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

Author: Patrick Hettinger

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  • The Ebola outbreak and its spill-over effects have slowed growth in 2014 to an estimated 1.8%; although commercial gold production, manufacturing and a gradual resumption in construction are expected to support real GDP growth of 3.8% in 2015, household incomes may be slower to recover.
  • Short-term government priorities are focusing on supporting Ebola-affected households, increasing incomes and employment, and resuming health services and education, for which fundamental reform will be critical to develop a healthy and skilled workforce.
  • Improving the business-enabling environment will be vital to employment generation, especially in the context of reduced international demand for Liberia’s commodity exports and the additional stigma from the Ebola crisis.

The Ebola outbreak has had a severe impact on Liberia’s economic and social progress. More than 4 000 Liberians have died in the health crisis. Although the disease is progressively being contained in early 2015, the spill-over effects on economic growth, investment and access to social services have reduced growth in 2014 to around 1.8% and will have an adverse impact over the medium term. The impact has been highest on the poor, who have faced a reduction in already precariously low incomes. While mining and rubber exports have continued during the crisis, the services sector, which employs around 45% of Liberians, faced a sharp decline. Agriculture is estimated to have a slightly below average harvest, with reductions in areas hardest hit with Ebola and due to flooding in the southeast region.

The government has clear priorities to contain the health crisis and mitigate its short-term consequences on affected households through cash transfers, cash-for-work programmes and food aid. It is also working on re-opening health services and schools. Building a healthy and skilled workforce for the future is critical and calls for immediate reform in the health and education sectors, although the government must take care to balance needed investment in the health sector with support to other sectors. To enable a return to inclusive growth beyond the immediate recovery, improving the business environment to encourage entrepreneurs and investment, including in agriculture, will be key, especially in light of reduced demand for Liberia’s exports and the additional stigma of the crisis reducing potential investment. As such, the resumption of road and energy infrastructure projects, as well as accompanying governance improvements to ensure sustainability, will help address binding constraints to growth.

Improving service provision to rural areas will support the long-term growth and stability of Liberia. While Monrovia has been the centre of economic activity for decades, increasing the welfare of households in rural areas will be key to developing sustainable growth in the country. Deconcentration of health services and education will be important factors in this. However, moving towards decentralisation will take many years, due to weak infrastructure, low local capacity and the high financial costs.

Table 1: Macroeconomic indicators

Real GDP growth8.
Real GDP per capita growth6.2-0.61.44
CPI inflation7.69.97.47
Budget balance % GDP-1.6-1.1-6.7-9
Current account balance % GDP-43.5-36.5-44.8-35.8

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