Central African Republic Economic Update, October 2020 : The Central African Republic in Times of COVID-19 - Diversifying the Economy to Build Resilience and Foster Growth
The economy of the Central African Republic (CAR) grew at a slower pace in 2019 compared to 2018. Still, it grew at 3.1 percent, year-onyear, in 2019, above the average of regional peers (1.6 percent) and countries affected by fragility, conflict,...
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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/553731605123053992/Central-African-Republic-Economic-Update-The-Central-African-Republic-in-Times-of-COVID-19-Diversifying-the-Economy-to-Build-Resilience-and-Foster-Growth http://hdl.handle.net/10986/34803 |
| Summary: | The economy of the Central African
Republic (CAR) grew at a slower pace in 2019 compared to
2018. Still, it grew at 3.1 percent, year-onyear, in 2019,
above the average of regional peers (1.6 percent) and
countries affected by fragility, conflict, and violence
(FCV) (2.7 percent). Despite improvements in security
following the signing of the peace agreement in February
2019, the economy performed worse than expected due to the
collapse by about 30 percent in the production of coffee and
cotton, which in turn was the result of persistent
structural challenges in the agriculture sector. On the
demand side, private consumption remained the main driver of
economic growth, while the agriculture and services sectors
drove growth on the supply side. Moreover, extreme poverty
remains high and projected to affect 71 percent of the
population—3.4 million people—in 2019. Inflation increased
in 2019, and CEMAC’s monetary policy remained on track. The
tightening of monetary policy, as well as progress on
implementing the new Economic and Monetary Community of
Central Africa’s (Communauté Économique et Monétaire de
l’Afrique Centrale, CEMAC) foreign exchange regulation in
March 2019, contributed to a strong recovery of gross
foreign assets, from 2.7 months’ worth of imports in 2018 to
3.3 months in 2019. Inflation was contained at an average of
2.8 percent in 2019 as inflationary pressures from the
blockade of the main trade route between Bangui and Cameroon
in March abated. Fiscal stance improved, but CAR remains at
high risk of debt distress. Public expenditure grew at a
slower pace in 2019 than in 2018, mainly due to delays in
public investments. Government revenues picked up at 18.4
percent of GDP in 2019 thanks to a significant increase in
official grants. As a result, the overall fiscal situation
improved in 2019, and the debt-to-GDP ratio continued to
decline. However, CAR remains at high risk of debt distress,
primarily due to low exports and mobilization of domestic resources. |
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