Current Date:

Thursday, 25 May 2017

Sudan Economic Outlook

(African Development Bank Group) - * Sudan’s economic growth rose to above 5% in 2015 and is expected to increase further

to above 6% in 2016 and 2017, mainly driven by agriculture and extractive industries and supported by improved macroeconomic policies.
* Challenges continue to be sustaining economic policy reforms, economic stability, civil war, and meeting the country’s Millennium Development Goals (MDGs); but a positive outcome of the national dialogue is hoped to lead to an end of the civil war and improvement in economic stability.
* A coherent urban-development strategy is needed to better cope with population growth, the internal displacements of people due to the continuing civil war and the currently weak urban-rural linkages.

Inflation declined to 16.9% in 2015, while real GDP growth remained buoyant at 5.3%, supported by agriculture, minerals, services, oil-transit fees and foreign direct investment (FDI). Growth is expected to strengthen to 6.2% in 2016 and 6% in 2017, despite the fall in oil prices, reduced gold purchases by the Central Bank and the unstable security situation. The forecast is based on the assumption of strong agricultural revival, a gradual recovery of global oil prices, political stability in South Sudan, sustained inflows of FDI and a positive outcome from the national dialogue to end the civil war and conflicts.
Fiscal and monetary consolidation, together with low global food prices and a significant increase in FDI by 37%, have boosted economic growth and helped to reduce inflation from 36.9% in 2014 to 16.9%. Nonetheless, the challenges of diversification and social development, including high unemployment, poverty and unequal distribution of wealth, in the context of the civil war still remain. Spending on social development in 2015 is unlikely to be higher than it was in 2014 (0.3% of GDP) and is not expected to rise in 2016. Challenges of the external-debt problem and normalisation of relations with creditors also continue to persist. The government has yet to agree on a new IMF-Staff Monitored Programme (SMP) as a prelude for reaching a decision on the Heavily Indebted Poor Countries (HIPCs) Initiative. In 2015, Sudan was removed from the “black list” of the Financial Action Task Force, an international financial-fraud monitoring body located at the OECD. However, the continued difficulties of processing international banking transactions may fuel informal transfers, contribute to exchange-rate distortion, and reduce fiscal revenues.
Sudan‘s cities contributed an estimated 60% of GDP in 2014, with a skills base 62% higher than in rural areas. In urban areas, job creation is above average and the poverty rate is less than half of the national average. By 2030, the urban population will represent 48.6% of the total, reflecting a continuing contraction in the share of the rural population. However, since 1990 urban growth has been propelled by rural-urban migration, internally displaced people (IDPs) due to the civil war and conflict, climate-change impacts on the environment, and population growth. This has led to serious strains on urban services and disrupted the urban-rural market links that are of key importance for agriculture-based structural transformation. Policies adopted to upgrade slums have resulted in low-density, auto-dependent sprawl, further adding to urban services delivery inefficiencies. The adoption of an urban-development strategy aiming to improve infrastructure, land governance, and involve the private sector more in urban development is, therefore, inevitable if Sudan is to harness the potential benefits of its rapidly growing urban sector.