Sierra Leone’s economy proved resilient in the face of two major exogenous shocks: the Ebola epidemic and collapse of iron ore prices and associated loss of production in 2014-2015. Since the last quarter of 2015, economic growth has resumed, and it remains on an upward trend, supported by new investments in mining, agriculture and fisheries. The recovery underway, according to International Monetary Fund projections, is expected to remain sustainable over the medium term.
Real Gross Domestic Growth (GDP) is projected to recover from -21.1% in 2015 to 4.3% in 2016.
However, Consumer Price Inflation continues to rise on account of exchange rate pass-through and accommodative monetary stance. Rising from a base of 9.5% (year-on-year) in December 2015, inflation has reached 10.9% in July 2016. Exchange rate pressures remain unabated. The local currency (the Leone) depreciated by 20.4 percent (year-on-year) in June 2016.
The overall fiscal balance (excluding grants) is projected to recover slightly from -9.6% of non-iron ore GDP in 2015 to -8.1% in 2016. Total domestic revenue collection amounted to Le1.32 trillion, slightly above the program target of Le1.31 trillion for end-June.
The medium-term outlook is expected to improve given that the twin shocks have now largely dissipated. Under the baseline scenario, the IMF projects the medium-term growth to gradually pick up to around 6.5% by 2020 from 4.3% in 2016. Inflation is projected to decline to 7.5% by 2020 from the current level in 2016.
Sierra Leone conducted its third democratic elections in 2012 since the end of the 11 years civil war in 2002 that claimed the lives of over 50,000 Sierra Leoneans. The current President, Dr. Ernest Bai Koroma, is serving his second and final term, which ends in 2017. ; Elections for president, government and Parliament will be held in early2018..
The 1991 Constitution is being reviewed and a draft is expected to be presented to the President by the Constitutional Review Committee (CRC) in the second week of October. A referendum to vote on the new Constitution follows in 2017. A national population and housing census was conducted in 2015 and provisional results released early this year by Statistics Sierra Leone.
Until the outbreak of Ebola in May 2014, Sierra Leone was seeking to become a transformed nation with middle-income status, but the country still carries its post-conflict attributes of high youth unemployment, corruption and weak national cohesion. The country continues to face the daunting challenge of enhancing transparency in managing its natural resources and fiscal policy. Problems of poor infrastructure and widespread rural and urban impoverishment still persist in spite of remarkable strides and reforms.
Last Updated: Oct 25, 2016