IMF Projects Somalia’s Economy to Grow at 3.2% in 2022

ADDIS ABABA- The International Monetary Fund (IMF) on Monday projected Somalia’s economy to grow at 3.2 percent for 2022, but warned risks are on the downside.

The Projection came after the IMF team held a virtual mission during February 22 – March 7, 2022, to conduct reviews of Somalia’s economic program supported by its Extended Credit Facility (ECF) arrangement.

“Growth will be supported by remittances, foreign direct investment, and increased public spending as grant financing unlocks once the elections process is complete,” IMF said in a statement after the mission.

According to the team, inflation is expected at 6.5 percent in 2022 due to higher food and energy prices while fiscal deficit forecasted to narrow to 0.5 percent of GDP, as revenues and budget grants recover.

“However, near-term risks include the evolution of the pandemic, political uncertainty related to elections, prolonged drought or new climate shocks, resurgence of desert locust infestation, and the potential implications from geopolitical uncertainties,” the Fund said.

Shortfalls in budget grants would also create risks for the budget, according to the IMF.