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Djibouti is one of the smallest countries in Africa, with an area of 23,200 square kilometers and a population estimated at about 990,000. The size of its economy limits its ability to diversify production and increases its reliance on foreign markets, making it more vulnerable to market downturns and hampering its access to external capital. With less than 1,000 square kilometers of arable land (0.04% of its total land area) and average annual rainfall of only 130 millimeters, Djibouti depends almost completely on imports to meet its food needs. 

Djibouti’s strength lies in its strategic location at the southern entrance to the Red Sea, marking a bridge between Africa and the Middle East. Adjacent to some of the world’s busiest shipping lanes (between Asia and Europe), it hosts military bases for France, the United States, Japan, China, and the North Atlantic Treaty Organization (NATO), as well as for other countries with forces supporting global anti-piracy efforts. 

Djibouti’s economy is driven by a state-of-the-art port complex, among the most sophisticated in the world. Trade through the port is expected to grow rapidly in parallel with the expanding economy of the country’s largest neighbor and main trading partner, Ethiopia. Djibouti has some natural assets that could be used for tourism, untapped marine resources that could support more artisanal fishing, and an infrastructure of undersea telecommunications cables from which it could develop new digital and service industries. Renewable energy could be another source of growth, as Djibouti has geothermal, solar, and eolian potential. 

Economic activity slowed down in 2022 after a recovery in 2021. GDP growth rate in 2022 is estimated at 3.6 percent compared to 4.8% in 2021. The slowdown is driven by rigidities in the global maritime transport and logistics value chain associated with the war in Ukraine, sluggish demand from Ethiopia, and severe droughts. Djibouti's economy is projected to gradually recover over the medium term, driven by private and SOEs investment programs (including the development of the Damerjog industrial park project, a new fuel storage terminal, and an oil jetty) and structural reforms that will be undertaken as part of the implementation of the second national development plan (Djibouti Inclusion - Connectivity - Institutions ICI). GDP growth is thus expected to accelerate to 5.3 percent in 2023 and, further, to 6.2 percent in 2024.

Last Updated: Dec 15, 2022


Djibouti: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments
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