70000090

6000008050000070

40000060

3000005020000040

10000030

0Dec-21

Apr-22

Inflation (CPI)

Aug-22

Dec-22

Core inflation

Apr-230
2010

Aug-23

2012

2014

2016

2018

International poverty rate
Upper middle-income pov. rate

Central bank rate

Source: World Bank staff estimates.

Source: World Bank. Notes: see Table 2.

MPO

68

Oct 23

2020

2022

2024

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

in August despite the headline inflation
rate falling to 11.9 percent (yoy) in July
2023—well below the 27.7 percent peakin November 2022. To counteract the effect of a sharp depreciation of the franc
against the US dollar—10.6 percent between end-December 2022 and August2023—on inflation, the NBR has doubled
its dollar sales to commercial banks from
US$5 to US$10 million per week. Persistently high food inflation—exceeding 30
percent (yoy) in rural areas since July
2022—will continue burdening poor
households, who spend most of their resources on food.
Fiscal deficits—both primary and overall—are expected to narrow in 2023 on
account of ongoing fiscal consolidation.
Key drivers of fiscal consolidation are
revenue and tax policy reforms andspending rationalization focusing on improved efficiency of government services,limits to subsides, and more efficient capital expenditure. The primary deficit isexpected to decline to 4.9 percent of
GDP. Public debt to GDP is estimated at69.2 percent in 2023.

Outlook
Growth is expected to regain momentum,
growing by 7.6 percent on average in
2024–25. This would be driven by some
improvement in global tourism demand,a pickup in construction with the new
airport, and manufacturing activities supported by Manufacture and Build to Recover Program. While goods exports are
expected to slow, the external current account deficit is projected to improve to19.3 percent of GDP on the back of therecovering tourism sector and services exports. Continued strong FDI inflows andconcessional financing will cover externalfinancing needs. Inflation is expected togradually return within NBR’s target of
5±3 percent in 2024.
The FY24-FY26 budget framework reflects
the Government’s commitment to fiscal
consolidation, which will largely throughstreamlining and gradually reducing subsidies particularly those related to energy
and fuel, and state-owned-enterprises by

TABLE 2 Rwanda / Macro poverty outlook indicators

strengthening their oversight and governance and risk management while safeguarding fiscal space for human capitalspending. On the revenue side, the Government plans to introduce a number oftax policy measures, envisioned in the
MTRS. Despite increases in 2024-25, public
debt is assessed to remain sustainable withmoderate risk of external and overall public debt distress.
This outlook is subject to substantial
downside risks. Geopolitical tensions
could cause global commodity prices torise again, placing renewed pressure on inflation and the current account. Rwanda’s
agricultural sector remains exposed to increasingly frequent weather shocks, which
would reduce agricultural output and leadto food insecurity and higher food prices.
Projected poverty reductions of 3 ppts between 2023 and 2025 (from 43.1 to 40 percent) could be reduced or even reverted
if high food inflation persists. To improveon resilience to climate change, Rwanda
needs to invest in and operationalize nature-based solutions that contribute toadaptation and growth.

(annual percent change unless indicated otherwise)

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

2020
-3.4
-5.0
1.9
-4.5
-9.2
-3.4

2021
10.9
8.8
13.7
16.5
2.9
3.6

2022
8.2
11.9
10.6
-4.2
30.1
16.1

2023e
6.9
5.9
7.5
10.1
11.4
10.9

2024f
7.5
6.2
5.8
5.3
13.2
7.0

2025f
7.8
6.8
4.5
5.7
11.2
5.9

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-3.5
0.9
-4.2
-5.5

10.6
6.4
13.4
11.9

7.8
1.6
5.0
12.2

6.9
0.9
11.0
8.2

7.5
4.7
8.5
8.4

7.8
5.0
8.5
8.7

Inflation (consumer price index)

7.7

0.8

13.9

7.3

5.6

5.0

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-12.1
1.5

-11.3
2.1

-9.8
3.0

-11.5
3.2

-10.1
3.2

-9.4
3.4

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

-12.6
23.9
72.5
-10.9

-8.8
24.6
73.4
-7.0

-7.3
23.8
67.5
-5.5

-7.0
22.8
69.2
-4.9

-6.8
22.3
74.5
-5.1

-5.7
22.8
75.1
-4.2

51.2
77.6
92.1

48.4
75.9
91.6

44.4
73.3
90.8

43.1
72.4
90.5

41.6
71.4
90.2

40.0
70.2
89.8

0.1
16.1

3.1
16.1

2.8
15.8

3.2
15.6

3.8
15.6

3.7
15.8

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 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.

MPO

69

Oct 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

67.6

Total GHG emissions (mtCO2e)

0.4Life expectancy at birth, years

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

São Tomé and Príncipe (STP)´s economy isexpected to stagnate, with GDP growing
only by 0.5 percent in 2023, due to persistent power shortages and high commodities
prices. As a result, extreme poverty is expected to increase. In the medium term, reforms supported by the new IMF program
will help restore macro-stability and unlock
growth potential. Delays in the implementation of energy reforms are the main risks
to the outlook.

Key conditions andchallenges
STP is a fragile and small island state constrained by remoteness, a small private
sector, limited institutional capacity, andscarce human capital. Underdeveloped infrastructure, particularly unreliable andcostly electricity, is a key challenge to
growth and fiscal sustainability. STP ishighly dependent on external concessional
financing and has primarily pursued a“public expenditure-led” growth model.
This model has become unsustainable dueto the decline and volatility of grants. STP
is especially vulnerable to climate change
due to the high risk of drought, coastal erosion, and flooding.
In recent years, economic growth has
slowed significantly due to the lingering
effects of the COVID-19 pandemic, persistent power outages, climate shocks, andhigh commodity prices triggered by theheightened global geopolitical tensions.
Also, delays in external financing disbursements reduced foreign exchange reserves tocritical levels. The new government is committed to implement the needed structuralreforms to restore macroeconomic stability
and promote growth, particularly energy
reforms. The authorities have introduced
new fiscal measures such as the value-addedtax (VAT) and fuel price adjustments. The
government has also requested a new IMF
program to support the reform agenda,
which is also expected to mobilize additional concessional financing.

The main risks result from continued power shortages due to non-implementation of
the energy reforms, higher commodity
prices, lower external financing, slow recovery of the tourism sector. In addition,
adverse climate events could continue toundermine the primary sector, affecting
food production and exports.

Recent developments
Growth is estimated to have decelerated in
the first half of 2023 due to recurrent energy shortage, aggravated by severe fuelshortages, and high commodities prices(food and fuel). Thus, the economy is expected to expand by only 0.5 percent driven by the rebound of the tourism sector,
as monthly tourist arrivals have increased
from 1,339 in January 2022 to 2,172 in January 2023. Tourism recovery is being propelled by the additional flight connections
to STP and the complete removal of pandemic restrictions. In addition, higher
global growth is driving strong demandfor cocoa and palm oil, which lifted total
goods exports by 5.8 percent year-on-year
in June 2023.
The current account deficit (CAD), excluding grants, has narrowed from US$ 20.2
million to US$ 15.6 million year-on-year in
the first quarter of 2023 (H1) due to higher
agricultural and tourism exports growth,which helped to partially offset the higher
costs of imports, particulary food, fuel, andfertilizers. However, the lower-than-expected external financing disbursements
have decreased net international reserves

FIGURE 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)
5

Poverty rate (%)

4

90

3

80

2

70

1

60

0

50

-1

40

Real GDP per capita (constant FDJ)

100

25000
20000
15000
10000

30

-2

20

-3

5000

10

-4
2018

2019
Agriculture
Services

2020

2021

2022f

2023f

2024f

0

2025f

0
2010

Industry
Real GDP growth rate

2012

2014

2016

2018

International poverty rate
Upper middle-income pov. rate

Sources: São Tomé and Príncipe authorities' data and IMF and World Bank staff
estimates.
MPO

Source: World Bank. Notes: see Table 2.

70

Oct 23

2020

2022

2024

Lower middle-income pov. rate
Real GDP pc

from US$ 23.3 million (equivalent to 1.5
months of imports) in April 2022 to US$
12.3 million (0.8 months of imports) in May
2023 after being topped up by a currency
swap between the central bank and Afreximbank in the amount of US$ 30 million.
This transaction also aimed to protect thecurrency peg to the euro.
Fiscal performance has deteriorated due toa decline of 22.3 percent in grants in H1.
But it is expected to improve due to theintroduction of VAT, and resumption of
grants disbursements. Public expenditures
will be contained by a front-loaded fiscal
adjustment under the new IMF program.
As such, the domestic primary deficit (excluding oil and grants) is projected to reduce significantly from 5.7 percent in 2022
to 2.4 percent in 2023. Similarly, public
debt will decrease from 92.3 percent to 89.2
percent of GDP over the same period. Inflation remained high at 25.4 percent inJune 2023, reflecting continued pressure on
prices of imported goods, and the fuelprice adjustments in mid-2023. These dynamics are likely to further increase extreme poverty which is already high with
15.5 percent of the population living on

less than US$2.15 per day (in 2017 PPP
terms) in 2022.

OutlookReal GDP growth is expected to recover
to 2.5 percent in 2024 supported by a dynamic agricultural sector, stronger tourism
rebound and continued implementation of
externally funded infrastructure development projects. The CAD is projected toslightly narrow to 17.9 percent of GDP
boosted by gains from cocoa and palm oil
exports, expansion of tourism services
along with a moderate decline in the import of oil products as the energy sector becomes more efficient.
The country’s fiscal position is expected
to further improve in 2024, thanks to theintroduction of VAT in June 2023. Moreover, the implementation of the plannedenergy reforms as well as the gradual resumption of fiscal consolidation supportedby the IMF program will contribute to adomestic primary surplus of around 0.5
percent of GDP in 2024. These measures

TABLE 2 São Tomé and Príncipe / Macro poverty outlook indicators

are projected to drive a moderate decline
in public debt in the medium term. Whilethe introduction of the VAT is likely to leadto a temporary increase in prices, inflation
is projected to drop to 7.2 percent by theend of 2024, owing to the continued support of the peg by the Central Bank andlower commodity price pressure. However, without appropriate welfare monitoring and targeted social support following
the introduction of the VAT, the share ofpeople living in extreme poverty is expected to slightly increase in 2023 and poverty
reduction could stagnate in 2024, despite
the positive growth prospects.
The outlook is subject to significant
downside risks. Delays in the implementation of overdue energy reforms could
intensify power shortages. Additionalrisks stem from the slower implementation of externally funded infrastructure
projects which could subdue industrial
activity
andundermine
economic
growth. Further delays on the new IMF
program could lead to uncertainty on external financing. Moreover, climate-related events could also strain the agricultural and fisheries sectors.

(annual percent change unless indicated otherwise)

Real GDP growth, at constant market prices

2020
3.1

2021
1.9

2022
0.1

2023e
0.5

2024f
2.5

2025f
3.3

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

0.5
0.5
-0.5
0.7

2.5
2.0
1.5
2.8

3.3
2.8
2.0
3.6

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

9.4
-11.3

9.5
-18.6

25.2
-16.0

15.4
-19.3

7.2
-17.9

5.0
-16.6

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

-4.9
26.0
87.6
-4.5

-6.0
19.7
91.6
-5.8

-6.1
21.8
92.3
-5.6

-4.9
19.4
89.2
-4.6

-2.9
20.9
86.5
-2.5

-1.0
21.4
84.2
-0.7

15.3
44.5
79.1

15.3
44.5
79.2

15.5
44.7
79.5

15.6
44.9
79.8

15.5
44.8
79.7

15.4
44.7
79.5

1.2
37.0

0.9
37.1

0.6
37.1

1.0
37.4

1.6
38.0

1.8
38.7

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/ 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.

MPO

71

Oct 23

SENEGAL

Key conditions andchallenges

Table 1

2022

Population, million

17.3

GDP, current US$ billion

27.7

GDP per capita, current US$

1598.7

International poverty rate ($2.15)

a

9.2
a

37.6

a

74.4

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

a

38.3

School enrollment, primary (% gross)

b

81.2

b

67.1

Total GHG emissions (mtCO2e)36.6Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ Most recent WDI value (2021).

Growth is projected to slow to 4.1 percent
in 2023, reflecting the impact of domesticsocial unrest, while the fiscal deficit
should narrow to 4.9 percent of GDP, following a commitment to fiscal consolidation. Growth should rebound to 8.8 percent in 2024 driven by hydrocarbon production. Risks are titled to the downside,
including persistent inflation, a delay ofhydrocarbon production, failure to eliminate energy subsidies and domestic andregional instability.

The implementation of the Emerging
Senegal Plan has resulted in economic
growth averaging 6 percent between 2014
and 2019, thanks to the dynamism of
the agriculture and services sectors coupled with public and private investment
in infrastructure. This has contrasted withpersistent structural weakness, including
productivity stagnation, limited humancapital, slow poverty reduction, and increasing informality. Recent external
shocks and inflation due to spillovers
from Russia’s invasion of Ukraine andpolitical tensions linked to the 2024 Presidential elections have led to an upsurge
in social unrest, leading to the periodic
closure of businesses that disproportionately affects the service sector, deterring
domestic and foreign investment. The situation is further exacerbated by growing
regional instability, with multiple coups
in neighboring countries, creating a moreunpredictable outlook that threatens toundermine efforts to reduce poverty.
Persistent inflationary pressures have reduced households purchasing power,
particularly for the most vulnerable,
which have less flexibility to access alternative sources of income while tightening financial market conditions continue
to drive up the cost of debt service andinvestment. Regressive energy subsidies
remain significant, to the detriment of social and investment spending. The June

2023 Debt Sustainability Analysis assessed
Senegal at moderate risk of debt distresswith limited fiscal space to absorb shocks.
Interest payments have risen rapidly in recent years, totaling 8.4 percent of public
spending in 2022. Putting debt on a downward trajectory would require improved
governance and enhanced public expenditures efficiency, creating space for moretargeted social spending.

Recent developments
Senegal’s GDP is expected at 4.1 percent
in 2023 (1.4 percent per capita), with adownward revision from the previous
MPO forecast of 4.7 percent growth reflecting the impact of social unrest in advance of elections in 2024, combined withhigher inflation and monetary tightening.
Social unrest has disrupted key sectors,
reducing consumer spending and investment. The ICT and financial sectors arealso set to contract, and foreign investment could decline, hampering growthprospects. Growth in the agriculture sector should be bolstered by a good rainyseason and an increase in budgeted support services to FCFA 100 billion.
Using the international low middle income poverty line of $3.65 per person aday, poverty is expected to slightly decline to 37.1 percent in 2023 from 37.7
percent in 2022. The moderation in the
downward trend is due to inflation remaining high (projected to average 5 percent at end-2023) while growth is expected to rebound in per capita terms in

FIGURE 1 Senegal / Evolution of main macroeconomic
indicators

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

Percent
10

Poverty rate (%)

Percentage
0Real GDP per capita (constant LCU)

100

81100000

90
-5

6
4

-10

2
0

70

90000060

800000

50

-15

-2

1000000

80

-20

-4

40

70000030

600000

20

-6

-25
2015

2017

2019

2021

2023p

500000

10

2025p

0

GDP growth (lhs)
Primary fiscal balance (lhs)
Current account balance (rhs)400000
2011

2013

2015

2017

2019

International poverty rate
Upper middle-income pov. rate

Source: World Bank.

Source: World Bank. Notes: see Table 2.

MPO

72

Oct 23

2021

2023

2025

Lower middle-income pov. rate
Real GDP pc

the agricultural sector, which employs 28
percent of the workforce, 51 percent ofrural workers, and 48 percent of workers
in poverty. Poverty could decline faster
if the coverage and amount of social assistance payments increases, notably fromsavings due to the elimination of costly,
regressive energy subsidies.
To counter inflation across WAEMU
countries, the Central Bank of West
African States raised policy interest rates
by a cumulative 125 basis points since
the start of 2022 to 3.25 percent for liquidity calls and 5.25 percent for the marginal lending facility. However, the monetary policy stance remains broadly accommodative, inflation is still above target, and foreign exchange reserves havebeen on a downward trend.
The fiscal balance is projected to narrow
to 4.9 percent of GDP in 2023. While theauthorities are committed to fiscal consolidation, expected tax policy reforms and thephasing out of costly, regressive energy

subsidies look slower than anticipated, resulting in less financial resources channeled towards government social and investment priorities. The current accountdeficit (CAD) is projected to narrow to 13.3
percent in 2023, with the resumption of
trade with Mali and the gradual decline ininvestment in the hydrocarbon sector.

Outlook
Growth is expected to increase to 8.8 percent in 2024 and 9.3 percent in 2025, driven
by hydrocarbon production and public
and private investments. Inflation is expected to gradually decline to 2 percent by
2025, relieving pressure on financing rates
and enabling poverty reduction. The fiscal
deficit is expected to meet the regional convergence criteria of 3 percent of GDP by
2025, thanks to fiscal consolidation efforts.
As a result, public debt is set to decline to

TABLE 2 Senegal / Macro poverty outlook indicators

69.1 percent by 2025 from 75.0 percent in
2022. The CAD is projected to narrow overthe medium term to 4.2 in 2025, supported
by hydrocarbon exports.
The combination of rising growth, accelerated by the production of hydrocarbons, good agricultural performance, anda decline in inflation to the 3 percent
regional target should lead to a significant decline in poverty in 2024, with
the incidence reaching 33.1 percent in
2025. However, sustaining more inclusive
growth requires greater investment in
human capital and adaptive social protection systems to help the vulnerable copewith shocks, along with a phasing outof regressive energy subsidies and moresustained domestic revenue mobilization
efforts. Other risks to the outlook include
a further delay in hydrocarbon production, poor agriculture performance due toclimate variability, high regional interest
rates persistent inflation, and continued
social instability.

(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

2022
4.2
2.9
6.4
7.2
8.1
23.8

2023e
4.1
2.0
6.2
8.1
8.3
5.7

2024f
8.8
6.0
6.1
10.7
15.1
6.9

2025f
9.3
6.4
5.5
11.5
18.2
8.9

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
-1.4
1.1
6.7

4.1
5.2
3.2
4.1

8.8
5.5
16.9
6.3

9.3
5.6
22.3
4.4

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

2.5
-10.9

2.2
-12.1

9.6
-19.9

5.0
-13.3

3.0
-6.1

2.0
-4.2

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

-6.4
20.1

-6.3
19.5

-6.1
20.5

-4.9
21.5

-3.9
22.0

-3.0
22.3

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

69.1
-4.3

73.3
-4.3

75.0
-3.9

75.9
-2.4

71.9
-1.5

69.1
-0.8

8.8
37.6
75.4

8.2
36.4
73.9

9.1
37.7
74.8

8.7
37.1
74.5

7.7
35.4
72.7

6.5
33.1
70.4

0.9
25.5

5.2
27.0

2.6
28.0

2.5
28.9

5.1
30.5

5.0
32.3

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/ Projections using microsimulation methodology.

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73

Oct 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

73.4

Total GHG emissions (mtCO2e)0.9Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ Most recent WDI value (2021).

GDP growth is expected to slow toaround 4 percent in the medium-term,
given reduced tourism receipts; and moderate global prices are expected to ease inflation. Slower growth is projected tomarginally reduce poverty to 5.6 percentof the population in 2023. The government’s effort to maintain fiscal sustainability while increasing resilience in thefisheries and tourism sectors is expected
to keep the economy on a stronger footingin the medium term.

A rebound in tourism, coupled with prudent fiscal management, has supported the
Seychelles’ quick economic recovery fromthe COVID-19 pandemic. The tourism recovery and inflows of foreign exchange
contributed to strengthen the Seychelles’
currency, offsetting imported food and fuel inflation, and helping contain annual inflation in 2023. The rollback of COVID-19
supports measures, including a reduced
wage bill and the scaling back of social
programs, reduced spending and helped
contain inflation.
However, the Seychelles remains vulnerable to external shocks. A global slowdown
or a sudden drop in tourist arrivals could
have severe negative impacts on growth.
The decline of tourism-led foreign exchange inflows could spill over into a
sharp weakening of the Seychelles rupee,with a high pass-through to inflation.
Weaker prospects for external grants may
limit financing options and weaken thebalance of payments. Moreover, financial
stability risks may arise from further increases in non-performing loans due tolarge exposures and credit concentration.
Sustaining high growth and macroeconomic stability requires increased efforts
to address the country’s high vulnerability to climate shocks. More than 4 percent of Seychelles’ budget goes towards
climate resilience measures, including
strategic investments to address coastal

flooding, erosion, and ecosystem degradation. Also, an environment levy on visitors was approved in the 2023 Budget.
Seychelles aims to strengthen its climate
resilience using mostly concessional financing, complemented by private sector
efforts, given the country’s clear climatechange strategies and commitments anda public-private partnership law that canfacilitate investment in green energy andeco-friendly transport.
Wage income has played a crucial role in
reducing poverty levels, as more households participate in the labor market. Unfortunately, the rapidly growing rate of
drug and alcohol addiction is becoming achallenge to labor market participation.
This is increasing the country’s reliance on
migrant workers to sustain its growing
tourism industry.

Recent developments
Real GDP is expected to grow by 4.3
percent in 2023, compared to 9 percent
in 2022, owing to slower tourism
growth. As of July 2023, tourist arrivals
were 201,028, or about 93 percent of2019 levels. The inflation rate contracted
by 2 percent in July 2023, owing to continued currency appreciation, helped bydeclining global food and fuel prices.
The Seychelles rupee appreciated to
SRs13.5 per US dollar in 2023 from
SRs14.3 per US dollar in 2022, owing to
the robust performance of the tourism
industry, which has resulted in sustained foreign exchange inflows.

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

Poverty rate (%)

10

20

8

18

6

16

30000025000014

4200000

12

2

10

0

1500008-21000006Agriculture
Industry
Services
Gross value added at basic prices

-4
-6

4

50000

2
0

-8
-10

Real GDP per capita (constant LCU)

0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

2018

2019

2020

2021

2022

2023e

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.

MPO

74

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

The current account deficit is estimated toincrease from 7.6 percent in 2022 to 9.5 percent of GDP in 2023, as tourism inflows
moderate and imports rise, reflecting a rebound in capital investments. Foreign exchange reserves stood at US$728 million(3.1 months of imports) as of July 2023,
due to higher foreign exchange demand
for goods and services imports. The fiscal
deficit increased from 1.6 percent of GDP
in 2022 to 3 percent in 2023, reflecting an
increase in capital expenditure due tosome new projects financed by grants (adrug rehabilitation center, and a new hospital on La Digue island). Revenues remain buoyant, supported by efforts to improve tax administration and compliancethrough the Tax Amnesty Programme.
Lower spending on wages and social programs, coupled with delayed capitalspending helped reduce financing needs in
2022, contributing to lower public debt to68.3 percent of GDP in 2023 from 69.9 percent of GDP in 2022.
Slower economic growth is also reflected in
employment numbers. In 2023Q1, total employment increased by 3.7 percent while average earnings increased by 0.4 percent

compared to 2022Q1, leading to a slightdecrease in poverty levels, from 5.9 percent
in 2022 to 5.6 percent in 2023.

Outlook
The outlook remains positive; however, a
slowdown in GDP growth of 4 percent is
expected in 2023-24, reflecting weak
tourism earnings. The outlook for tourism
earnings is subject to downside risks basedon global developments that could lead toboth lower arrivals and reduced spendingby tourists. Growth will be supported byefforts to increase climate resilience in fisheries management while investing in new
fish-processing units, and hotels (as well as
renovation of existing establishments).
The ICT sector is expected to remain strong,in line with rapid increases in data traffic. A
steady recovery is also expected in transportation and storage activities. Average inflation is projected to average 1.7 percent in
the medium term, reflecting a moderation in
global energy and food prices and recovering private consumption. The Seychelles

TABLE 2 Seychelles / Macro poverty outlook indicators

rupee is expected to remain strong at
SRs13.3 per US dollar by end-2024, supported by modest flows of foreign exchange into the tourism sector. The current
account deficit is projected to average 10.4
percent of GDP in the medium term, due
to lower tourism inflows and a decline inforeign direct investment inflows to hotels
and resorts. The deficit will be financed byconcessional loans and domestic borrowing. Foreign exchange reserves are projected to reach 3.6 months of imports by theend of 2024.
Continued fiscal consolidation is expected
to put the country in a stronger fiscal position and improved investor confidence.
A planned increase in the wage bill of 0.6
percent of GDP would be partially financed by cuts in allowances. The government will continue its targeted program ofsocial support and temporary cash transfers to protect the most vulnerable and empower Seychellois to get well-paying jobs.
Ongoing reforms to the social protection
system will ensure its sustainability andpromote increased labor force participation of working-age beneficiaries. This
would contribute to reducing poverty.

(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
-7.7
-5.1
17.0
-11.4
-25.2
-15.5

2021
5.4
4.2
7.3
3.3
9.2
7.7

2022
9.0
6.6
2.6
2.8
9.2
3.1

2023e
4.3
6.5
1.2
1.9
2.6
2.0

2024f
4.1
6.0
1.4
1.3
2.2
1.4

2025f
3.9
3.5
1.4
0.9
3.4
1.2

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-8.4
-12.5
0.6
-10.0

5.3
3.1
2.5
6.0

8.9
3.5
3.7
10.3

4.3
3.1
3.3
4.5

4.1
2.9
3.1
4.3

3.9
2.7
3.0
4.1

Inflation (consumer price index)

1.2

9.8

2.6

0.9

1.4

2.0

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-14.0
11.4

-11.0
12.4

-7.6
14.2

-9.5
12.6

-10.1
13.2

-10.8
17.5

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

-18.2
35.2
91.9
-15.2

-6.4
36.1
81.3
-3.2

-1.6
33.7
69.9
0.7

-3.0
35.8
68.3
-0.4

-2.4
36.3
66.8
0.2

-1.4
35.9
64.7
1.0

0.6
1.4
7.3

0.5
1.2
6.8

0.5
1.0
5.9

0.4
1.0
5.6

0.4
1.0
5.6

0.4
0.9
5.2

-17.3
76.0

16.8
79.0

17.4
81.7

3.2
81.9

2.5
82.0

3.6
82.2

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-HBS. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
b/ Projection using neutral distribution (2018) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU.

MPO

75

Oct 23

SIERRA LEONE
Table 1

2022

Population, million

8.6

GDP, current US$ billion

3.9

GDP per capita, current US$

457.4

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

60.1

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/ Most recent WDI value (2021).

The economy has been set back by a
combination of exogenous shocks andpolicy slippages. Loose monetary and fiscal policies have aggravated the impact
of exogenous shocks, resulting in soaring inflation, exchange rate pressures,
and a rapid debt buildup. Record inflation has precipitated a cost-of-living crisis and intensified food insecurity. Looking ahead, a sustained growth momentum and a credible commitment to fiscal
discipline will be crucial for restoring
macroeconomic and social stability.

Key conditions andchallenges
Economicdevelopmenthasbeenconstrainedby concurrent shocks and periods of weakeconomic management. Growth has beenslower and more volatile during the past
decade than before. Economic activities haveremained concentrated in low-value-added
agriculture, mining, and informal services,reflecting policy and institutional weaknesses in creating an enabling business environmentandtheprevalenceofweakaccountability and vulnerability to exogenous shocks.
TheCOVID-19pandemicandspilloversfrom
the Russian invasion of Ukraine have exacerbated economic deterioration, with GDP
growthslowingduring2020-2022tolessthan
1/3rdofpre-pandemicaverage(2017-2019).
Macroeconomic management remains challenging. Fiscal and debt pressures have significantly intensified, while inflation hassoared, driven by global supply shocks,
and exchange rate depreciation. A rise incost of living combined with weak growth
threatens to increase poverty. Higher
prices have squeezed household budgets,and poverty, food insecurity have worsened (affecting 57 percent of the population), affecting social and political stability.

Recent developments
Economic growth surprised on the upsidein 2022 due to strong mining production

and fiscal overspend. GDP growth wasestimated at 3.6 percent in 2022, only
marginally lower than the post-pandemic rebound in 2021 (4.1 percent). Thishigher-than-expected growth was driven
by robust agriculture, gains in iron-ore
mining, and government spending, although the latter invoked higher inflation and fiscal deterioration. Preliminary 2023 data indicates that the growth
momentum may have stalled as persistent inflationary pressures have erodedhousehold consumption.
Inflationary pressures have persisted
amidst a combination of global shocks,
and policy slippages. Headline inflation
averaged 27 percent while the Leone
depreciated by over 40 percent during2022 on the back of higher import prices
and monetization of the fiscal deficit.
These pressures have persisted in 2023,
with inflation rising to a 26-year highof 44.9 percent (y-o-y) in July (the third
highest in Sub-Saharan Africa) and theLeone depreciating further by 15 percent year-to-date. Food inflation rose to
60 percent y-o-y in July 2023. The Bankof Sierra Leone has raised rates since
the start of 2022 by 500bps to 19.25 percent, but monetary policy effectivenesswas limited by shallow financial markets and fiscal dominance.
The fiscal position has worsened andrisks to debt sustainability have intensified. The fiscal deficit widened to 9.6
percent of GDP in 2022 – 2pp higher than in 2021 – driven largely byhigher-than-budgeted expenditures at
28.9 percent of GDP (7.7pp above target). Revenues came in slightly lower

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

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

Percent, percentage points
40

Poverty rate (%)

30

90

20

80

Real GDP per capita (constant million LCU)

100

2.0

1.5

70

10

60

0

50

-10

40

-20

30

-30

20

-40

10
2015
2017
Gov. cons.
Inventories
Statistical disc.

2019
2021
Exports
Private cons.
GDP

1.0

0.5

0

2023
2025
GFCF
Imports

0.0
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.

MPO

76

Oct 23

2019

2021

2023

2025

Lower middle-income pov. rate
Real GDP pc

than expected (1.1pp below target). The
excess deficit was financed domestically, aided by BSL interventions in thesecondary market. By end-2022, public
debt rose to 96 percent of GDP (from85 percent in 2021) and risks to debt
sustainability had considerably intensified. External debt, mainly owed to multilaterals, constituted 2/3rd of the total; while the remaining is high-interest, short-term domestic debt. In early
2023, the government began tightening
its policy stance to restore macro stability – this included expenditure restraint and the enactment of a revised
Finance Act to improve revenue collections. These efforts facilitated the completion of a delayed IMF-ECF program
review by its Board in June 2023.
The trade balance has improved marginally
due to stronger exports. Exports grew by 50
percent during 2022 – and further by 19 percent y-o-y during thefirst halfof 2023–largelyduetoiron-ore.Thecurrentaccountdeficit
narrowed slightly to 8.5 percent of GDP in
2022, despite higher imports prices. However, gross reserves declined to 4 months of imports in 2022 (from 6 in 2021) and further to 3
months by August 2023 as capital inflows

were insufficient, and as the BSL intervened to contain currency depreciation.
Although international poverty (US$2.15/
person/day 2017 PPP) rates have declined
since 2020, it remains higher than the prepandemic levels. The international poverty
is projected at 25 percent in 2023, nearly
the same level as 2019, due largely to the
cumulative effects of economic contraction
in 2020, followed by rising inflation, particularly food inflation which disproportionately affects the poor.

Outlook
Growth is projected to decelerate to 3.1
percent in 2023 against a backdrop ofhigh inflation and fiscal consolidation,
before converging to its long-term average of 4-4.5 percent in the medium-term.
The projected recovery will be supported
by mining and agricultural growth, andthe gradual restoration of macro stability
with a more supportive fiscal stance. Inflation will be influenced by global commodity prices and is expected to moderate only to 14.3 percent by 2025.

TABLE 2 Sierra Leone / Macro poverty outlook indicators

Maintaining fiscal discipline will be crucial in restoring macroeconomic stability
and is contingent on the government’s
adherence to its stated reforms, including(i) sharp expenditure consolidation, followed by continued revenue mobilization
efforts, and (ii) gradual reduction in net
credit to government.
Poverty is expected to decrease graduallyas households regain their purchasing
power, to 23.9 percent in 2025 (US$2.15/
person/day). The economy’s outlook istied to a limited number of exports,
mostly minerals. However, the mining
sector is capital intensive and has a limited impact on poverty reduction which
requires higher agricultural productivity,
infrastructure development, and humancapital investments.
This outlook is subject to several downside
risks. Recent fiscal slippages have raised
concerns about budget credibility andmacro stability. Risks to debt sustainability
will remain elevated until fiscal balances
improve further, and the reliance on expensive domestic borrowings is addressed.
Severe climate vulnerabilities and inflation
could increase food insecurity and social
tensions and affect reform appetite.

(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
-30.0
1.9
46.6

2022
3.5
-1.5
13.7
-3.3
5.0
-0.3

2023e
3.1
6.2
5.5
2.2
15.0
11.9

2024f
3.7
6.0
5.2
8.6
18.0
12.0

2025f
4.3
5.8
7.4
5.2
12.0
9.9

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

3.6
3.0
8.2
3.3

3.1
2.7
5.0
3.2

3.7
3.2
6.0
3.7

4.3
3.3
6.6
5.0

Inflation (consumer price index)

13.5

11.9

27.0

35.0

19.8

14.3

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-6.8
3.3

-8.7
8.5

-8.5
8.5

-7.2
6.4

-6.6
5.6

-5.9
4.1

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

-6.7
19.0
78.0
-3.7

-7.6
21.1
84.7
-4.2

-9.6
19.6
96.3
-6.2

-5.9
19.9
88.0
-1.4

-3.8
22.4
79.0
1.7

-4.3
22.6
77.3
1.7

26.4
64.6
90.1

25.9
64.2
89.9

25.4
63.7
89.7

25.0
63.4
89.6

24.5
62.9
89.3

23.9
62.4
89.1

-1.4
9.1

0.8
9.1

3.2
8.7

2.4
8.4

2.9
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.

MPO

77

Oct 23

SOMALIA

Key conditions andchallenges

Table 1

2022

Population, million

a

15.6

GDP, current US$ billion

b

10.4

GDP per capita, current US$
Gini index

667.3

c

35.2

School enrollment, primary (% net)

c

25.0

d

55.3

Total GHG emissions (mtCO2e)42.4

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Estimates based on 2013 population estimates by UNFPA and assume an average annual population growth of
2.8%.
b/ Somalia released new GDP series (2017-22) in June
2023, rebasing the old series.
c/ Somalia Integrated Household Budget Survey 2022
(SNBS, 2023).
d/ Most recent WDI value (2021).

The economy is expected to record amodest recovery due to improved agriculture conditions and easing inflation.
Real GDP growth is projected at 3.1
percent in 2023, picking up after a prolonged severe drought and high commodity prices. Better rains are boosting
agriculture production and private consumption. Food inflation slowed to 3.6
percent in January-July 2023 from adouble-digit rate a year ago. Nevertheless, poverty remains high and widespread, estimated at 73 percent in 2023.

Somalia continues to contend with increasingly frequent shocks in the context ofwidespread fragility, conflict, and violence. Recurrent climate-related shocks
such as cycles of droughts, floods, locusts’infestation, higher international commodity prices, as well as increased insecurity
and conflict have interrupted the country’s
growth trajectory and slowed the transition from fragility. Real GDP growth averaged only 2 percent per year in 2018–22,
while real GDP per capita growth averaged -0.8 percent per year. Repeatedshocks have eroded households’ asset baseand purchasing power, increasing the riskof more people falling into poverty. Labor
force participation rates are exceptionally
low with large gender gaps. Only onethird of men and 12 percent of women participate in the labor market. Accelerating
the momentum in building institutions
and developing resilience is fundamental
for growth, poverty reduction, and transition from fragility.
Somalia is anticipated to reach the Completion Point of the Heavily Indebted
Poor Countries (HIPC) initiative by theend of 2023. Somalia will then receive
full and irrevocable debt relief. To avoid
falling back into debt distress once thecountry is again able to borrow to financedevelopment needs, the government willneed to rely solely on concessional finance and carefully manage public debt.

Currently, the government has limited
fiscal space to respond to shocks anddevelopment priorities, including taking
over the provision of security services
as the withdrawal of the African Union
Peacekeeping Mission (ATMIS) continues
through 2024. The country therefore
needs to continue strengthening its
macroeconomic stability, raise domestic
revenues, prioritize public expendituresto promote economic growth and poverty reduction, and ensure that debt levels
remain sustainable.

Recent developments
The economy is expected to record GDP
growth of 3.1 percent (see Table 2) as thecountry emerges from the severe 2020/23
drought. The April–June Gu rainfall season is boosting agricultural production,
reducing food insecurity, and supporting
private consumption, the main driver ofgrowth. Sustained growth in remittancesand private sector credit contributed tostrengthening of construction, real estate,
and investment. Though improving, net
exports continue to be a drag on growth
because the economy remains heavily import-dependent. Moreover, livestock production, the main source of export earnings, will remain constrained as it willtake longer for pastoralists to rebuild
their herds, especially in the worst
drought-affected areas. The trade deficit,
estimated at 58 percent of GDP in 2023,
will continue to be financed by official
grants and remittances.

FIGURE 1 Somalia / Federal government of Somalia tax
revenue and compensation of employees

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

US$ Millions

Poverty rate (%)

300

100

380

90

375

80

370

250

Real GDP per capita (constant LCU)

70

200

365

60

360

50

150

355

40
100

350

30

50

20

345

10

340

0

0
2017

2018

Tax revenue

2019

2020

2021

335
2017

2022

2019

2021

International poverty rate
Real GDP pc

Compensation of employees

Sources: Somalia Authorities and World Bank estimates.

Source: World Bank. Notes: see Table 2.

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Oct 232023

2025

Lower middle-income pov. rate

Price growth moderated in 2023, following high spikes in 2022. Overall inflation
has eased to 6 percent in July 2023 (y-oy) compared to 6.7 percent in July 2022,
driven by declining food prices. The onset of a favorable 2023 Gu harvest season
has resulted in continued easing of local
staple food prices. Food inflation averaged 3.6 percent in the first seven monthsof 2023, compared to 13.9 percent during
the same period in 2022. Similarly, global
fuel and wheat prices have declined fromtheir peaks in 2022. They declined by 27
percent and 20 percent in February - July
2023 respectively, compared to the same
period in 2022.
The fiscal situation remains challenging.
While domestic revenue mobilization has
improved over time, it remains low. In
the first half of 2023, overall domestic
revenue collection reached 1.2 percent ofGDP, compared to 1.1 percent a year
ago. The Federal Government of Somalia(FGS) is constrained to finance its wage
bill and transfers to Federal Member
States (FMS). In 2022, domestic revenue
provided for only 77 percent of spendingon FGS wage bill and intergovernmental
transfers, the rest was covered by external

grants. To improve fiscal sustainability
and maintain prudent fiscal policy, thegovernment will need to fast-track thenumerous efforts underway to increase
domestic revenue as well as constrain
its wage bill and its reliance on external
donor funds.
Poverty remains high. Projections basedon GDP per capita growth suggest poverty has increased from 71 percent in 2017
to 73.7 in 2022, based on the 2017 poverty
line. According to the 2022 Integrated
Household Budget Survey, poverty rates
are larger among the nomadic population, however, due to the country’s highurbanization, the majority of the poor are
in urban areas. While the international
community has provided support in theform of food assistance, an expansion ofsocial safety net programs, and support
to informal settlers in urban areas, people remain vulnerable to falling below
the poverty line. In a context of increasing global shocks, there are competing
demands for limited ODA, underscoring
the importance of Somalia strengthening
resilience through advancing reforms to
support growth, food security, and theprovision of basic services.

TABLE 2 Somalia / Macro poverty outlook indicators

OutlookMedium-term recovery is projected to bemodest as risks remain significant. RealGDP growth is projected to expand to 3.5
percent in 2024 and 3.8 percent in 2025,
slightly outpacing the estimated population
growth of 2.8 percent. Economic reforms
and post-HIPC investor confidence should
attract FDI and encourage increased broadbased private sector activity, which will
gradually boost the low domestic productive capacity. The growth projections are also anchored on a gradual recovery of the
agriculture sector and continued easing of
the global commodity prices. Nonetheless,the outlook is subject to significant risks including climatic shocks, security threats,
and global economic shocks.
The poverty rate is projected to remain ataround 73 percent between 2023 and 2025.
Accelerating the pace of poverty reduction
will require policy interventions and public
investments that raise productivity,
strengthen resilience, create jobs, and expand pro-poor programs that focus on
women and youth.

(percent of GDP unless indicated otherwise)

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

2020
-2.6
4.3

2021
3.3
4.6

2022e
2.4
6.8

2023f
3.1
4.2

2024f
3.5
3.8

2025f
3.8
3.6

Current Account Balance
Trade balancePrivate remittances
Official grants

-11.1
-50.4
17.4
22.8

-9.7
-50.9
21.5
20.7

-15.2
-61.2
20.6
25.9

-12.8
-58.5
21.6
24.6

-11.3
-56.5
22.2
23.3

-11.8
-57.8
23.1
23.2

0.3
2.3
3.2
5.2
2.5
42.5

-0.8
2.3
1.5
4.7
2.5
35.6

-0.1
2.5
4.4
7.0
2.5
31.3

-0.2
2.5
3.6
6.3
2.5
4.9

-1.2
2.7
2.6
6.5
2.4
6.1

-1.4
3.0
2.0
6.4
2.4
7.2

73.1
91.4

73.3
91.4

73.7
91.6

73.4
91.5

73.2
91.4

72.9
91.2

-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)
GHG emissions growth (mtCO2e)
Energy related GHG emissions (percent of total)aSources: Federal Government of Somalia, IMF, and World Bank staff estimates. Emissions data sourced from CAIT and OECD.
Notes: e = estimate; f = forecast.
a/ GDP baseline estimates 2020-22 are by Somalia National Bureau of Statistics (SNBS, June 2023).
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:
2020–22. Forecasts are from 2023–25.
d/ Projection using neutral distribution (2017) with pass-through = 1 (High) based on GDP per capita in constant LCU.

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79

Oct 23

SOUTH AFRICA
Table 1

2022

Population, million

South Africa is stuck in a trajectory of low
growth, high unemployment, high poverty,
and high inequality, driven by a lack ofstructural reforms and inefficient investment in and management of public infrastructure. In the past two years, rolling
scheduled power cuts (loadshedding) intensified exponentially, and to date in 2023,
they already exceed the level reached in
2022. The overall cost of loadshedding is estimated at between 6 percent and 15 percent
of GDP. Growing maintenance problems
and infrastructure theft have also taken a tollon port and rail performance, affecting
transport corridors and creating bottlenecks
for trade. This weak growth is insufficient togenerate jobs to reduce unemployment,poverty, and inequality, which remains
among the highest in the world.
Macroeconomic policies are relatively
sound. Fiscal policy has been prudent despite spending pressures, and monetary
policy has tightened in response to rising
inflation. The fiscal deficit declined from
9.9 percent of GDP in FY2020/21 to 4.2 percent of GDP in FY2022/23. The central bankgradually increased the policy rate from
3.5 percent in October 2021 to 8.25 percent
in May 2023.
South Africa needs to grow faster to escapethe middle-income trap; reduce unemployment, poverty, and inequality; and preservelong-term fiscal sustainability. Confronted
with the emergency of the energy crisis, the59.9

GDP, current US$ billion

405.3

GDP per capita, current US$

6766.5International 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

Key conditions andchallenges

a

63.0

School enrollment, primary (% gross)

b

97.4

b

62.3

Total GHG emissions (mtCO2e)

586.4

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 (2020); Life expectancy(2021).

South Africa’s economy is slowing
sharply, hampered by the acute energy
crisis, transport bottlenecks, and otherstructural constraints. Real GDP growthis projected at 0.5 percent in 2023 andaround 1.5 percent over the medium
term. Inflation is declining thanks to lower commodity prices and monetary policy
tightening. Job creation is anticipated toremain weak, constraining poverty reduction. Fiscal policy remains prudent but
spending pressures are elevated, especially ahead of general elections next year.

government has begun to act, but reforms
need to be bolder and implemented faster.
Raising productivity will require investingin public infrastructure and human capital,
promoting innovation, and strengthening
institutions to restore private sector confidence. Given the limited fiscal space, improving the efficiency of public spending is
also critical.

Recent developments
GDP growth declined to 1.9 percent in
2022 from 4.7 percent in 2021, and to 0.9
percent in 2023H1. On the spending side,household consumption continued to be
the main growth driver, but its support
is fading. It increased by 0.7 percent annually over the first half of 2023 against
2.5 percent in 2022. On the productionside, services sectors have been the main
drivers of growth over 2023H1. Mining
and manufacturing have been particularly affected by loadshedding. The unemployment rate remains extremely high at
32.6 percent in June 2023 (42.1 percent
when including discouraged job seekers).
The labor absorption rate is low due tothe weak economy. Based on the uppermiddle-income poverty line, the poverty
rate was estimated at 62.6 percent in 2022,with about 1.5 million more people living
in poverty compared to 2019. Inflation isdecreasing but remains above the central
bank’s 3-6 percent target range, averaging
6.6 percent in 2023H1. High fuel and foodinflation has hit low-income households
the hardest.

FIGURE 1 South Africa / Public debt dynamics areunfavorable

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

Percent
20

Poverty rate (%)
Projections

15

10

5

0

Real GDP per capita (constant LCU)

70

82000

60

80000

50

78000

40

76000

30

74000

20

72000

10

70000

0

-5
2000

2005

2010

Implicit average interest rate

2015

2020

68000
2008 2010 2012 2014 2016 2018 2020 2022 2024

2025International poverty rate
Upper middle-income pov. rate

Nominal GDP growth

Sources: National Treasury, IMF WEO, and World Bank.

Source: World Bank. Notes: see Table 2.

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80

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

The global environment has become lesssupportive and domestic factors have also
contributed to the weakening of South
Africa’s external sector. Global risk aversion
hasresultedinranddepreciationandportfolio outflows, reinforced by the greylisting of
the country by the Financial Action Task
Force in February 2023. South Africa’s termsof trade deteriorated by 15.3 percent between 2021Q2 (historical high) and 2023Q2.
This, combined with domestic floods andstrikes at the ports, led to a continued reduction in the trade surplus and a return to current account deficits of 0.5 percent of GDP in
2022 and 1.6 percent of GDP in 2023H1, financed by net financial inflows. International reserves increased by nearly $1 billion
over 2023H1, to US$61.6 billion at the end ofJune. On the fiscal side, tax collection over
April-July 2023 has been significantly weakerthanovertheprevioustwoyears.

OutlookGDP growth is projected at 0.5 percent
in 2023 and is expected to stabilize ataround 1.5 percent over the medium
term as reforms in the energy sector
are anticipated to support a reduction
in loadshedding and a pick-up in activity. However, the slow pace of otherstructural reforms will continue tolimit South Africa’s growth potential.
Inflation is projected to decrease progressively, from 6 percent in 2023 to
4.5 percent by 2025. The unemployment rate is projected to remain above
32 percent throughout the projection
period and the poverty rate to decline
only slightly to 62.5 percent by 2025.
Lower commodity prices and transport bottlenecks are expected to continue to constrain the external sector,
leading to persistent current accountdeficits slightly above 2 percent of
GDP over the medium-term. These
deficits are expected to be financed
by net financial inflows.
The government is expected to continue restraining expenditure growth
to reduce fiscal deficits, whose trajectory will be impacted by the debtrelief arrangement with Eskom andlower revenue because of weaker

TABLE 2 South Africa / Macro poverty outlook indicators

commodity prices. The deficit is projected to reach 5.9 percent of GDP
in FY2023/24 and to improve to 4.5
percent of GDP in FY2026/27, after
the end of the Eskom deal. The
public debt-to-GDP ratio is projected
to increase, reaching 72.3 percent in
FY2023/24 and 76.3 percent in
FY2025/26.
Risks are significant. Externally, South
Africa is exposed to portfolio flows reversals and increases in global interest rates.
Higher energy prices could affect domestic
inflation, complicating monetary policy ina context of weak domestic demand. The
country is also vulnerable to climate
shocks. Domestically, South Africa is vulnerable to a slowdown in structural reforms ahead of next year’s elections. Fiscal
risks are high, with spending pressures on
public sector wages, social and stateowned enterprise transfers, and risingdebt-service payments. Improving primary balances is critical to ensure debt sustainability in a context of unfavorable debt
dynamics, as economic growth is projected
to be lower than the average interest rate
on public debt.

(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
-6.0
-6.1
0.9
-14.6
-12.0
-17.6

2021
4.7
5.8
0.5
0.6
9.1
9.6

2022
1.9
2.5
1.0
4.8
7.4
14.9

2023e
0.5
0.7
2.1
5.3
3.2
6.0

2024f
1.5
1.9
0.5
4.8
3.0
4.5

2025f
1.6
1.5
0.9
4.2
3.0
3.5

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-5.5
17.8
-12.1
-4.1

4.4
7.4
6.2
3.8

1.9
0.9
-2.5
3.4

0.5
0.9
-1.6
1.1

1.5
2.0
0.5
1.8

1.6
2.0
1.1
1.7

Inflation (consumer price index)

3.3

4.5

6.9

6.0

4.9

4.5

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

1.9
1.5

3.7
9.7

-0.5
1.6

-2.0
0.9

-2.1
1.2

-2.2
1.2

-9.9
25.1
70.1
-5.7

-4.6
27.8
67.9
-0.4

-4.2
28.5
71.2
0.5

-5.9
27.7
72.3
-0.9

-5.5
27.5
73.8
-0.5

-6.0
27.5
76.3
-0.8

22.6
42.7
63.6

21.7
41.4
62.8

21.5
41.1
62.6

21.6
41.3
62.7

21.5
41.1
62.6

21.4
41.0
62.5

-2.5
77.7

3.2
78.3

3.7
78.8

-2.6
78.3

0.8
78.2

1.5
78.1

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/ The Eskom debt-relief arrangement is reported above the line, in expenditures.
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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Oct 23

SOUTH SUDAN
Table 1

2022

Population, million

11.4

GDP, current US$ billion

5.2

GDP per capita, current US$

457.9

International poverty rate ($2.15)

a

67.3
a

86.5

a

96.6

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

Key conditions andchallenges

a

44.1

School enrollment, primary (% gross)

b

73.0

b

55.0

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(2021).

Falling oil production will drag on
growth for a fourth consecutive year, albeit at a lessening pace. Climate and external shocks, declining official development assistance, coupled with structural
challenges related to weak governance, inadequate service delivery, and ongoing localized conflict, contributed to high levelsof food insecurity and widespread extreme
poverty. The conflict in Sudan poses acutedownside risks to South Sudan’s macroeconomic stability amid limited fiscal resources and pressing humanitarian needs.

A decade after independence, South Sudan’s development prospects remain constrained by fragility amid localized/intercommunal conflict. A 2018 peace agreement ended five years of civil war; however, the transition period needed for its
full implementation has been extended until 2025. The country is vulnerable to climate change and external shocks. Oil accounts for nearly all exports and around
90 percent of government revenues. A
modest economic recovery in 2019 was
upended by historic floods and the
COVID-19 pandemic.
Since 2021, reforms initiated under an
IMF staff-monitored program havehelped improve macroeconomic andprice stability. Higher oil prices following
the war in Ukraine have supported foreign exchange buffers and fiscal revenues, although expenditures have also
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 made worse byhigher global food prices and domestic
floods. In addition, 2.2 million people areinternally displaced (55 percent of whom
are women and girls), and 2.3 million remain refugees in neighboring countries.
South Sudan is receiving returnees andrefugees displaced by the conflict in Sudan. About 140,000 people have crossed

FIGURE 1 South Sudan / Exchange rate developments

SSP/USDthe border since April 2023, of which 91
percent are South Sudanese returnees.
External risks stem from adverse global
oil and food price developments; acutemacroeconomic risks will materialize if
oil pipeline routes through Sudan are
disrupted by the conflict there. Implementing the 2018 peace deal is essential
for domestic peace and the resumptionof growth. Macroeconomic, governance,
and transparency reforms need to be urgently implemented 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 livelihoods for 80
percent of the population; these will help
to support diversification away from theoil sector, create jobs, and build resilience
to climate change.

Recent developments
Economic activity remained weak in
FY2022/23 due to a fourth consecutive yearof flooding and reduced agricultural
yields, flare-ups of violence, and higher
food inflation due to the war in Ukraine
and lingering impacts of the COVID-19
pandemic. Oil production fell by 8.8 percent in FY2022/23 due to floods and low investments in oil fields. These dynamics reduced households’ purchasing power andworsened food insecurity. GDP is estimated to have contracted by 0.4 percent in FY
2022/23, following a 2.3 percent decline theprevious year.

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

Spread, percent

Real GDP per capita (constant FDJ)

1200

300

120

3500

1000

250

100

3000

800

200

80

600

150

60

400

100

40

200

50

2500
2000

0
Oct-201500

20Apr-21

Oct-21

Apr-22

Official XR (lhs)Oct-22500

00Spread (rhs)100002009 2011 2013 2015 2017 2019 2021 2023 2025

Apr-23

International poverty rate
Upper middle-income pov. rate

Parallel XR (lhs)

Sources: Bank of South Sudan and World Bank.

Source: World Bank. Notes: see Table 2.

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82

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

After briefly turning negative at end-2022,
inflation averaged 18 percent between
January and July 2023 due to the weakening currency. Despite the onset of theconflict in Sudan and drawdowns on foreign exchange reserves at the central
bank, the premium over the official exchange rate has remained narrow (below
1 percent), indicating improved open
market operations under the term deposit
facility, newly introduced instrument by
the central bank, and regulatory tightening on parallel market operators.
Notwithstanding higher oil revenues, fiscal pressures proved greater than anticipated in FY2021/22. Expenses exceededplanned outlays by 68 percent, causing thegovernment to revert to oil advances andmonetary financing of the fiscal deficit in
mid-2022. Higher oil prices, and revenue
and customs administration reforms lifted
overall revenues by 83 percent in realterms. The FY2023/24 draft budget envisages increases in capital expenditures, a
130 percent increase in public sector
salaries to protect against the impacts ofinflation, and rising transfers to regions,which will further widen the fiscal deficit
and may require the government to either
accumulate salary arrears or deficit monetization. Data for FY23Q1 show continued

overdrafts at the central bank and use ofoil advances to finance the budget. Publicfinancial management reforms to strengthen expenditure controls and cash management have been initiated, including an integrated financial management system.
But there is limited transparency on oilrevenues, including servicing of non-concessional external debt. South Sudan remains at high risk of debt distress for both
external and domestic debt.
Despite increased oil receipts and weaker
demand for capital imports, the current account balance widened in line with risingfood import costs, increased repatriation of
investor profits, and continued transfers to
Sudan as part of the transitional financial
arrangement under the peace deal.

Outlook
Growth is expected to remain negative in
FY2023/24, with oil production projected
to drop by 7 percent. Nonetheless, higher
government current spending and expanding domestic credit should support a
recovery in the non-oil sector, with farm
output also expected to improve as floods
eventually recede.

TABLE 2 South Sudan / Macro poverty outlook indicators

Over the medium term, growth should rise
to above 2 percent as oil output recovers
and non-oil activity improves, supported
by higher government outlays on critical
public investments, 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. The pressure
on the current account balance is expected
to increase due to higher debt-service
obligations, a decline in oil prices, and a
decline in international aid.
Poverty is tenacious expected to remainstagnant at around 70 percent in themedium term as real growth prospects
are limited. Addressing this reinforces
the urgency of fiscal and PFM reforms
that generate budgetary resources to increase social expenditures. While efforts
to modernize tax administration using
digital solutions and expand the tax basewill help, fiscal pressures will remain
substantial given sizable debt-service
obligations, a reduction in legacy arrears,
and increasing social and humanitarian
expenditures. It is thus also vital tostrengthen 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

2022
-2.3

2023e
-0.4

2024f
-0.2

2025f
2.1

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
-5.4
7.7

-0.2
2.8
-4.1
4.5

2.1
2.8
0.5
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

-1.5
1.0

1.9
-0.3

1.9
-0.6

1.8
-0.9

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

-4.1
31.2
52.3
-2.8

-4.6
30.5
53.2
-3.5

-4.9
30.2
55.9
-3.5

65.3
84.7
96.1

67.5
86.6
96.7

68.8
87.6
97.1

69.5
88.0
97.2

69.3
87.9
97.2

69.0
87.7
97.1

-0.2
3.0

0.6
2.9

0.1
2.9

0.0
2.9

0.1
3.0

0.4
3.1

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 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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Oct 23

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

65.3

Total GHG emissions (mtCO2e)

126.0Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2014), 2017 PPPs.
b/ WDI for School enrollment (2018); Life expectancy(2021).

Broad destruction of the economic base dueto the conflict has set the country back several decades. GDP is expected to contract by
12 percent in 2023, driven by substantialsocioeconomic and infrastructure damage
and lower consumption. This would resultin a deterioration of households’ welfare as
the extreme poverty rate is projected to increase to 35.7 percent in 2024. Alongside acollapse in government revenues, significant currency pressure and supply-side
disruptions are expected to cause a return totriple-digit inflation.

Entering the April 2023 conflict, the economy was already weak, having suffered fiveconsecutive years of contraction. Attempts
in 2019 to shift course via a brief transition
to a reform-minded civilian government,
re-engagement with the international community, and the launch of the Heavily Indebted Poor Country debt relief process,were derailed by a military takeover in
2021. The loss of an estimated US$2 billion
in annual foreign inflows, along with slowdowns in reforms and foreign investments,
further depressed growth. Additional tax
hikes, as the government attempted tocompensate for forgone revenues, further
depressed private sector activity.
In 2022, there was a fresh effort to transition to civilian administration: a framework political agreement was signed in
December 2022, with elections planned for
two years later. However, mounting tensions between the Sudanese Armed Forces
and the Rapid Support Forces delayed thereturn to a civilian-led transitional government. The conflict that erupted in April
2023 destroyed the industrial base, halted
services, and led to the erosion of state capacity amid high and rising levels of displacement and food insecurity. As of August 15, more than 4mn people have been
displaced inside and outside the country.
Per the UN, conflict-induced food scarcity
has plunged 20.3mn people into severe
acute hunger, of which 6.3mn (more than

1 in 10 people in Sudan) are facing emergency levels close to famine.
The broad destruction of the economic
base will set the country back several
decades. The erosion of state capacity todeliver basic services is expected to prolong reconstruction efforts and recovery
from the conflict when it ends. The cost of
the conflict to the economy is more starkly
evident in the cumulative loss in GDP and
GDP per capita.

Recent developments
GDP fell by an estimated 1 percent in 2022.
The conflict has triggered a further collapse in activity, including wholesale/retailsales, restaurants, financial and ICT services, and damaged education and healthfacilities. Prior to April 2023, cereal production was improving due to better
weather and a shift to less resource-intensive crops. Net exports, investment, andrevenues were negligible prior to the outbreak of fighting in April 2023, but havesince collapsed, while agricultural output
and exports (gold, sesame, gum Arabic,
and livestock) have been severely affected.
Rising displacement and the devastationof the marketed surplus/incomes of agricultural households have weighed on consumption, which comprises roughly 94
percent of GDP.
Fiscal pressures, already significant inrecent years, have increased, while theability to deliver basic services has
been severely disrupted. Tax revenues
were expected to contribute 68 percent to

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

Percent2

Poverty rate (%)
100

800

0

90

700

Real GDP per capita (constant LCU)

80
-2

600

70

-4
-6
-8

-12

500

50

400

40

300

30

Agriculture
Industry
Services
Gross value added at basic prices

-10

60

200

20

100

10
0

0
2009

-14

2018

2019

2020

2021

2022

2023e

2024f

2011

2013

2015

2017

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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Oct 23

2019

2021

2023

2025

Lower middle-income pov. rate
Real GDP pc

total revenues, but are now expected to fall
to extremely low levels, with implications
for non-military expenditures. Sudan faces
a dire economic situation, with rapid currency depreciation as Sudan’s central bankis forced to monetize a mounting government deficit, supply disruptions, and foodshortages contributing to hyperinflation.
Foreign reserves were already below one
month’s of import coverage at end-2022,
and the state remains unable to access external financing due to its default status.
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 35 percent in 2023. The protracted economy andthe ongoing conflict contributed to an estimated 15 percentage-point increase in
extreme poverty.
Sudan’s closest neighbors are shifting toalternative trade routes. Last year, Sudan
imported almost 1.8 million tons of mainly
Indian sugar, with much of it then going
to Chad and the Central African Republic.
Those countries are now importing

Brazilian sugar, which is routed throughWest African ports. As new trade routes
are established, Port Sudan could lose its
regional importance, with negative longterm consequences for the country.

Outlook
The conflict is expected to significantly affect the coming agricultural growing season, in turn worsening an already direfood security situation, with the number ofpeople in need of humanitarian food assistance estimated at 25 million out of 42 million population, according to the UN.
The outlook remains highly uncertain;
predicated on a gradual cessation of conflict over the coming year, it remains subject to large downside risks of prolonged
conflict and tensions. Given conflict-related economic losses and destruction of infrastructure, a 12 percent GDP contraction
is anticipated in 2023 (this follows a cumulative 11.3 percent decline since 2018). As
economic activity stabilizes and households

TABLE 2 Sudan / Macro poverty outlook indicatorsand businesses adjust, a modest 0.6 percent decline is expected in 2024 and a slow
recovery thereafter, amid limited externaland domestic resources to support reconstruction. Agriculture will remain a mainstay for livelihoods, and rising agricultural
output and exports of livestock, as well as
mining and services should gradually support activity and incomes in coming years.
The fiscal deficit is projected to narrow
over the medium term, reflecting modest
recovery in tax revenue collections; however, continued monetization should keep
inflation high. The current account deficit
is expected to widen modestly in the medium term and average 7.5 percent of GDP
over 2023-25, reflecting Sudan’s high import requirements due to the war and apartial recovery of exports.
Extreme poverty is expected to worsen withthe massive destruction of infrastructure
and limited access to essential services. Projections suggest that extreme poverty will
steadily increase to 36 percent by 2025. A
quick end to the conflict and a collaborative
reconstruction effort are needed to reverse
the trend of poverty in Sudan.

(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
-0.9
-9.6
-2.1
8.0
-0.5

2022
-1.0
-0.8
1.9
1.2
12.0
8.7

2023e
-12.0
-10.6
-36.5
-20.0
-32.0
-36.0

2024f
-0.6
-0.2
1.1
1.3
6.0
11.0

2025f
0.2
1.1
1.6
2.5
9.0
19.0

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

-12.0
-7.9
-11.6
-16.0

-0.6
0.9
-0.4
-2.3

0.1
1.1
1.0
-1.6

Inflation (consumer price index)

163.3

359.7

164.2

230.0

95.0

65.0

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-21.6
-2.7

-7.3
-1.6

-6.0
-1.3

-0.6
-0.6

-7.2
-0.5

-7.8
-0.4

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

-3.5
5.1
167.3
-3.5

-3.0
6.0
157.9
-2.9

-2.6
6.8
149.5
-2.5

27.3
64.4
91.9

30.6
67.6
92.9

33.3
69.9
93.6

35.0
71.3
93.8

35.7
72.0
94.0

36.0
72.4
94.0

-0.1
16.4

-0.3
16.3

-0.4
16.0

0.1
15.7

0.5
15.7

0.8
15.8

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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Oct 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

66.2

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/ Most recent WDI value (2021).

In2023,Tanzaniahasmaintaineditseconomicmomentum.High-frequencyindicatorssuggestthatGDPgrowthhasalreadyreacheditspre-pandemiclevels,5.1percent
in2023(annualestimate). In the mediumterm, with transformative reforms aimed at
improving business environment, boosting
private sector investment, and creating
jobs, a 6 percent growth rate can be reached.
Risks to the country’s macroeconomic outlook include the incomplete implementation of these reforms, global economic slowdown, protracted war in Ukraine, and increased commodity price volatilities.

Tanzania has adequate opportunities to accelerate its transition to a successful middle-income status. With relatively limited
impact of external shocks, including
Covid-19 pandemic and the war in
Ukraine, and moderate risk of debt distress, the country continues to hold sufficient fiscal space to implement its development programs. Although official grossreserves have declined, they remain adequate. To lay the foundation for robust,
inclusive, and sustainable long-term
growth, the government should seize theopportunity to implement more ambitious human capital investments andstructural reforms to improve businessenvironment for private investment, including FDI. Tanzania’s private sector has
been challenged by a costly business regulatory environment, high taxes, weak infrastructure, and inadequate skills.
To reduce high and persistent rates ofpoverty in the country, significant increasein public spending on social services andinfrastructure is required, especially inrural areas. Priority reforms should aim tostrengthen the macroeconomic stability(including exchange rate), efficiency of
public investment, debt management, anddomestic revenue mobilization. To enhance the impact of growth on poverty reduction, investing in human capital, raising smallholder agricultural productivity,and supporting the creation of good jobs

by facilitating private sector investment
through regulatory environment streamlining will be essential. Moreover, helping
women access economic opportunities andassets such as land remains critical.

Recent developments
Following the COVID-19 pandemic andfacing the headwind of the war in
Ukraine and its global economic impact,
Tanzania’s economic growth rate rose to
4.6 percent in 2022, up from 4.3 percent
in 2021. This moderate rebound was driven by the services sector led by trade,transportation, tourism, and financial services which accounted for half of GDP
growth. High-frequency indicators including cement production, electricity
generation, and tourist arrivals indicate
economic activity remained robust during the H1 2023. The tightening of liquidity in the financial system and subsidies
for fuel and fertilizer helped to containinflationary pressures. Headline inflationstood at 3.3 percent in July 2023, well below Tanzania’s neighbors.
Despite a robust growth in exports, thestronger growth of imports pushed up by
domestic demand compounded with rising international commodity prices
widened the current-account deficit to 5.6
percent of GDP in 2022. The Bank of Tanzania has relied on foreign exchange sales in
response to the balance of payment pressure. As a result, official gross foreign reserve fell to US$5.3 billion (covering 4.8
months of imports) by end of June 2023

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

2.5

100

2.0

5
80
4

1.5
60

3

1.0
40

2
1

0.5

20

0
2018

2019
2020
2021
Agriculture
Services
GDP at Constant Prices

2022e

0

2023p 2024p 2025p
Industry
Net Taxes on Production

0.0
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 (2018-2025).

Source: World Bank. Notes: see Table 2.

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

from US$6.4 billion (6.6 months of imports) at the end of 2021. Although the
Tanzanian shilling remained relatively stable against the US dollar in 2022, in 2023
pressure on the shilling has increased andthere are signs of emergence of parallel exchange market.
Despite broadly stable public revenue collection, an increase in overall expenditures widened fiscal deficit from 3.6 percent of GDP in FY2021/22 to 4.4 percent
in FY2022/23. Domestic borrowing, mainly from bank and non-bank sources, covered almost 60 percent of the fiscal deficit.
According to the latest Debt Sustainability Analysis (DSA) Tanzania’s Public andPublicly Guaranteed debt stock stood at
43.8 percent of GDP by end-June 2022,
compared to 41.3 percent by end-June
2021. The DSA shows Tanzania’s risk ofdebt distress remains moderate.
The rate of poverty reduction, which notably decelerated in the 2010s, is expected
to continue its slow pace into the 2020s. In
2022, extreme poverty was at 44 percent,and it's projected to decline marginally to
43 percent in 2023 and 2024, further dropping to 42 percent in 2025. Considering thecountry's rapid population growth, the absolute number of individuals living in extreme poverty is expected to rise from 26
million in 2018 to over 30 million by 2025.
At the lower middle-income poverty line,
the count is likely to increase from 44 million in 2018 to 52 million by 2025.

Outlook
GDP is projected to grow at 5.1 percent in
2023 and 6.1 percent by 2025, close to its
long-run potential, supported by increasing domestic demand and exports as reforms to improve business climate are implemented successfully. The current account deficit is projected to narrow to 5.1
percent of GDP in 2023 as exports are expected to grow faster than imports, partly
due to a combination of easing commodity
prices and strong rebound in tourism. The
current account deficit is expected to befinanced by external loans and increasing
FDI. The fiscal deficit is projected to decline further to about 2 percent of GDP in
2024/25, well below the 3 percent of GDP

TABLE 2 Tanzania / Macro poverty outlook indicators

ceiling posed by the convergence criterionof the East African Community, as improved business environment strengthens
domestic revenue mobilization and public
expenditures stabilize. The narrowing fiscal deficit is expected to be financed byboth external and domestic loans.
Tanzania’s macroeconomic outlook facedownside risks, which could suppress
GDP growth by 1-2 percentage points if
one of those risks materialize. A global
slowdown, protracted war in Ukraine, andincreased commodity price volatilities areamong major downside external 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 climatechange effects on the agriculture andtourism sectors.
The poverty rate will likely follow a consistent downward trend. Projections suggest
a decline of 1.3 percentage points, from
43.4 percent in 2023 to 42.1 percent in 2025.
This trajectory is underpinned by robust
growth prospects, that will likely propel
the country's GDP growth to pre-pandemic levels by 2025.

(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

2022
4.6
4.8
8.4
9.3
10.2
23.7

2023e
5.1
2.2
10.7
5.3
13.8
6.8

2024f
5.5
3.3
6.2
5.4
10.4
4.2

2025f
6.1
3.3
11.3
5.3
10.2
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

4.6
3.3
4.3
5.6

5.1
3.6
4.8
6.3

5.5
3.8
5.6
6.4

6.1
4.1
6.2
7.2

Inflation (consumer price index)

3.3

3.7

4.3

4.2

4.1

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

-5.1
2.1

-4.4
2.6

-3.5
2.9

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

-4.0
15.9
43.2
-2.3

-3.4
16.4
42.7
-1.8

-2.9
16.9
42.2
-1.3

44.6
74.1
91.9

44.3
73.9
91.7

44.0
73.6
91.4

43.5
73.3
90.9

43.0
72.9
90.5

42.4
72.4
89.9

1.9
11.0

-0.4
9.3

1.5
9.4

2.3
10.2

1.4
10.1

1.5
10.1

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 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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Oct 23TOGO

Key conditions andchallenges

Table 1

2022

Population, million

8.8GDP, current US$ billion

8.2

GDP per capita, current US$

930.5

International poverty rate ($2.15)

a

28.4
a

56.9

a

84.0

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

a

42.5

School enrollment, primary (% gross)

b

124.2

b

61.6

Total GHG emissions (mtCO2e)9.9Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ Most recent WDI value (2021).

Growth in Togo should benefit fromstrengthening consumer spending andprivate investment in 2023 and 2024
but is still projected to soften somewhat
to 5.2 percent reflecting the impact offiscal consolidation measures, tighter financing conditions, and soft external
demand. It should accelerate again in
2025, supported by a more favorable
international backdrop. Real income
gains combined with moderating inflation should enable the poverty rate to
decrease to 24.8 percent by 2025.

Since the COVID-19 pandemic in 2020, Togo has faced significant headwinds ranging from the fallout from Russia’s invasionof Ukraine on energy and food prices, toslowing external demand, tighter financing conditions and regional instability. A
sharp increase in public spending helped
stabilize growth in the face of these shocks
but vulnerable populations have been adversely impacted by the rising cost of living and fiscal space has been depleted.
Large fiscal financing needs amid tightening borrowing conditions have encouraged authorities to frontload consolidation measures to bring the deficit back to
3 percent of GDP by 2025, while at thesame time implementing an emergency
program to address growing fragility
risks in the Northern Savanes region. Rebuilding fiscal space while supporting
priority investments and social spending
are among the most pressing policy challenges facing the country.

Recent developments
Growth remained robust in 2023, at an estimated 5.2 percent, but moderated from 5.8
percent in 2022 as the government shiftedfrom an expansionary fiscal policy stanceto a more restrictive one. Slow executionof planned public investment so far thisyear and additional spending cuts considered for the revised 2023 budget are expected to narrow the fiscal deficit to 5.8
percent of GDP, down from 8.3 percent in
2022. The dampening effect of fiscal consolidation measures on economic activity
should be partially offset by a recovery inconsumer spending supported by abating
food and energy price inflation, while private investment is bolstered by improving
business sentiment and ongoing infrastructure projects. On the external side,
the trade deficit has been narrowing asexport revenues outpaced imports so far
this year, but the current account deficit isstill expected to widen somewhat to reach
3.5 percent of GDP in 2023. At the sectoral level, industrial activity has shown
signs of recovery from a weak start of
the year, with positive contributions fromthe extractive, power, and manufacturingsectors. Regarding agriculture, meteorological conditions have been conducive
to a relatively favorable crop harvest forthe 2023/24 season. Real GDP per capita
gains estimated at 2.8 percent in 2023,
combined with consumer price inflation
moderating from 7.6 percent in 2022 to
5.8 percent in 2023 should help the extreme poverty rate (US$2.15/day) to decrease to 27.6 percent this year, its firstdecline since the onset of the COVID-19
pandemic in 2000.
To counter inflationary pressures across
WAEMU countries, the Central Bank ofWest African States (BCEAO) has raised
policy interest rates by a cumulative 125
basis points since mid-2022 but the monetary policy stance remains broadly accommodative, while inflation is still above

FIGURE 1 Togo / Real GDP growth

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

Percent

Poverty rate (%)

8100

Real GDP per capita (constant LCU)
70000090

660000080
47050000026040000050

040300000-230200000-4

20

100000

10
-6
2001

2004

2007

GDP growth
2017-19 avg

2010

2013

2016

2001-07 avg
2020-22 avg

2019

2022

0

2025

0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

2008-16 avg
2023-25 avg

International poverty rate
Upper middle-income pov. rate

Source: World Bank.

Source: World Bank. Notes: see Table 2.

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88

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

target and foreign exchange reserves havebeen on a downward trend.

Outlook
Growth in Togo is projected to stabilize
at 5.2 percent in 2024, as additional fiscal
consolidation measures are counterbalanced by a further acceleration in consumer spending and private investment.
The former will benefit from receding inflationary pressures while the latter will
be boosted by the Adétikope Industrial
Park development and ongoing reforms
in the agriculture, logistics, and trade
sectors. Export growth should remain
subdued in 2024 as key trading partners
face mounting economic challenges, before
recovering in 2025, in line with projected improvements in global demand. The

fiscal deficit is predicted to narrow to 3
percent of GDP by 2025, and the current
account deficit to 2.7 percent of GDP.
Under a realistic reform scenario, potential growth in the short to medium term
could average 5.5 percent, while more
substantial gains in private capital spending, agricultural productivity, female labor force participation, and human capital could lift it to 7 percent under the
best-case scenario. The poverty rate is
projected to decline to 24.8 percent in
2025, a substantial drop from an estimated 28.4 percent in 2022.
Uncertainty related to the evolution of
global demand, energy, food prices, financing conditions, security risks, and climate change imply that the balance ofrisks to the outlook remains tilted to thedownside. In particular, a sharper deterioration in regional debt markets could
lead to financing risks given the highTABLE 2 Togo / Macro poverty outlook indicatorsrollover needs from domestic sovereign
debt while growing regional insecurity
could dampen economic prospects by reducing market access to important trading partners. Under an alternative scenario of persistent headwinds reflected inlower export growth (-2 percentage points
below baseline projections in 2023-25),
higher domestic inflation (+1 percentage
point), and tighter financing conditions
on regional debt markets (+150 basis
points), growth would be expected toslow down to an average of 4.2 percent
over the period 2023-25 (-1.2 percentage
point below baseline projections) while
the budget deficit would stay above 4.5
percent of GDP until 2025. In this scenario, the public debt-to-GDP ratio would
only return below the estimated risk
threshold for Togo by 2028 but the overall
assessment regarding debt sustainability
risks would not be fundamentally altered.

(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
-14.3
1.8
36.6
6.5
1.6

2021
6.0
9.9
0.2
-0.2
5.3
6.9

2022
5.8
1.3
8.8
26.4
-1.1
5.1

2023e
5.2
5.0
6.6
5.5
4.2
3.8

2024f
5.2
5.2
-5.9
12.2
4.3
4.9

2025f
5.8
5.5
2.1
9.0
6.8
6.3

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

2.2
3.3
4.0
1.1

5.3
3.4
5.7
5.9

6.2
5.0
7.3
6.2

5.1
4.6
7.0
4.4

5.2
5.0
6.3
4.9

5.8
5.2
6.7
5.7

Inflation (consumer price index)

1.8

4.5

7.5

5.8

3.8

3.0

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-0.3
0.7

-0.9
0.3

-3.0
0.3

-3.5
0.4

-3.4
0.4

-2.7
0.4

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

-7.0
16.6
60.1
-4.7

-4.7
17.1
63.0
-2.5

-8.3
17.6
65.8
-5.9

-5.8
17.2
66.3
-3.4

-4.1
16.5
65.9
-1.7

-3.0
16.2
65.0
-0.7

28.2
56.4
83.5

28.4
56.5
83.3

28.4
56.4
83.1

27.6
55.2
82.4

26.2
53.9
81.6

24.8
52.0
80.5

1.8
22.9

6.4
25.7

5.4
26.9

2.9
26.4

4.0
26.3

4.5
26.5

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 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2022. Forecasts are from 2023 to 2025.
b/ Projections using microsimulation methodology.

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Oct 23

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

62.7

Total GHG emissions (mtCO2e)63.6

Life expectancy at birth, years

reduce trade cost and reduce ad hoc tariffincreases. Finally, adopting climate-smart
agriculture methods and improving adoptive capabilities would build resilience toclimate change.

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

Uganda’s economy is rebounding, benefiting from improvements in all threesectors that allowed for an economic
growth of 5.3 percent in FY2023 andlikely a reduction in poverty. Fiscal performance is improving as the government continues to embark on fiscal consolidation by reducing expenditures andbolstering revenues. Medium-term
growth prospects appear favorable due torecovery in tourism, although considerable uncertainty around the start of oil
production remains.

Increased shocks and less momentum behind policy reform create challenges forsustaining economic growth and reducing
poverty in Uganda. Rapid population
growth has kept a large share of the population below the poverty line, while humancapital and infrastructure deficits have
limited the country’s growth potential andcontain improvements in social indicators.
Further, almost one million working age
Ugandans enter the labor market every
year. Majority of them are still employedin the agriculture sector which is prone tonatural disasters that climate change ismaking more frequent and impactful—and adapting to which is hampered
by low adaptive capacity.
To promote economic growth over the
medium-term Uganda needs to pursue
structural reforms to alleviate critical constraints. First, the country needs to shift towards more private investment by reducing the cost of doing business and fostering access to finance. Second, the country
needs to enhance debt sustainability andimprove budget efficiency by increasing
revenue collection, cutting tax expenditures, and prioritizing social spending.
Third, the government needs to adopt a
more open and transparent trade regime,
invest in transport infrastructure to support regional trade and benefit from theAfrican Continental Free Trade Area
(AFCFTA), simplify customs procedures to

FIGURE 1 Uganda / Fiscal adjustment

Recent developments
Real GDP growth accelerated to 5.3 percent
in FY2023, despite multiple shocks andtighter financial conditions. Economic
growth was buoyed by the industrial andservices sectors, which grew by 3.9 and 6.2
percent respectively. In addition, the agriculture sector improved to 5.0 percent despite unfavorable weather conditions in thefirst quarter of the fiscal year. Private consumption increased, while public investment was scaled back as fiscal space narrowed. Higher capital imports widened thecurrent account deficit to 8.7 percent of GDP
in FY2023 from 7.9 percent in FY2022. Imports increased due primarily to oil project
related investments.
The Bank of Uganda has maintained a tightmonetary policy stance to keep inflation under control. For FY2023, inflation averaged
8.8 percent, this reflects five months ofsteady increase in prices which peaked at
10.7 percent in October 2022 driven by highenergy and food prices. In February 2023 inflation began to decline reaching 4.9 percent
by June 2023 driven by declining energy
prices, improved global supply chains andtight monetary policy. Based on the consistent decline in the inflation rate, the Bank of
Uganda reduced its policy rate by 50 basis
points in August 2023, to 9.5 percent.

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

Percent of GDP
16

Poverty rate (%)

Percent of GDP
60

14

2.5

90

50

80

12

2.0

70

40

10

Real private consumption per capita (constant million LCU)

100

60

8

30

6

1.5

50
40

20

1.0

30

4
10

2
0

20

0
2020

2021

2022

Public debt to GDP (rhs)
Tax (lhs)

2023

2024f

0.5

10
0

2025f

0.0
2009

Primary fiscal 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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Oct 23

2019

2021

2023

2025

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

The overall fiscal deficit declined to 5.1
from 7.4 percent of GDP between FY2022
and FY2023, reflecting a reduction in recurrent and development expenditure aswell as increases in domestic revenue andgrants. Recurrent spending declined by 0.6
percentage points due primarily to a reduction in spending on goods and services. Development spending declined by
0.8 percent, as the government cut backon public investment spending. Tax revenue and grants increased by 0.5 percentage points each. The increase in revenue
was driven by an increase in import duty.
The fiscal deficit was financed by domestic
and external borrowing. Uganda’s public
debt continues to be sustainable in themedium term due to the implementationof fiscal consolidation.
Consistent with accelerated economic
growth, more respondents shared positive perceptions on current and future
household and country economic wellbeing according to the most recent round of
the phone survey from February/March
2023. Nevertheless, about 34 percent ofhouseholds were moderately food insecure and seven percent were severe foodinsecure. About half of respondents werealso certain to experience extreme weather

events during next 12 months and negative expectations were higher among thepoorest households.

OutlookIn the medium-term, real growth is expected to accelerate beyond 6 percent, if not derailed by a global slowdown, disruptions to
global finances and weather shocks. The recovery in the medium-term will be driven by
a recovery in tourism, and the developmentsin the oil sector that is attracting foreign anddomestic private investment in related infrastructure ahead of the start of oil production in 2025. Economic growth will also be
driven by increase private consumption, as
inflationary pressures continues to abate.
Inflation is projected to decline fromFY2024 onwards reaching the Bank of
Uganda’s medium-term target of 5 percent, after averaging at 8.9 percent in
FY2023. This reflects the impact of morefavorable weather conditions on domestic
harvests, the softening of global commodity prices and easing of global demandsupply imbalances, and the effects of monetary and fiscal policy tightening.

TABLE 2 Uganda / Macro poverty outlook indicators

Accelerated growth is expected to reduce poverty (measured at the $2.15/
day international poverty line) from 41.7
percent in 2023 to 40.7 percent by 2025.
But given that households have limited
adaptive capacity, the pace of poverty
reduction will ultimately depend on
how food access and affordability
evolve, and on the incidence of weather
and other shocks.
The government aims to narrow the fiscal deficit to 3.4 percent of GDP in
2024–25 through more efficient spending
and implementation of the Domestic
Revenue Mobilization Strategy (DRMS). The government plans to reduce nonpriority capital expenditures while
maintaining the share of social spending. The government’s domestic revenue
mobilization strategy which includes rationalization of exemptions, and revenue
administration modernization to improve compliance is expected to yieldapproximately 0.6 and 0.5 percent of
GDP in FY2024 and FY2025, respectively. Continued fiscal consolidation willmodestly reduce debt to around 47 percent of GDP by 2025, keep debt service
manageable, and reduce crowding out
private sector investment.

(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

2022
4.7
3.4
-17.4
20.1
-18.6
-8.9

2023e
5.3
4.4
5.1
5.5
7.0
3.2

2024f
6.0
5.6
5.0
8.2
7.8
8.6

2025f
6.6
5.8
5.3
9.3
8.7
8.8

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

5.3
5.0
3.9
6.3

6.0
5.1
5.6
6.8

6.6
5.3
6.5
7.3

Inflation (consumer price index)

2.3

2.5

3.7

8.8

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

-7.2
5.9

-7.9
8.7

-10.4
10.9

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

-5.0
15.0
48.3
-2.0

-3.4
15.4
47.4
-0.1

-3.4
15.9
46.3
-1.4

42.5
72.2
91.3

42.3
72.0
91.2

42.2
71.9
91.1

41.9
71.7
90.8

41.3
71.2
90.2

40.7
70.7
89.5

1.3
18.4

2.7
18.4

3.4
18.6

3.6
18.8

3.8
19.2

3.9
19.6

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 2009-UNHS, 2012-UNHS, and 2019-UNHS. Actual data: 2019. Nowcast: 2020-2022. Forecasts are from 2023 to 2025.
b/ Projection using point to point elasticity at regional level with pass-through = 0.7 based on private consumption per capita in constant LCU.

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ZAMBIAKey conditions andchallenges

Table 1

2022

Population, million

20.0

GDP, current US$ billion

29.0

GDP per capita, current US$

1449.2

International poverty rate ($2.15)

a

60.8
a

78.0

a

91.0

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

a

55.9

School enrollment, primary (% gross)

b

98.7

b

61.2

Total GHG emissions (mtCO2e)

94.6

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 (2017); Life expectancy(2021).

After two years of solid growth, the Zambian economy moderated in 2023 as muted copper prices and legacy operational
challenges constrained copper production,and power outages hit early in the year.
Growth is expected to accelerate in
2024-25, averaging 4.7 percent as mining
picks up and induces services activity.
Completing debt treatment would help restore macroeconomic and debt sustainability, supporting the Government’s ambitious reform program and accelerating
more diversified and inclusive growth.

Zambia is in debt distress and requires
debt restructuring. A decade of unsustainable macroeconomic policies and falling
copper prices caused external debt to jumpfrom 6.7 percent of GDP in 2011 to 66.4
percent in 2019. The COVID-19 pandemic
exacerbated these vulnerabilities, leading
to a default on Eurobond payments in
2020. In early 2021, Zambia requested debt
treatment under the G20 Common Framework. Its official creditors reached anagreement on key parameters of debt reliefin June 2023 and are now finalizing thememorandum of understanding. Once formalized, the agreement will reduce the netpresent value of Zambia’s US$ 6.3 billion external bilateral debt by 40 percent. It shouldpave the way for completing negotiations
with private creditors on comparable terms.
Despite this challenging environment,
Zambia’s economy has recovered from thepandemic-induced recession thanks to the
new administration’s bold macroeconomic
and structural reforms. Still, multiple
shocks, including global commodity prices
and adverse weather, have negatively affected fiscal and external sector balances as
the country remains dependent on mining
and agriculture. Weak links between thecapital-intensive mining sector and othersectors of the economy, coupled with low
productivity in labor-intensive agriculture,
limit opportunities for inclusive and sustainable development. Poverty remains

widespread and is predominantly rural,estimated at 60.8 percent, of which 80 percent are rural poor. Inequality is among
the highest in Sub-Saharan Africa, as evidenced by a high Gini coefficient of 0.56 in
2015, the most recent data available.
A youthful population offers an opportunity for Zambia to harness a sizeable demographic dividend if it can create more
and better jobs for new labor force entrants. Available estimates suggest that
300,000 new jobs must be created annually.
However, generating jobs will remain achallenge as the potential for the private
sector to drive job growth and lead economic transformation is hampered by regulatory bottlenecks, large infrastructure
deficits, and the high cost of finance. The
government’s current capacity to financedevelopment is significantly constrained.
Completing debt treatments would give
Zambia breathing space to restore macroeconomic stability and debt sustainability,
supporting the ambitious reform programand accelerating more diversified and inclusive economic growth.

Recent developments
In H1 2023, economic growth slowed as
muted copper prices and unresolved management challenges at Mopani and Konkola Copper Mines (KCM) continued to constrain copper production and, with low
water levels at the Kariba dam, power outages hit the economy. Q1 GDP grew by
only 2.3 percent year-on-year, down from
7.9 percent in Q1 2022, reflecting declines

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

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

Percent, percentage points
10

Poverty rate (%)
100

9000

8

90

8000

80

7000

6

Real GDP per capita (constant FDJ)

70

4

60

2

50

0

40

6000
5000
4000
3000

30

-2
-4

20

2000

10

1000

0

-6
2020Q1

2020Q3

Agriculture

2021Q1
Industry

2021Q32022Q1Mining2022Q32023Q1ServicesGDP02006 2008 2010 2012 2014 2016 2018 2020 2022 2024
International poverty rate
Upper middle-income pov. rate

Source: World Bank estimates.

Source: World Bank. Notes: see Table 2.

MPO

92

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

in agriculture, mining, electricity, and thewholesale and retail trade sectors. . The
Stanbic Bank Purchasing Managers’ Index
suggests that private sector activity remained subdued, with the uncertainty surrounding debt restructuring hinderingbusiness confidence. In the year to June, copper earnings declined by 22.6 percent, while
imports rose by 23.1 percent. As a result, themerchandise trade surplus narrowed to US$
0.2 billion from US$ 1.7 billion in H1 2022,
weakening the current account surplus. International reserves declined from covering
3.8 months of imports at the end of December 2022 to 3.3 months in March 2023.
The average exchange rate depreciated by
16.6 percent between H1 2023 and H2 2022
because of reduced inflows from mining
and portfolio capital outflows amid the uncertainty surrounding the conclusion of external debt restructuring. Inflationary pressures intensified in H1 2023, stemminglargely from exchange rate pass-through of
the weakening currency. . In August, BoZ
raised its policy rate by 50 basis points to
10 percent after inflation spiked to two digits, well above the 6-8 percent target band.
High inflation is hampering the recovery
in living standards which remains slow
and uneven since 2020.
Fiscal balances have remained within budget in H1 2023, evidencing the robust fiscal
consolidation that started in 2022. While fiscal revenues softened due to a shortfall in tax

revenue as mineral production struggled,
grants were 50 percent above target, reflecting greater support from development partners. Total expenditure remained below
budget as spending on the farmer input support program was cut, and planned local development spending was delayed. Despite
significant overruns on roads, the authorities benefitted from lower-than-expecteddebt repayments related to the debt service
standstill and a hefty dividend from BoZ.

Outlook
The Zambian economy is expected to grow,driven by robust copper production, withreal GDP projected to average 4.7 percent
annually in 2024-25. This outlook assumes
firmer global copper demand and production ramping up at KCM after the government returned control of the mine to Vedanta Resources following four years of disputed liquidation. Reaching a final agreementwith creditors on debt restructuring will stabilize the exchange rate. This stability andongoing business regulatory reforms are expected to attract more FDI. With the recent
overhaul of the mining fiscal regime,
seeking to raise copper production from
800,000 tons to 3 million tons, additional
mining investments will stimulate morevigorous activity in services that support

TABLE 2 Zambia / Macro poverty outlook indicators

mining. This favorable outlook relies on
greater private investment as sustained
primary surpluses reduce the state’s competition with the private sector for domestic credit. It also depends on the authorities maximizing concessional financing and leveraging public-private partnerships as an alternative source of financing to promote investment in various
sectors, including mining, agriculture,
tourism, and digitalization. While robustsocial spending is expected to improvehousehold welfare, under current growth
projections, poverty reduction will remain slow and gradually approach prepandemic levels by 2025.
Downside risks for Zambia’s economic
outlook are considerable. Copper revenues
may remain constrained because of lower
ore grades, delayed investments in the sector, or weakening copper prices owing to
subdued global growth and a further slowdown in the Chinese economy, a central
market for Zambia’s copper exports. The
effects of climate change pose a risk to foodsecurity and hydropower generation.
There could be additional inflationarypressures from a depreciating Kwacha(due to elevated import demand and foreign debt service) or climate-driven foodshortages. Finally, a prolonged war in
Ukraine could pressure fertilizer and foodprices, increasing inflation and spendingon agricultural inputs.

(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
3.1
5.6
8.3
4.6
2.5

2022
4.7
3.7
-3.4
8.7
5.0
4.0

2023e
2.7
2.5
15.5
2.1
2.8
4.5

2024f
4.6
4.0
4.6
8.5
3.0
3.9

2025f
4.8
4.5
3.2
8.7
3.2
4.3

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

-2.2
17.2
1.3
-6.1

4.7
6.9
4.2
4.6

4.8
-2.4
-2.1
9.7

2.5
3.0
1.0
3.3

4.7
1.0
3.0
6.0

4.9
2.0
2.5
6.4

Inflation (consumer price index)

15.7

22.3

10.7

11.1

10.1

7.2

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

10.6
1.0

9.7
-1.9

3.6
1.1

3.8
2.1

6.8
2.8

8.2
3.6

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

20.4
-7.9

22.6
-2.0

20.5
-1.6

21.1
0.2

21.8
1.2

21.6
2.0

62.4
79.2
91.7

62.2
79.0
91.7

61.8
78.6
91.4

61.6
78.5
91.3

61.0
78.2
91.1

60.5
77.7
90.9

1.0
8.2

1.7
8.8

0.9
8.8

0.9
9.1

1.1
9.6

1.3
10.2

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-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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Oct 23ZIMBABWE

Key conditions andchallenges

Table 1

2022

Population, million

16.3

GDP, current US$ billion

31.1

GDP per capita, current US$

1902.6

International poverty rate ($2.15)

a

39.8
a

64.5

a

85.0

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

a

50.3

School enrollment, primary (% gross)

b

96.1

b

59.3

Total GHG emissions (mtCO2e)

119.3

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2019), 2017 PPPs.
b/ Most recent WDI value (2021).

Real GDP growth was high at 6.5 percent
in 2022, largely driven by the agricultural sector, yet other sectors were constrained by price and exchange rate instability. Annual inflation returned totriple-digit levels in 2022 and remained
high in the first half of 2023, driven byboth monetary expansion and external
shocks. Poverty levels declined moderately. Economic growth is projected to slow to
4.5 percent in 2023 and to remain under 5percent in the medium term, reflecting
global shocks and structural bottlenecks.

Exchange rate and inflationary pressurescontinue to constrain Zimbabwe’s fullgrowth potential. Since 2016, reforms tomaintain the local currency have been associated with periodic macroeconomic instability- high inflation and exchange rate
depreciation that distorted economic activity. This has affected both domestic andforeign investment which remain far below regional peers. With waning economicand employment activity in the formal sector, informality has grown in recent years.
High unsustainable debt and arrears to international financial institutions (IFIs) continue to limit the fiscal space and growthpotential. External debt rose from 40 to 70
percent of GDP between 2018 and 2022.
The government ceased servicing external
debt in 2000, and arrears have since risen
to 37 percent of GDP (US$6.7 billion) as ofDecember 2022. The country resumed token payments to multilateral creditors in
2021, and initiated an arrears clearance dialogue process in 2022, as a signal for reengagement commitment. The government
has accumulated two types of legacy debt
since 2021: (i) US$1.6 billion compensation
for a 2019 imposition of exchange rate restrictions that blocked external payments
to foreign suppliers and investors(“blocked funds”), and(ii) US$3.5 agreed
as compensation to former farm owners
who lost land and assets during thepost-2000 land reform.

Poverty has been elevated on account ofmacroeconomic instability, poor job creation in the productive sectors, weather
and global health shocks, and weak social
protection systems. Extreme poverty rate
has declined from its 2020 peak but remains high against the background of
cyclical agricultural production and elevated food prices.

Recent developments
Real GDP growth remained high at 6.5
percent in 2022 from 8.5 percent in 2021
driven by a significant revision in agricultural production. Earlier projections had
anticipated agriculture output to contract
by 14 percent, but growth in maize andwheat production saw agriculture output
revised upward to 6.2 percent in 2022.
During the first half of 2023, exchange rateand inflationary pressures intensified,with manufacturing, construction, electricity supply and accommodation, and foodservice activities contracting in 2023Q1.
The unemployment rate increased onquarter-on-quarter basis from 19.3 percent
in 2023Q1 to 19.7 percent in 2023Q2.
Inflation reached hyperinflation levels inJune 2023, but declined thereafter, as authorities implemented various measures
to curb currency depreciation. After depreciating sharply from the turn of 2022
to May 2023, the parallel market exchange rate started to appreciate in June,
falling to below 35 percent in July 2023,
from over 100 percent in May 2023, partly reflecting the impact of tight monetary

FIGURE 1 Zimbabwe / Exchange rates

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

ZWL$/US$
9000

Poverty rate (%)
100

16000

8000

90

14000

7000

80

6000

70

5000

60

10000

4000

50

8000

40

6000

3000

Real GDP per capita (constant LCU)

12000

30

2000

4000

20

1000
0
Jan-22

2000

10
Apr-22

Jul-22Oct-22Auction market exchange rate
Interbank market exchange rate

Jan-23Apr-230Jul-230
2011

Parallel market exchange rate

2013

2015

2017

2019

International poverty rate
Upper middle-income pov. 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

policy and slowing of quasi-fiscal activities. This dampened month-on-month inflation from 74.5 percent in June 2023 to-15.3 percent in July 2023. Notwithstanding, Zimbabwe dollar denominated prices
remain elevated, eroding the purchasing
power, and putting many goods and services out of reach of most households.
The fiscal balance continued to be in surplus during the first half of 2023, as government slowed spending to contain inflation and exchange rate pressures. Highinflation contributed to higher revenue
while the government restrained the implementation of capital projects. However, recurrent spending pressures increased ahead of national elections, as
the government increased civil servants’salaries sharply, both in foreign and local
currency. The government transferred allquasi-fiscal operations (QFOs) from theCentral Bank to the Treasury, and thiswill increase interest payment during thesecond half of 2023.
The current account surplus narrowed
during the first half of 2023 as thewidening of the trade deficit outpaced
the growth of remittances. The merchandise trade deficit increased by 19 percent

during the first half of 2023 compared tothe same period last year, reflecting a decline in mineral exports and increase in imports. Remittances from non-governmental organization contracted by 10.5 percent.

OutlookReal GDP growth is projected to slow
to 4.5 percent in 2023, constrained by
global headwinds, structural bottlenecks,
and price and exchange rate instability.
Growth in 2023 will be driven mostly
by agriculture and services, particularly
tourism. Manufacturing and mining sector growth are projected to slow in 2023,
partly affected by electricity shortage, inflation, and exchange rate pressures.
Downside risks to the outlook could include policy slippages after elections, aweak global environment for growth,volatile commodity prices, and climatechange. Inflationary pressures are expected to slow, but inflation will remain in
triple-digits in 2023, before returning todouble digits in 2024 and 2025, as exchange rate pressures are contained.

TABLE 2 Zimbabwe / Macro poverty outlook indicators

The fiscal balance is projected to turn into
deficit in 2023 on a high wage bill, highinterest payments from QFOs, and theresumption of spending after elections.
Moreover, the government is expected toresume paying its contractors and suppliers after elections. Interest paymentsfrom servicing QFOs debts are projected to significantly increase, posing liquidity risks, amid limited access to concessional financing. Fiscal deficit is projected
to reach 3.2 percent of GDP in 2023, before slowing to under 2.0 percent in 2024
and 2025. The current account surplus is
expected to continue shrinking, reflecting
an increase in imports and a slowdown inremittance inflows.
The poverty rate is expected to declinemodestly in the medium term along withthe projected increase in GDP per capita.
However, structural changes are necessary
to accelerate poverty reduction and breakits dependence on weather cycles. Improving labor productivity through an increasein agricultural productivity, structuraltransformation, and capital deepening, as
well as instituting a robust social protection system are the key 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
-2.3
-23.8
-18.2
-48.9
-44.1

2021
8.5
1.5
142.1
12.8
47.0
61.5

2022
6.5
4.9
31.3
22.3
43.9
54.6

2023e
4.5
3.0
26.8
-21.6
3.0
2.0

2024f
3.9
4.0
3.5
0.9
1.5
1.1

2025f
4.1
4.8
1.7
0.8
3.4
2.5

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

6.4
6.2
5.5
7.0

4.5
6.3
2.9
4.9

3.9
0.9
4.5
4.2

4.1
3.0
4.2
4.3

Inflation (consumer price index)

557.2

98.5

193.4

305.0

45.1

15.9

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

2.9
0.7

1.0
0.7

1.0
1.0

0.8
1.4

0.5
1.5

0.4
0.5

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

1.5
13.3
51.2
1.6

-2.0
15.3
58.4
-1.9

0.1
16.4
99.6
0.2

-3.2
18.7
130.8
-2.3

-1.6
18.9
111.1
-0.3

-1.2
19.5
123.7
0.0

43.9
68.1
86.9

41.4
65.8
85.6

39.6
64.2
85.0

38.7
63.4
84.6

37.8
62.8
84.3

36.9
61.5
83.9

-1.4
11.3

1.2
12.5

1.4
13.2

0.5
14.4

1.0
15.4

1.6
16.6

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 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

10 /2023