Macroeconomic Performance
Table 1: Overview of some macroeconomic indicators
Sierra Leone’s economy slowed to a growth of 3.4 per cent in 2023 from 3.5 per cent in 2022, as private consumption was suppressed by an exceedingly high average inflation, which ended the year at 47.7 per cent from 27.2 per cent in 2022, fuelled by increased food and energy prices. Fiscal balance narrowed to -7.3 per cent of GDP from -10.3 per cent in 2022 as revenue growth outpaced the growth in expenditure. The debt-to-GDP ratio improved to 80.0 per cent of GDP from 94.1 per cent in 2022, with the current account balance experiencing a remarkable improvement to -4.0 per cent of GDP from -11.0 per cent in 2022 as increased iron ore exports helped to increase export proceeds.
Outlook
The Sierra Leonean economy is projected to rebound to a growth of 4.1 per cent in 2024, and further to 4.5 per cent in 2025 as the projected decline in inflation spurs private consumption. Average inflation is projected to decline to 38.6 per cent in 2024 and further to 23.1 per cent in 2025 on the back of declining food and energy prices, while the fiscal balance tightens to -3.0 per cent of GDP in 2024 before inching up marginally to -3.6 per cent in 2025. The debt-to-GDP ratio is projected to decline markedly to 69.7 per cent of GDP in 2024, rising marginally to 69.8 per cent in 2025, below the 70 per cent convergence threshold. The current account balance is projected to continue to tighten to -3.0 per cent of GDP in 2024, supported by iron ore export proceeds, before climbing to -4.0 per cent in 2025.
Probable Headwinds
Currency depreciation poses a vital risk for economic growth and macroeconomic stability. The Leone has lost a lot of ground recently to the US dollar, fuelling inflation. If this should continue, GDP growth will continue to be constrained. A suspected coup attempt in 2023 was averted. A recurrence of this incident will suppress foreign direct investment while threatening fiscal stability since resources will be dedicated to contain it. A recurrence of high food and energy prices will continue to fuel inflation and suppress GDP growth.