Madagascar Economic Update, October 2019
The successful conclusion of the Presidential election in January 2019 represents a historic window of opportunity for Madagascar to break cycles of political instability that abruptly interrupted its development in the past and to leapfrog its economic and social revitalization. Following a prolonged period of economic stagnation, growth accelerated over the last five years to reach 5.1 percent in 2018, its fastest pace in over a decade. The return to constitutional order in 2014 was instrumental to this economic revival, as it contributed to restore investor confidence, re-open access to key export markets, reinstate flows of concessional financing, and encourage structural reforms. Growth continued apace in 2019, although moderating slightly to an estimated 4.7 percent, amid weakening external demand and a slow execution of public spending following the presidential and parliamentary elections. A post-election rebound in public and private investments is expected to result in growth averaging 5.4 percent in 2020-21. This Economic Update suggests however that the country remains vulnerable to shocks. International risks include the possible intensification of the trade war between main trading partners, or the rise in international oil prices in a context of geopolitical tensions. The risk of natural disasters or of a sharp drop in the price of vanilla also need due consideration. The government must take advantage of the successful political transition to accelerate growth-enhancing reforms and develop the necessary fiscal buffers to support priority investments and be ready to face unexpected circumstances.
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Language: | English |
Published: |
Washington, DC: World Bank
2019-10
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Subjects: | ECONOMIC GROWTH, POVERTY, TRADE, MONETARY POLICY, FISCAL TRENDS, ECONOMIC OUTLOOK, PUBLIC FINANCE, RISKS, COMPETITION, |
Online Access: | http://documents.worldbank.org/curated/en/535501571854255186/Madagascar-Economic-Update-A-New-Start https://hdl.handle.net/10986/32636 |
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Summary: | The successful conclusion of the
Presidential election in January 2019 represents a historic
window of opportunity for Madagascar to break cycles of
political instability that abruptly interrupted its
development in the past and to leapfrog its economic and
social revitalization. Following a prolonged period of
economic stagnation, growth accelerated over the last five
years to reach 5.1 percent in 2018, its fastest pace in over
a decade. The return to constitutional order in 2014 was
instrumental to this economic revival, as it contributed to
restore investor confidence, re-open access to key export
markets, reinstate flows of concessional financing, and
encourage structural reforms. Growth continued apace in
2019, although moderating slightly to an estimated 4.7
percent, amid weakening external demand and a slow execution
of public spending following the presidential and
parliamentary elections. A post-election rebound in public
and private investments is expected to result in growth
averaging 5.4 percent in 2020-21. This Economic Update
suggests however that the country remains vulnerable to
shocks. International risks include the possible
intensification of the trade war between main trading
partners, or the rise in international oil prices in a
context of geopolitical tensions. The risk of natural
disasters or of a sharp drop in the price of vanilla also
need due consideration. The government must take advantage
of the successful political transition to accelerate
growth-enhancing reforms and develop the necessary fiscal
buffers to support priority investments and be ready to face
unexpected circumstances. |
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