The World Bank on Tuesday projected Somalia’s economy to grow at 2.4 per cent in 2021, rebounding from the “triple shock” – Coronavirus (COVID-19), flooding, and the locust infestation – that ravaged the country in 2020.
Kristina Svensson, the World Bank country manager for Somalia announced the projection during the virtual launch of an economic update by the bank.
In its latest Economic Update, the World Bank said that the growth momentum would continue in the medium-term and reach pre-COVID-19 levels of 3.2 per cent in 2023.
“As Somalia embarks on the road to recovery from the triple shocks, policy interventions that raise productivity, create jobs, and expand pro-poor programmes will be key,” said Svensson.
According to the report, the economy of Somalia contracted 0.4 per cent in 2020, less severe than the 1.5 per cent contraction projected at the onset of the global pandemic.
Higher-than-anticipated aid flows, fiscal policy measures put in place by the government to aid businesses, social protection measures to cushion vulnerable households, and higher-than-expected remittance inflows mitigated the adverse effects of the triple shock.
The report said that the disruptions stemming from COVID-19 containment measures reduced federal and state revenue collection while increasing pressure to spend more on health and disaster relief.
The World Bank noted that large increases in external grants enabled the government to begin rebalancing public spending toward economic and social services and to provide funds for new social programs and emergency response projects to increase resilience.
John Randa, World Bank senior economist, said support for the health sector is an essential component of resilient and inclusive development, and investing in health sets Somalia on a path to reaping substantial demographic dividends from improvements in life expectancy and reductions in fertility.
The lender said interventions to improve the investment climate and encourage the formalisation 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 among private firms, reducing red tape, and broadening financial inclusion. (Xinhua/NAN)