Population 3.977 million
GDP 1.767 US$ billion
@rating
country
Business climate
assessment
| 2010 | 2011 | 2012(e) | 2013(f) | |
|---|---|---|---|---|
|
GDP growth (%)
|
5.5 |
7 |
8.5 |
7.5 |
|
Inflation (yearly average) (%)
|
7.3 |
9 |
5 |
6 |
|
Budget balance (% GDP)
|
-0.8 |
-4.7 |
-3 |
-6.2 |
|
Current account balance (% GDP)
|
-149.5 |
-133.3 |
-133.8 |
-124.1 |
|
Public debt (% GDP)
|
42 |
38 |
34 |
33 |
| (e) Estimate (f) Forecast | ||||
STRENGTHS
- Diversity of natural resources (rubber, timber, iron, gold)
- Low external debt
- Support of international donors and investors
- Long coastline, natural outlet for Guinea
WEAKNESSES
- Inadequate energy, educational, health and transport infrastructures
- Vulnerability to fluctuation of world oil and food prices
- Widespread poverty, unemployment and illiteracy
- Recent and therefore weak democracy
Risk assessment
Growth supported by the agricultural and mining sectors and rehabilitation of deficient infrastructures
Since the end of fourteen years of civil war in 2003, the country has been slowly rebuilding and has recorded satisfactory growth rates. In 2013 activity will be driven by rising incomes in the agricultural sector (60% of GDP) and rising production in the mining sector. Revenues from rubber exports (the main export) will remain high, helped by solid international prices. Activity in the extractive industries will increase, stimulated by substantial foreign investments (iron ore). However, growth in manufacturing will be limited by inadequate electricity and water supply. Nevertheless, major reconstruction works are planned for 2013. These will concern the continuation of repairs to communication infrastructures (roads and bridges) and restoration of the water and electricity supply. The works will concentrate on rehabilitating the Mount Coffee hydroelectric station, as well as on the construction by the Liberian Electricity Corporation of ten power stations to increase short-term supply.
Structural trade deficit
The trade deficit (and therefore the current account deficit) remains huge, although narrowing. The growth of mineral exports (iron, gold and diamonds) supplementing traditional rubber sales is not enough to cover imports, which are twice as high, of capital goods (necessary for the reconstruction projects), food products and fuel. Moreover, the balance of services, greatly burdened by the United Nations Mission (UNMIL) present in the country, will remain in deficit. Transfers will, however, remain high due to the importance of aid for the reconstruction of infrastructures and humanitarian assistance. The current account deficit makes it difficult to accumulate the foreign exchange (2,2 months of import) necessary to prevent the depreciation of the Liberian pound and pushes up the price of products imported for local consumption. However, the high dollarisation of the economy (the American dollar is legal tender) limits inflationary tendencies.
External public debt largely wiped out
In 2010, the country benefited from a substantial cancellation of its external public debt under the heavily indebted poor countries (HIPC) initiative sponsored by the IMF and the World Bank. The debt cancelled amounted to a total of $4.6 billion.
Since 2008, the country has further benefitted from an IMF Extended Credit Facility of $495 million, two thirds of which has already been drawn down. In November 2012, the IMF approved a further drawdown over three years of $79 million in connection with this ECF.
In 2013, the fiscal deficit is expected to reach 6.2% of GDP. Spending will focus on public services improvement (health, education, expansion of the water supply system) and infrastructure reconstruction. The reconstruction projects will still largely be funded by international donors (World Bank, African Development Bank), with the difference funded by concessional foreign loans, higher customs revenues and government bonds as the country returns to the financial markets for finance.
Political situation still weak
In November 2011, Ellen Johnson-Sirleaf was re-elected as Head of State for a second term. However, voter turnout in the second round was only 38%. Her opponent, Winston Tubman, withdrew from the race citing first-round fraud as his reason. The opposition now accuses the government of corruption and nepotism. Moreover, though advances have been made in health and education, public opinion is critical of the slow pace of economic and social progress. Moreover, the security situation remains precarious. The 100,000 former combatants have not all been re-integrated into civil society. There remains a risk, therefore, that they will decide to join the regional militias. Finally, the situation in the sub-region is likely to remain precarious. The conflict in the Ivory Coast, which ended in April 2011, led to an influx of refugees into Liberia while there are still cross-border movements of arms and mercenaries, which, it is claimed, have been involved in the series of attacks affecting the Ivory Coast in recent months. The United Nations are, however, planning to cut their staff in Liberia by more than half by 2015.
