São Paulo – Djibouti, an Arab country in Africa, has an economic growth projected at 6.5% for this year, according to an analysis released by the International Monetary Fund (IMF) on Thursday (12). The country’s economy has strong foundations in shipping and logistics due to the strategic location of the Port of Djibouti. This sector has shown resilience to regional conflicts, according to the IMF team.
“Growth in FY24 is projected at a robust 6.5 percent, driven by increased transshipments as shipping companies navigate Red Sea tensions,” says the report by Esther Pérez Ruiz, who led the IMF team during its visit to the Arab country from December 8 to 12. Transshipment occurs when cargo is transferred from one ship to another to continue to a new destination.
In the Red Sea, vessels have been suffering recurring attacks by the Houthis, a group from Yemen. The Port of Djibouti has an outlet to the Gulf of Tadjoura, which lies next to the Gulf of Aden, providing access to the Indian Ocean, the Mediterranean Sea, the Red Sea, and the Suez Canal.
According to Ruiz, inflation remains moderate in Djibouti as the authorities have stabilized energy and food prices to mitigate the impact of rising import costs. The fiscal deficit for 2024 is projected to stabilize at 3.5% of gross domestic product in 2024, as reduced interest payments offset weaker tax revenues and grants.
Esther Pérez Ruiz, however, highlights the decline in the country’s international reserves over the past two years, “which deserves attention in view of substantial outstanding external obligations,” she said. The IMF executive also mentions risks to the country’s economic outlook, such as limited job creation or the recurrence of droughts, which disproportionately affect the poor.
Djibouti’s overall outlook could enhance
“On the positive side, stronger-than-expected growth in Ethiopia and a swift resolution of Red Sea disruptions could enhance Djibouti’s overall outlook,” she said. Ethiopia, a major economy in Africa, is Djibouti’s neighbor. Esther Pérez Ruiz highlights the authorities’ efforts promoting macroeconomic sustainability and the credibility of the political framework, with measures such as expediting debt negotiations, revising agreement, and enhancing revenue mobilization.
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Djiboutian growth reached about 7% in 2023
Translated by Guilherme Miranda
