Madagascar: Madagascar Outlook for 2015-17

The country （Madagascar） is situated in Southern Africa, island in the Indian Ocean, east of Mozambique.
Land in Madagascar is narrow coastal plain, high plateau and mountains in center.
Malagasy land covers an area of 587040 km². The climate is tropical along coast, temperate inland, arid in south.

Malagasy (singular and plural) speak French (official), Malagasy (official).

Overview

A political and social crisis since 2009 meant that 2014 was a decisive year for Madagascar, with a new president elected, a fresh parliament installed and a new government sworn in, thus enabling the country to rejoin the international community.

This evolution has not from presently on been matched by improvements to the economic and social performance. Increase remained sluggish in 2014 (3%, slightly up from 2.4% in 2013) due to little development in governance, energy shortages and delayed foreign funding, combined with a lack of domestic funding and private investment because of a worsening business climate.

Increase was driven (as in 2013) mainly by the extractive industries, agro-industry, banks, transport, livestock and fisheries. Inflation was 6%, mainly due to energy prices and imported goods. The budget deficit (commitment basis) was an estimated 2% of gross domestic product (GDP), down from 4% in 2013. The current account deficit shrank to 2.3% of GDP (from 5.4% in 2013) thanks to healthy exports and steady imports. Increase is expected to be only slightly higher (at 4%) in 2015 given the electoral context, governance constraints, energy shortages, and floods damaging crops and basic infrastructure. It may reach 5.1% in 2016, helping to reduce poverty and unemployment, due to governance reforms, a better business climate and robust performances by the extractive industries, agro-industry, banking, transport, tourism, construction, livestock and fisheries.

Sluggish increase in the crisis years, poor governance, a flagging workforce and social services have all worsened the plight of most citizens. Extreme poverty above 53% and regional inequalities are acute, challenging efforts to build stability and achieve national reconciliation. The programme to reduce poverty and relaunch improvment– through general government policy, the national development plan (PND), evolution towards the Sustainable Development Goals (SDG) and talks on the post-2015 schedule – will help the new authorities to meet these challenges and put the country on a broader and additional sustainable development path.

Madagascar’s economic geography includes both an urban-rural divide and regional disparities, which mean unequal economic opportunities, economic infrastructure and access to basic social services, with the subsequent risk of spatial tension between urban areas and the rest of the country. Government policies focusing on regional development, land use and decentralisation have been adopted or are being drafted. Their implementation should gradually reduce such risks.

Outlook for 2016

Madagascar’s increase was only 3% in 2014 but should pick up in 2015 and 2016 as governance and business climate reforms take result, alongside buoyant extractive industries, agriculture and tourism.
The political situation has stabilised next presidential and legislative elections, and a national development plan has been launched.
Tensions due to spatial disparities are a challenge for government policies on regional development, land use and decentralisation.