Somalia is entering a crucial phase, seeking to move beyond years of conflict with new development plans. The National Transformation Plan 2025–2029 and Centennial Vision 2060 outline significant state and institution building reforms, aimed at inclusive growth, job creation, and reducing fragility. The government is working to maintain fiscal sustainability and align spending with available resources. However, Somalia continues to rely heavily on foreign aid to provide basic services. Key policy reforms have focused on increasing domestic revenue, improving financial management and inclusion, strengthening governance, and enhancing statistics. Additional risks stem from global economic volatility and geopolitical tensions, while underfunding of key security missions and political uncertainties surrounding upcoming elections may hinder progress and disrupt reforms.

As Somalia undertakes the reconstruction of its economic governance institutions, the country is presented with numerous opportunities, such as rapid urbanization, increasing adoption of digital technologies, and planned investments in sectors like energy, ports, fisheries and agriculture. Strengthening resilience to shocks is therefore crucial for fostering economic growth and generating employment.

As a result, between 2019 and 2024, average annual real GDP growth stood at just 2.4%, while real GDP per capita declined by an average of 0.4 % each year. Projected economic growth for 2025 has been downgraded from 4% to 3% due to reduced foreign aid. Private consumption, agricultural production and exports continue to drive growth. However, foreign aid cuts have slowed growth of private consumption through lower cash transfers to the poor and contributed to an increase in food insecurity. Although food and fuel prices have been easing, inflation remains persistent at 4.6% in May 2025 compared to 4% in January 2025.

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