Wednesday November 30, 2022
MOGADISHU - Somalia's economy is expected to grow by 2.7 percent in 2022, down from 2.9 percent in 2021, amid a global environment characterized by multiple shocks, high volatility and uncertainty, the World Bank projected on Tuesday.
The World Bank's latest Somalia Economic Update report says a recovery in demand is expected in 2023 when most of the shocks currently dragging on the recovery are expected to dissipate.
"An uptick in consumption and investment, combined with faster growth of Somalia's trading partners, supports a forecast of Gross Domestic Product (GDP) growth of 3.6 percent in 2023 and 3.7 percent in 2024," says the report.
According to the World Bank, the economy rebounded with a GDP growth rate of 2.9 percent in 2021, up from a contraction of 0.3 percent in 2020.
The World Bank said this is despite significant shocks and factors that muted economic recovery, including delayed elections, drought, supply chain bottlenecks from COVID-19 closures, and increased insecurity.
World Bank Country Manager for Somalia Kristina Svensson said given the recurrent climatic shocks facing Somalia, the medium-term growth outlook remains highly uncertain, and the case for investments in social protection is stronger.
Somalia is currently experiencing a severe drought not seen in at least 40 years. After four consecutive seasons of poor rains, 90 percent of the country is experiencing severe drought conditions that include failed crop harvests, widespread water shortages, and a decline in livestock production.
According to the United Nations, the drought has intensified the humanitarian crisis and is driving the country to the brink of famine with large displacements of people as they leave their homes in search of food, water, and pasture for their livestock. The higher commodity prices are disproportionately affecting the poor and exacerbating inequality.
The report also notes that as Somalia transitions out of fragility, it needs to transition from humanitarian aid to development approaches gradually. ■