São Paulo – Somalia’s economy is expected to grow 3.5% this year, over the 3.1% projected for 2018, according to estimates published by International Monetary Fund (IMF) this Tuesday (26) based on the review of the economic reforms implemented in the country in partnership with the fund.
According to the fund, since 2017, Somalia’s economy has rebounded, inflation has slowed and the trade deficit has narrowed, but further efforts are needed to improve economic conditions, increase employment, and reduce poverty.
Among the challenges faced by the country are improving revenue mobilization, by broadening the tax base and developing the administrative capacity to collect taxes. Somalia receives grants from countries and bodies. New transfers from the European Union and the World Bank are providing support for reforms and social initiatives, according to the IMF.
IMF commended the authorities’ efforts to improve domestic revenue mobilization but says bold steps to strengthen public financial management need to continue. “Staff encourages continued progress on implementing the authorities’ action plan (the Financial Sector Roadmap) for reforming and developing the financial sector,” says the report.
The fund states unemployment is very high in the country, and development and social needs are very large. “Growth remains too low to significantly address poverty and unemployment, particularly among the youth,” says IMF, naming also its vulnerability to natural disasters and food insecurity.
Last year, Somalia’s economy has had a modest recovery, aided by favorable rains and sustained remittance inflows. Exports are recovering on the back of stronger agricultural production, and imports decelerates as drought-related relief returns to levels pre-drought (2016-2017).
IMF projects an increase in the per capita GPD this year to USD 551. Last year, it reached USD 527, also an increase over 2017 (USD 510). The country’s nominal Gross Domestic Product (GDP) is expected to reach USD 7.9 billion in 2019, after USD 7.4 billion in 2018 and USD 7.1 billion in 2017.
Translated by Guilherme Miranda