The World Bank expects Somalia's economy to grow by 3.8% by 2025

The World Bank expects Somalia's economy to grow by 3.8% by 2025

 The Somali economy has shown resilience, according to the eighth Somalia Economic Report issued by the World Bank, despite facing a long-term drought from 2020 to 2023. The report noted that the drought, which severely affected agriculture and exports, led to a large migration as people searched for food and water, causing... GDP growth will decline to 2.4% in 2022, down from 3.3% the previous year.

However, forecasts point to an increase in GDP growth to 3.1% in 2023, with the potential to rise to 3.8% by 2025. The positive outlook is attributed to the implementation of reforms under the HIPC Initiative, which is expected to lead to Modest improvement in per capita income.

Christina Svensson, Director of the World Bank Office in Somalia, stressed the importance of ongoing reforms to achieve sustainable growth. She stated, “Achieving the Heavily Indebted Poor Countries (HIPC) completion point is pivotal for Somalia, as it enhances investor confidence and requires continued efforts in creating an enabling environment for foreign investments.”

The report also focused on the importance of water management in Somalia's development strategy, as effective management of water resources is crucial to mitigating the effects of climate variability and achieving economic stability, as pointed out by Chantal Ritchie, a senior expert in the field of water supply and sanitation at the World Bank.

Public finances have improved in Somalia, with domestic revenues exceeding pre-coronavirus levels since 2022. This increase has allowed a shift in government spending towards social welfare and regional grants. Stella Ilieva, World Bank Senior Economist, emphasizes that economic reforms and investments in human capital are vital to attract foreign direct investment and boost economic output growth.