Somalia Economic Update, June 2020 : Impact of COVID-19 - Policies to Manage the Crisis and Strengthen Economic Recovery
Before the COVID-19 (Coronavirus) pandemic, Somalia’s economy was on an upward trajectory, recovering from the 2016/17 drought. The economy grew at an estimated rate of 2.9 percent in 2019, on par with population growth, and was projected to grow a...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/252881595627954924/Somalia-Economic-Update-Impact-of-COVID-19-Policies-to-Manage-the-Crisis-and-Strengthen-Economic-Recovery http://hdl.handle.net/10986/34239 |
| Summary: | Before the COVID-19 (Coronavirus)
pandemic, Somalia’s economy was on an upward trajectory,
recovering from the 2016/17 drought. The economy grew at an
estimated rate of 2.9 percent in 2019, on par with
population growth, and was projected to grow at 3.2 percent
in 2020. The COVID-19 pandemic has interrupted Somalia’s
economic recovery. The crisis will have a large negative
impact on real GDP growth in 2020, affecting the economy
through a combination of supply and demand shocks. As a
result of shutdowns, global supply chains have disrupted
imports of consumption and capital goods from Somalia’s
trading partners (mainly China, the United Arab Emirates,
India, Turkey, and Oman); cancellations of the 2020 Hajj and
export bans by Saudi Arabia have tamped down demand for
exports (mostly live animals); and the global recession and
travel restrictions/flight suspensions are limiting
remittance flows into Somalia. The economy, which is driven
mainly by the private sector, is exposed to increased
business vulnerabilities, interruption of supply chains,
decreased capital and venture inflows, diminished access to
financing, and shortages of basic raw materials. The
pandemic is projected to push the economy into contraction,
increase fiscal pressures, and deepen poverty in 2020. The
economy is projected to contract by 2.5 percent in 2020. A
slowdown in economic activities, declining remittances,
falling exports, and the government-mandated closures of
airports and businesses to contain the spread of the virus
are reducing household income. Household consumption will
fall sharply and rapidly with supply disruptions. Panic
buying led to an uptick in prices in an economy that depends
on imports even for food products at the start of the
pandemic, but this has eased. |
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