South Sudan Economic Update, February 2020 : Poverty and Vulnerability in a Fragile Environment
After contracting for four consecutive years since FY2014/15, the economy is estimated to have recovered with a growth rate of 3.2 percent in FY 2018/19. These developments reflect activity in the oil sector, which rebounded strongly, and dividends...
| Main Author: | |
|---|---|
| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/893571583937198098/South-Sudan-Economic-Update-Poverty-and-Vulnerability-in-a-Fragile-Environment http://hdl.handle.net/10986/33453 |
| Summary: | After contracting for four consecutive
years since FY2014/15, the economy is estimated to have
recovered with a growth rate of 3.2 percent in FY 2018/19.
These developments reflect activity in the oil sector, which
rebounded strongly, and dividends from the peace agreement,
which led to a reduction of hostilities in some regions
across the country, leading to a mild recovery in a few
non-oil sectors. Growth in the oil and mining sectors was
estimated at 10.7 percent, services sector is estimated to
have grown by 0.4 percent, and agriculture is estimated to
have contractedby 2.5 percent. The oil-led growth may have
limited impact on the welfare of most citizens as relatively
little of it trickles down and very little is spent on basic
service delivery. Slow growth in the non-oil sectors,
coupled with limited expenditure on service delivery, and
limited linkages between the oil and non-oil economy
creates a disconnect between the observed oil-led growth
and citizen welfare. Recent budget execution reports
indicate that the social sectors not only get smaller
allocations, they are also faced with under execution. The
economy is still beset with high inflation and a soaring
foreign exchange rate premium. The rate of inflation is
estimated to have increased from 40 percent in December 2018
to 86 percent in June 2019, reversing the downward trend
observed in the first half of FY2018/19. By October 2019,
inflation is estimated to have risen to 170 percent. At the
same time, the gap between the official exchange rate and
the parallel market rate remains high, indicating that the
official rate is overvalued and does not reflect the
underlying economic fundamentals. While the increase in oil
production and prices coupled with an improved outlook for a
peaceful settlement initially led to a marked decline in the
premium in the second half of 2018, this gap has been
widening in the first half of 2019 and increased from 65
percent in December 2018 to 95 percent in September 2019. |
|---|