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Thematic analysis: Structural transformation and natural resources

Author: Marcellin Ndong Ntah

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  • Despite poor international conditions, notably a sharp drop in the price of iron – the country’s main export – the economy grew an estimated 6.4% in 2014, the third year running that it has been above 5%.
  • The short and medium-term outlook remains good, thanks to satisfactory macroeconomic policies, structural reforms, increased public investment and plans for greater production capacity in the extractive sector.
  • Encouragement of inclusive growth includes reducing spatial and other inequalities, a priority for better territorial governance.

The economy remained healthy in 2014, growing an estimated 6.4% – higher than 5% for the third year running – and driven by a revival in fisheries and a robust mining sector, which compensated for lower oil production and manufacturing. With suitable policies and structural progress, the economy held up against falling iron and gold prices and insufficient rainfall. The short and medium-term outlook remains good, thanks to a planned increase in the production capacity of the extractive sector and continuing structural reforms.

Economic gains were strengthened in 2014, and inflation remained under control at 3.5%. The overall budget situation continued to be viable despite some widening of the deficit in the basic balance (to 2.4% of GDP) and in the overall balance (to 3.4%). The current deficit improved to 24.7% of GDP from 24.8% in 2013. Currency reserves fell slightly due to lower exchange rates and were estimated at the equivalent of 4.7 months of imports (excluding the extractive sector) compared with 6.5 months in 2013. The year saw the start of a structural transformation of the economy, with a gradual diversification of the productive base and the continuing expansion of the services sector.

The 2015 budget focused on continuing public investment, strengthening the macroeconomic balance and implementing priority structural reforms. This should produce a better macroeconomic situation, with inflation held at 4.6%, smaller basic and overall budget deficits and a comfortable level of exchange reserves.

Mauritania has made progress in reducing poverty by strengthening the social safety net and investing in key projects to fill the infrastructure gap, but much remains to be done. Progress towards the 2015 Millennium Development Goals has been mixed.

Despite the positive change in the economic situation, challenges remain in achieving more inclusive growth, with special attention required for inequalities, notably the spatial disparities resulting from the country’s large size (1 030 000 km2) and strong demographic growth (an annual 6.44%) in the capital, Nouakchott, which has just over one-fourth (958 500) of the total population. The region of the capital is by far the most populated, compared with the sparsest, Inchri, which has only 19 600 inhabitants.  This underlines the importance of a land-use and territorial-rebalancing policy as a crucial means to reduce regional disparities.

Table 1: Macroeconomic indicators

Real GDP growth5.
Real GDP per capita growth3.243.24.4
CPI inflation4.
Budget balance % GDP-1.1-3.4-2.8-1.7
Current account balance % GDP-24.8-24.7-7.6-23

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