Macroeconomic and Developmental Indicators
Sierra Leone Economic Outlook
Sierra Leone is one of the poorest countries in the ECOWAS region. The Human Development Index (HDI), which measures a country’s overall standard of living, ranked Sierra Leone as a low human development category, which implies it is positioned at 179 out of 188 countries on improvements on the basic dimension of human development (education, health and a decent standard of living) in 2018. The country’s health indicators are among the worst in the region (behind only Niger and Liberia), primarily due to a poor health care delivery system.
Real GDP growth is expected to strengthen 5.0% in 2019, from 3.5% recorded in 2018. This is will be driven by increased agricultural production and buoyed construction and service sectors. Inflationary pressures remain relatively high at 15.7% but declined compared to 2016 as a result of the tight monetary policy stance adopted by the Central Bank of Sierra Leone and prudent fiscal stance by the government of Sierra Leone. The domestic exchange rate also lost almost 30% of its value since 2016. This was partly due to shortages of foreign currencies due to poor export performance (a fall in iron ore prices and the closure of two main mining companies). The overall fiscal deficit declined to 3.6% of GDP in 2019 from 5.8% of GDP in 2018, explained by tight budgetary spending and improved revenue collections. The total public debt increased to an estimated 64.5% in 2019, from 63.0% in 2018. According to the IMF debt sustainability analysis, Sierra Leone is considered a high risk of debt distress. The external sector also improved as the current account deficit narrowed slightly from 13.8% of GDP in 2018 to an estimated 12.3% of GDP in 2019. This was on the back of weaker than expected imports and the impact of tight fiscal policy.
The business environment remains stable but the heightened risk of macroeconomic vulnerability is persistent. According to the World Bank Doing Business Survey 2020, Sierra Leone is ranked 163 out of 180 countries in the world.
Sierra Leone satisfied two out of three conditions of the primary convergence criteria and met all of the secondary criteria in 2019.