SOMALIA

Key conditions andchallenges

Table 12023

Population, million

a16.1

GDP, current US$ billion

b11.7

GDP per capita, current US$Gini index

727.7

c37.0

School enrollment, primary (% net)

c25.0

d55.3

Total GHG emissions (mtCO2e)43.7Life 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 of2.8%.
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 continues its recovery as
improved weather conditions boost agriculture production, private consumption, and exports. GDP is estimated tohave grown at 3.1 percent in 2023, up
from 2.4 percent in 2022. Supported byfavorable rains and declining global
prices, inflation eased in 2023 but remained sticky. Nevertheless, recurrent
shocks such as the ongoing floods areincreasing the susceptibility of morepeople falling into poverty.

Somalia continues to contend with frequent shocks in the context of widespreadfragility, conflict, and violence. Recurrent
climate-related shocks such as cycles ofdroughts, floods, locusts’ infestation,
volatile international commodity prices, aswell as increased insecurity and conflicthave interrupted the country’s growth trajectory and slowed the transition fromfragility. Growth has been modest anddoes not generate the jobs needed to reduce poverty. It averaged only 2 percent
annually in 2019–23 with an average negative real GDP per capita growth of 0.8
percent. Labor force participation rates are
exceptionally low with large gender gaps.
Only one-third of men and 12 percent of
women participate in the labor market.
Poverty is high and widespread, with recurrent shocks increasing the risk of more
people falling into poverty.
Somalia achieved a historic HIPC Completion Point (CP) milestone on December 13,2023. Following the CP, Somalia received
full and irrevocable debt relief for thecountry of US$4.5 billion. As a result, Somalia’s external debt is estimated at lessthan 6 percent of GDP in 2023, from 64
percent in 2018. The country achieved thismilestone under a very challenging andfragile environment—the key structuralreforms were implemented at a time when
the country was plagued by multiple
shocks and challenges including the global

COVID-19 pandemic, protracted 15-monthelectoral impasse, prolonged and severe
drought, floods, locusts’ infestation, higher
international commodity prices, and increased insecurity and conflict. As thegovernment’s fiscal space remains limited
for development priorities and to respond to recurrent shocks, this debt relief
is expected to facilitate access to critical
additional financial resources needed tostrengthen the economy, reduce poverty,and promote job creation.

Recent developments
The economy is rebounding graduallywith improved weather conditions contributing to the continued reversal of the
impacts of the prolonged 2020/23 severe
drought. Favorable rains in 2023 led to
improved agricultural production, reduced food insecurity, and supported
private consumption. Exports recovery
was faster than that of imports, as exports of livestock rebounded. Nevertheless, net exports continue to be a dragon growth as the economy is heavily
reliant on imports. Private sector credit
growth contributed to strengthening ofconstruction, real estate, and investment
as growth in remittances remained muted. Real GDP is estimated to have grown at
3.1 percent in 2023, at par with population
growth, up from 2.4 percent in 2022.
Inflationary pressures eased in 2023,
supported by better agriculture performance and declining commodity prices.
Overall inflation, however, remained

FIGURE 1 Somalia / Federal government revenue

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

Percent of GDP8Poverty rate (%)

790

Real GDP per capita (constant LCU)

100

710
700

80

670690560

680

450670

40

330

220

1

10660
650

0020182019

Tax revenue

2020

2021

Non-tax revenue

2022

640
20172023

2019

2021

International poverty rate

GrantsReal GDP pc

Sources: Somalia authorities and World Bank estimates.

Source: World Bank. Notes: see Table 2.

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Apr 242023

2025

Lower middle-income pov. rate

sticky, averaging 6.1 percent in 2023 compared to 6.8 percent in 2022. Favorable
rains in 2023 boosted agricultural production, easing local staple food prices. Food inflation averaged 0.7 percent in 2023, compared to 13.9 percent in 2022. The easing of
global commodity prices has led to lower fuel and energy prices locally, though still highcompared to pre-2022 levels, contributing to
the stickier overall inflation.
The Federal Government of Somalia (FGS)
ran a small surplus in 2023 but the fiscal
situation remains challenging due to low
domestic resource mobilization (Figure 1).
Domestic revenue mobilization improvedin 2023 to 2.8 percent of GDP, from 2.5 percent in 2022 but remained well below thedevelopment needs of the country. Public expenditures are dominated by personnel costs, while investments in human capital are largely financed by grants and investments in infrastructure are negligible.
To improve fiscal sustainability and maintain prudent fiscal policy, the government
will need to fast-track the numerous efforts
underway to increase domestic revenue aswell 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 to73 percent in 2023, based on the 2017
poverty line. According to the 2022 Integrated Household Budget Survey, while
poverty rates are highest among the nomadic population, due to Somali’s high urbanization, the largest share 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 toinformal settlers in urban areas, people remain vulnerable to falling below thepoverty line. Somalia remains vulnerable
to shocks, particularly climatic ones, underscoring the importance of strengthening resilience through advancing reforms
to support growth, food security, and theprovision of basic services.

OutlookMedium-term recovery is projected tobe modest as risks remain significant.

TABLE 2 Somalia / Macro poverty outlook indicators

Real GDP growth is projected to expand from 3.7 percent in 2024 to 4 percent in 2026. Economic reforms and increased public investment with HIPC
CP dividends will boost investor confidence and attract foreign direct investment (FDI) encouraging increased
broad-based private sector activity.
Moreover, the recovery of agricultural
production and exports is expected tocontinue with improving weather conditions. This, coupled with further easing of the global commodity prices,
is expected to keep inflation low.
Nonetheless, the outlook is subject tosignificant risks including climatic
shocks, security threats, and global
economic shocks.
The poverty rate is projected to decrease between 2024 and 2026, reaching 71 percent in 2026, although still
very high. Accelerating the pace ofpoverty reduction will require policy
interventions and public investmentsthat raise productivity, strengthen resilience, create jobs, and expand propoor programs that focus on womenand youth.

(percent of GDP unless indicated otherwise)

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

2021
3.3
4.6

2022
2.4
6.8

2023e
3.1
6.1

2024f
3.7
3.9

2025f
3.9
3.7

2026f
4.0
3.5

Current account balance
Trade balancePrivate remittances
Official grants

-7.3
-50.9
21.5
23.0

-8.0
-61.2
20.6
33.0

-9.6
-58.8
20.3
29.3

-8.6
-58.5
20.4
29.8

-8.8
-57.7
20.6
28.6

-10.4
-56.9
21.0
25.9

b-0.8
2.3
1.5
4.7

-0.1
2.5
4.4
7.0

0.2
2.8
3.5
6.2

-0.4
2.8
4.3
7.5

-1.2
3.0
3.0
7.1

-1.8
3.3
1.5
6.6

Compensation of employees
External debt

2.5
39.9

2.5
36.7

2.5
5.4

2.6
5.0

2.5
5.7

2.5
7.2

72.6
91.3
99.8

72.8
91.4
99.9

72.7
91.3
99.8

72.1
91.0
99.5

71.6
90.7
99.1

71.0
90.4
98.8

0.0
1.5

0.0
1.5

0.2
1.5

0.3
1.5

0.3
1.5

0.2
1.5

Fiscal balance
Domestic revenue
External grants
Total expenditurec,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)

aSource: World Bank, IMF, and FGS. Emissions data sourced from CAIT and OECD.
Notes: e = estimate; f = forecast.
a/ GDP baseline estimates 2021-22 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:
2021–23. Forecasts: 2024–26.
d/ Projection using neutral distribution (2017) with pass-through = 1 (High) based on GDP per capita in constant LCU.

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