World Bank launches seventh edition of Madagascar’s economic update
The World Bank has launched its seventh edition of Madagascar’s economic update.
“Once again, this year, Madagascar has proven its extraordinary ability to act swiftly when disasters strike. This seventh edition of Madagascar’s Economic Update shows that despite a challenging start due to two climatic shocks, Madagascar’s economy is projected to grow at 4.1 percent in 2017, a continuation of the positive trend from last year,” said Coralie Gevers, Country Manager for Madagascar.
The services sector continue to be the most important growth driver, supported by an increase in construction activities, trade, and transport.
Construction activities supports a planned scale-up of public investments following the outcome of the donors and investors conference in Paris in December 2016, and the disaster management response to the devastating cyclone ENAWO.
Manufacturing is expected to increase, reflecting strong demand for Malagasy textiles, and an increase in agricultural processing, particularly for sugar.
A more buoyant growth of 9.5 percent is expected in the extractive industries, as global nickel prices improve slightly. However, performance of the agricultural sector has been affected by the two major natural disasters earlier this year.
The Madagascar’s Economic Update forecasts a positive medium-term economic growth, estimated to reach 5.1 percent of GDP in 2018, and then average 5.3 percent over the 2019 to 2022 period.
This growth is expected to be driven by the intensification of public works activities, as well as the tourism sector. The energy sub-sector is also projected to grow at an average of 10.5 percent over the 2018-2022 period, as private production expands and provided governance reforms for JIRAMA start to bear fruit.
A special focus of the report shows also an improvement to Madagascar’s institutional environment measured through the Country Policy and Institutional Assessment (CPIA).
Since the return to constitutional order in 2014, Madagascar has recorded a gradual improvement to the quality of the institutional and policy environment, notably in the areas of social protection and budgetary management.
The CPIA score increased from 3.0 in 2013, when the country’s performance was at its lowest, to 3.2 in 2016. Improving the institutional environment is critical given the opportunities and challenges that lie ahead. Building strong institutions is key for ensuring resources are used well.