Authors

Overview

Recent Developments & Prospects

Macroeconomic Policy

Fiscal Policy

Monetary Policy

Economic Cooperation, Regional Integration & Trade

Debt Policy

Economic & Political Governance

Private Sector

Financial Sector

Public Sector Management, Institutions & Reform

Natural Resource Management & Environment

Political Context

Social Context & Human Development

Building Human Resources

Poverty Reduction, Social Protection & Labour

Gender Equality

Thematic analysis: Structural transformation and natural resources

Authors: Alassane Diabate, Riad Meddeb

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  • The return of political and institutional stability in the Comoros has allowed economic growth to resume, averaging 3% a year between 2011 and 2013. The outlook for 2014 is positive, but the employment situation is not expected to improve, especially among new graduates.
  • Control of public expenditure has enabled the Comoros to conclude the sixth and final review of the IMF’s Extended Credit Facility (ECF), approved on 13 December 2013.
  • Despite the structural deficit in the current account balance, the country still has a comfortable external position, with more than seven months of import reserves, mainly thanks to remittances from emigrants (USD 147 million in 2012, or 23% of GDP).

The Comoros has recorded positive growth since 2011. Growth was estimated at 3.6% in 2013, driven mainly by agriculture (representing almost half of GDP), retail, tourism, construction (above 4.0%), and banking and other services (around 8.0%).

The return to growth was aided by an expansionary fiscal policy thanks to major multilateral external financing, and especially bilateral financing from Arab countries. The Comoros has thus been able to run fiscal surpluses since 2011, increasing the surplus each year. A 5.6% surplus is projected for 2014 thanks to ongoing grants and programmes in the pipeline with the African Development Bank (AfDB), the World Bank and the European Union (EU).

Nevertheless, the country’s economic impetus since 2011 has not led to structural changes in the economy. It remains dominated by the agricultural sector (agriculture, forestry and fisheries), which represents almost half of GDP. The secondary sector, including construction, has grown slightly since 2010, remaining above 12% of GDP. The services sector, meanwhile, has declined since 2008 and now accounts for less than 40% of GDP.

The telecommunications sector has driven economic growth in many franc-zone countries. In the Comoros it remains a state monopoly. With support from the World Bank, the authorities are expected to sell a second licence in the near future and to open up the capital of Comores Télécom to create a competitive environment.

With the country’s population growing at a rate of 2.1% a year, the level of economic growth is too low to increase real per capita income and reduce poverty and youth unemployment. Poverty remains high, estimated at 45.6% in 2012, well above the Millennium Development Goal (MDG) target of 31.5% by 2015. The economic growth has done little to create jobs, with unemployment estimated at 14.3% and youth unemployment (under 25s) at 44.5%.

As part of the SCA2D strategy for accelerated growth and sustainable development (Stratégie de croissance accélérée et de développement durable) currently being drawn up for the period 2015-19, the government has set a growth objective of 6%, which will be driven by the development of basic infrastructure, improvements to the business climate and private-sector financial support.

Table 1: Macroeconomic indicators

 20122013(e)2014(p)2015(p)
Real GDP growth33.63.84.1
Real GDP per capita growth0.61.21.41.8
CPI inflation6.32.54.24.4
Budget balance % GDP3.65.55.65.7
Current account balance % GDP-7.2-7.3-7.1-8.7

Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.

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