World Bank predicts Somali economy to grow 2.4% in 2021

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The World Bank on Tuesday forecast Somalia’s economy to grow 2.4 percent in 2021. / Xinhua

The World Bank on Tuesday forecast Somalia’s economy to grow 2.4 percent in 2021. / Xinhua

The World Bank on Tuesday forecast Somalia’s economy to grow by 2.4% in 2021, rebounding from the “triple shock” that ravaged the country in 2020 – COVID-19, flooding and locust invasion.

In its latest economic update, the World Bank said this growth momentum is expected to continue over the medium term and reach pre-COVID-19 levels of 3.2% in 2023.

“As Somalia sets off on the path to recovery from the triple shocks, policy interventions that increase productivity, create jobs and expand pro-poor programs will be essential,” said Kristina Svensson, director of the World Bank for Somalia, at the virtual launch of the report.

According to the report, Somalia’s economy contracted 0.4% in 2020, less severe than the 1.5% contraction predicted at the start of the global pandemic.

Higher than expected aid flows, fiscal policy measures put in place by the government to help businesses, social protection measures to cushion vulnerable households and larger than expected remittances have mitigated the negative effects of the triple shock.

And disruptions resulting from COVID-19 containment measures have reduced federal and state revenue collection while increasing pressure to spend more on health and disaster relief, according to the report, noting that sharp increases in external subsidies allowed the government to begin to rebalance public spending towards the economic and social. services and provide funds for new social programs and emergency response projects to increase resilience.

John Randa, Senior Economist, World Bank, said supporting the health sector is an essential component of resilient and inclusive development and that investing in health puts Somalia on track to reap substantial demographic dividends through improved life expectancy and reduced fertility.

The lender said interventions to improve the investment climate and encourage the formalization of businesses to attract more private investment would include reforms focused on reducing the cost of electricity and improving its reliability, leveling the playing field between private companies, reducing bureaucracy and expanding financial inclusion.

Source (s): Xinhua News Agency


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