Somalia’s economy has shown resilience with a 2.8% GDP growth in 2023, driven by the recovery of the agricultural sector and strong performance in service industries. Projections indicate a rise in GDP to 3.7% in 2024 and 3.8% in 2025, supported by key sectors like livestock, services, and remittances.
Persistent challenges
However, economic outlook is shadowed by risks such as the dispute with Ethiopia over the Red Sea port, environmental risks, and internal security issues. The government aims to strengthen the low domestic revenue base through tax reforms.
Monetary policy and debt reduction
Somalia operates under a dual currency system and aims to introduce formal monetary policy by 2026. Inflation has seen a decline, and debt relief of $4.5 billion has improved the fiscal outlook.
Socio-economic developments
Although poverty rates have decreased, poverty remains pervasive, particularly among nomadic communities. Structural reforms and targeted social investments are needed for inclusive growth.
Strategic policies
Somalia is working on tax modernization, currency stabilization, agricultural development, and debt management to foster growth.
Overall, strategic economic policies, international support, and structural reforms are crucial for Somalia’s economic stability and growth in the face of challenges.
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