By T. Roble
Somalia’s economic growth is projected to dip by 1.5% this year owing to the triple effects of COVID-19, floods, and desert locust invasions, the World Bank has said but noted the drop was a point lower compared to estimates in the mid of the year.
The 5th Somalia Economic Update launched today points to sustained resilience despite the impact of the COVID-19 and environmental factors. According to the lender, Somalia’s economy was projected to shrink by 2.5% in June.
The report also noted domestic revenues are expected to decrease by 1.4% of the GDP amounting to $67 million while expenditures will double to 2.4% GDP compared to 2019.
Despite the slump, the report notes, more money has moved from the Federal Government to the Federal Member States deepening fiscal federalism. Transfers from the national government rose by 244% translating to 146 million in 2020 compared to $42.6 million the previous year.
Social spending especially in health and social protection sectors rose by 132%, a move the World Bank has lauded as impressive as more money goes to improving livelihoods and living conditions.
The report projects an economic rebound to 2.9% in 2021 but conditioned on the easing of COVID-19 pressures, upsurge in remittances, and official grants in addition to the absence of further climatic shocks. However should these factors remain in place, the economy will record a growth of 1.9% next year.
The World Bank recommends steps to enhance and promote measures to prevent the domestic spread of COVID-19, food security, and revenue mobilisation reforms in addition to implementing financial sector reforms to sustain economic growth.