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World Bank forecasts favourable economic outlook for South Sudan

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ESI AFRICA 8 APR 2020

After a four-year contraction, South Sudan’s economy appears to be recovering and reached 3.2% in FY18/19.

However, according to the World Bank’s latest Economic Update for South Sudan, the economy is still affected by high inflation, which stood at 170% in October 2019.

The report forecasts favourable economic outlook with growth expected to be in the range of 7.9% during FY2019/20 and exports projected to increase by 23%.

However, the report cautions that a collapse of the peace agreement could push the economy back into recession over the same period.

According to the South Sudan Economic Update: Poverty and Vulnerability in a Fragile Environment, growth was mainly driven by positive movement in the oil sector, which recovered strongly.

Dividends from the peace agreement also reduced conflict in certain regions across the country and led to a slight recovery in a few non-oil sectors.

Growth in the oil and mining sectors was estimated at 10.7%, the services sector is estimated to have grown by 0.4%, while agriculture is estimated to have contracted by 2.5%.

Despite the positive economic achievements, South Sudan remains among the poorest countries in the world and four out of five South Sudanese still live below the international poverty line of $1.90 per day. 

Hyperinflation, high debt burden, distortions in the foreign exchange rate market, challenges in budget execution, as well as sub-national conflict further exacerbate the situation.

“South Sudan has registered positive economic growth. However, in order for growth to have more impact on the lives of ordinary citizens, a significant portion must be reinvested in improving food security and basic service delivery,” said Husam Abudagga, World Bank country manager for South Sudan.

According to the report, the country could reach its economic and social ambitions by:

  • Addressing the underlying causes of conflict and restoring peace and stability;
  • Implementing comprehensive macroeconomic reforms, including measures to unify the exchange markets, reduce inflation, and diversify the economy;
  • Improving budget transparency and taking steps to provide timely and accurate information on revenue, spending, arrears, debt, and budget execution; and
  • Increasing allocations and investment for service delivery, particularly in education, health, and rural development, necessary to improve resilience, reduce poverty, and build stock of human capital and avoiding a lost generation.

The World Bank’s South Sudan Economic Update series aims to provide regular, comprehensive analysis of the South Sudanese economy.

The report is intended to encourage constructive dialogue on public policies among the country’s leadership and key stakeholders including development partners, academia, the private sector and civil society.

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