Madagascar, a country in southern Africa located in the Indian Ocean east of Mozambique, is the fifth largest island in the world, with a land mass of 587,000 km2 and 25.5 million inhabitants in 2017.
Having relinquished power in September 2018, as required by the Constitution, to run in the presidential elections held in November 2018, President Hery Rajaonarimampianina was defeated in the first round by two former Heads of State, Marc Ravalomanana and Andry Rajoelina. With 55.66% of the vote share, Andry Rajoelina is the new elected President of Madagascar since 19 January 2019. He has renewed the Prime Minister, Christian NTSAY at the head of the Government composed of 22 members. New parliamentary elections are expected by the end of 2019.
GDP growth increased between 2013 and 2017, rising from 2.3% to around 4.2%, and reached 5% in 2018. Small private sector industries and enterprises boosted the Malagasy economy. Exports of goods and services produced in economic free zones have also recorded a strong performance. The remarkable dynamism of public investment over the recent period has also been driving growth in the construction sector in urban areas. As a result, the main drivers of growth are concentrated in the industry and services sectors and are a boon mainly to the urban population, while the rural population continues to engage in agricultural activities that have not benefited from the economic recovery.
In fact, between 2014 and 2017 the agricultural sector contracted on average by 0.8% per annum. In a country where almost 80% of the population is engaged in agriculture, this indicates that the economic growth of the past few years has not impacted positively on the living conditions of the rural population.
It is projected that economic growth will remain dynamic, rising to an estimated 5.4% in 2019. Monetary policy is expected to continue focusing on controlling inflation, which was estimated at 6.4% in 2019 and is expected to average 4.4% to 6.0% between 2020 and 2022. In the medium term, public expenditure should stabilize, with a reduction in the percentage of recurrent expenditure and an increase in investment spending.
Despite these fairly positive projections, priority will have to be assigned to more inclusive growth in order to reduce the sharp inequalities and combat poverty, particularly as current projections point to a reduction in the percentage of the Malagasy population living beneath the poverty line. Indeed, the poverty index, based on a threshold of $1.90 per day and by purchasing power parity, is targeted to decline from 75% to 73% between 2018 and 2020. It is vital, therefore, that this trend be sustained. Furthermore, the increase in tax revenue and the reduction in transfers to underperforming public enterprises should make it possible to release more resources for the provision of public services in the areas of education, health and rural infrastructure.
Madagascar is lagging in a number of development indicators. Every second child (under the age of five) suffers from stunting, and the country has the world’s fifth highest number of out-of-school children. Furthermore, at only 13%, the rate of access to electricity is one of the lowest on the planet.
In 2018, Madagascar’s Human Development Index (HDI), as measured by the United Nations Development Program (UNDP), improved slightly from 0.512 to 0.519, but the country fell three places in the world ranking, from 158 to 161.
Last Updated: Mar 04, 2019