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Overview

Recent Developments & Prospects

Macroeconomic Policy

Fiscal Policy

Monetary Policy

Economic Cooperation, Regional Integration & Trade

Debt Policy

Economic & Political Governance

Private Sector

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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: Jamal E. Zayid

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  • Prior to the Ebola (EVD) outbreak of May 2014, considerable progress had been made since the end of the civil conflict but the economic outlook in the medium term is now unfavourable.
  • Economic growth is expected to slow to 6.0% in 2014 as an effect of Ebola (against an 11.3% projection) and it is projected to go as low as -2.5% in 2015 before reaching 2.8% in 2016.
  • The rural/urban population breakdown was 61.6% rural to 38.4% urban in 2010 with Freetown accounting for 40% of the urban population and regional development forming part of the country’s Agenda for Prosperity (A4P).

Prior to the Ebola outbreak which started in May 2014, the authorities in Sierra Leone had made considerable progress since the end of the civil conflict. The outlook for the economy in the medium term, however, is unfavourable following the current EVD crisis. Preliminary analysis shows that economic growth has slowed down to 6.0% in 2014 compared to the original projection of 11.3%. GDP growth is projected to go as low as -2.5% in 2015 and the economy is projected to recover slightly reaching 2.8% in 2016. Inflation is revised upwards from 8.8% to 10% for 2014 and is projected at 9.4% and 8.3% for 2015 and 2016, respectively. The EVD crisis poses a great threat to macroeconomic stability, human development and poverty reduction.

Infrastructure deficiencies pose a serious threat to private-sector development although some progress had been made in improving the business environment prior to the outbreak of EVD. Public debt levels (domestic and external) remain sustainable but historically, public finances have been stressed as total revenue has consistently been lower than total spending. This has attendant implications on monetary policy and the external position, which had been improving prior to the EVD outbreak. Regarding regional integration, challenges remain in the free movement of people and capital across the Economic Community of West African States (ECOWAS) countries but the situation had been improving in recent years until the advent of the emergency restrictions imposed in the wake of the EVD outbreak. Likewise, governance, gender, environment, and social indicators had been improving prior to the outbreak. Considerable effort needs to be exerted by government and development partners in implementing the emerging Post-Ebola Recovery Plan.

The spatial nexus in Sierra Leone is essentially rural/urban. The urban population has the lion’s share of services, assets and earned income and is likely to bequeath more to successor generations compared to the rural population. In 2010 the rural population was estimated to account for 62% of the overall population while urban was 38%. Freetown accounts for roughly 40% of the urban dwellers. There is no dedicated strategy for spatial inclusion in Sierra Leone but the essential elements of it are subsumed in the country’s medium-term plan, the Agenda for Prosperity (A4P 2013-2018).

Table 1: Macroeconomic indicators

 20132014(e)2015(p)2016(p)
Real GDP growth20.16-2.52.8
Real GDP per capita growth18.24.1-4.31.1
CPI inflation9.8109.48.3
Budget balance % GDP-2.4-1.2-3.2-3.5
Current account balance % GDP-37.3-35.6-33-40.6

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

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