(where available) for key growth drivers (physical investment, demographics and the labor force, human capital and total factor productivity).

**<u>Graph 1: Pre‐Conflict Real GDP Growth and Projection</u>**

<!-- Start of picture text --> (a) September/October 2018 Vintage (b) April 2011 Vintage<br>% %<br>8.0<br>8.0<br>6.0 4.9<br>6.0<br>4.0<br>4.5 4.0 5.0<br>2.0<br>2.0<br>0.0<br>0.0<br>‐2.0<br>‐2.0<br>‐4.0<br>‐4.0<br>IMF WEO, Oct 2018<br>WDI/MFMod 2018 IMF WEO April 2011, 6‐year average, 2011‐2016<br>WDI/MFMod 2018, 10‐year average, 2001‐2010 IMF WEO, April 2011 (dashed line indicates estimate/projection)<br>IMF WEO Oct 2018, 10‐year average, 2001‐2010<br>1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010<br>1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016<br><!-- End of picture text -->

# **2.1 Growth drivers**

In terms of **physical investment,** the investment‐to‐output ratio, IY⁄ (gross _<u>fixed</u>_ capital formation (GFCF), as a percentage of GDP) averaged about 21.5% over the 7‐year period, 2001‐2007 (Graph 2(a), blue line with marker).<sup>5</sup> For gross capital formation (GCF), which includes inventories, as a percentage of GDP, the IMF WEO October 2018 showed an average of 23.1% over 2001‐2010 (Graph 2(a) red line). Pre‐conflict data (IMF WEO April 2011) meanwhile suggested a lower average of 21.8% for GCF (% of GDP), albeit with a projected rise of about 3 percentage points over 2011‐2016 (Graph 2(b)). Of total IY⁄ , how much exactly can be attributed to public investment ( I<sup>�</sup> ⁄Y� is uncertain ‐ 40% seems plausible based on reported figures.<sup>6</sup>

**<u>Graph 2: Pre‐Conflict Investment and Projection</u>**

<!-- Start of picture text --> (a) September/October 2018 Vintage (b) April 2011 Vintage<br>% of GDP % of GDP<br>35.0<br>30.0<br>30.0<br>25.0<br>25.0<br>25.2<br>20.0<br>20.0<br>23.1<br>21.5<br>15.0 15.0<br>10.0 10.0<br>Gross fixed capital formation (GFCF) (WDI, 2018)<br>GFCF 7‐year average, 2001‐2007 (WDI, 2018) GCF (IMF WEO, April 2011), dashed line indicates estimate/projection<br>Gross capital formation (GCF) (IMF WEO, Oct 2018) GCF 6‐year average, 2011‐2016 (IMF WEO, April 2011)<br>GCF 10‐year average, 2001‐2010 (IMF WEO, Oct 2018)<br>1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016<br><!-- End of picture text -->

> 5 MFMod numbers suggest a slightly lower average of 20.5% over the same period (and 20.1% over 2001‐2010).

> 6 World Bank (2017b) reports I<sup>�</sup> ⁄Y of 9% and private fixed capital formation‐to‐output, I<sup>�</sup> ⁄ Y of 12% in 2010 giving a public investment share of total investment of 43%. Data in IMF (2010) indicate an average share of 38% over 2005‐2008, based on gross capital formation‐to‐output averaging 21.8%. Calculations using the IMF FAD Investment and Capital Stock Database 2017 suggest an average share of 47% over 2001‐2010, but the average value for total investment‐to‐output at 6% is relatively low compared to the other reported values.

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