ADDIS ABABA – The International Monetary Fund (IMF) says Djibouti’s economic growth will slow from nearly 5 percent in 2021 to 3.5 percent in 2022 due to external shocks.
The IMF said this after its team, led by Brett Rayner, concluded a five-day-long visit to Djibouti on Thursday.
In a statement today, the Fund says Djibouti’s economy rebounded from pandemic-related disruptions in 2021.
The economic recovery, however, “appears uneven”, Raynor said, “following a series of external shocks”.
“While the economy has rebounded from pandemic-related disruptions with growth of nearly 5 percent in 2021, port activity remains weak due to the conflict in Ethiopia and trade disruptions in China,” the team leader said.
In addition, the IMF says rising commodity prices are putting additional pressure on the balance of payments and reserves have fallen significantly over the past year. Rising global food prices have also put pressure on inflation, adversely affecting the purchasing power of the population.
“Growth in 2022 will depend on the resumption of port activity and is tentatively forecast at 3-and-half percent,” said Rayner.
Meanwhile, the authorities of the East African nation have maintained fixed domestic fuel prices in the face of rising global prices. “As a result, fiscal revenues are set to contract sharply,” said Rayner.
The IMF mission advised Djibout’s officials to create fiscal space for additional social spending, including supporting vulnerable households facing higher prices.