Macroeconomic Performance
Table 1: Overview of some macroeconomic indicators
Liberia’s economy slowed to a growth of 4.6 per cent in 2023 from 4.8 per cent in 2022, with high inflation scuttling private consumption, even though gold production supported growth. Average inflation inched up to 10.1 per cent in 2023 from 7.6 per cent in 2022 due to rising food and transportation costs and a depreciating currency. Revenue decline and a marginal uptick in expenditure resulted in a worsening of the fiscal balance to -6.4 per cent of GDP in 2023 from -5.3 per cent in 2022, with the debt-to-GDP ratio increasing to 55.7 per cent of GDP in 2023 from 53.9 per cent in 2022. The current account balance widened to -26.5 per cent in 2023 from -19.0 per cent in 2022 on the back of a worsening of the trade deficit.
Outlook
The Liberian economy is projected to grow by 5.2 per cent in 2024 and 5.4 per cent in 2025, bolstered by a recovery in agriculture and services sector growth. Mining sector growth and private consumption (supported by declining inflation) will also contribute to the growth of the overall economy. Average inflation is projected to decline to 7.5 per cent in 2024 and further to 6.1 per cent in 2025. Fiscal balance is projected to improve to -5.0 per cent of GDP in 2024 and stabilise around that ratio in 2025 as the new government seeks to ensure fiscal prudence. The debt-to-GDP ratio is projected to inch up marginally to 56.5 per cent of GDP in 2024 and further to 57.7 per cent in 2025, while the current account balance is projected to worsen to -30.8 per cent of GDP in 2024 before improving slightly to -30.5 per cent in 2025.
Probable Headwinds
An unfavourable rainfall pattern could derail the projected growth in agriculture, leading to food shortages and an inflation spike. A vigorous depreciation of the local currency will further worsen inflation and constrain the growth in economic activity. In a bid to fulfil campaign promises, the new government could embark on expansionary fiscal policies, which could derail fiscal consolidation efforts and increase the debt stock.