Central African Republic Economic Update, July 2021 : Investing in Human Capital to Protect the Future
The economy of the Central African Republic (CAR) decelerated in 2020 compared to 2019. Despite a relatively contained health impact, the coronavirus disease 2019 (COVID-19) pandemic has had a significant impact on the country’s economy, with the d...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/en/777641626238680558/Central-African-Republic-Economic-Update-Fourth-Edition-Investing-in-Human-Capital-to-Protect-the-Future http://hdl.handle.net/10986/35900 |
| Summary: | The economy of the Central African
Republic (CAR) decelerated in 2020 compared to 2019. Despite
a relatively contained health impact, the coronavirus
disease 2019 (COVID-19) pandemic has had a significant
impact on the country’s economy, with the disruption in
global value chains, low external demand, and domestic
containment measures that significantly affected trade,
transport, and tourism. Nevertheless, CAR’s GDP growth of
0.8 percent has outpaced the average of regional peers (−2.9
percent) and countries affected by fragility, conflict and
violence (FCV) (−1.7 percent). On the supply side, the
positive dynamic of the agriculture sector prevented the
economy from entering a recession, and the forestry and
telecommunications sectors were more resilient than
expected. On the demand side, private consumption contracted
in 2020, reflecting a decline in household income owing to
the pandemic. As a result, the extreme poverty rate
increased from 70.7 percent in 2019 to 71.4 percent,
affecting a total of more than 3.4 million people, in 2020.
CAR’s current account balance (CAD) deteriorated in 2020.
The current account deficit widened from 4.8 percent of GDP
in 2019 to 8.7 percent of GDP in 2020, driven by weak
external demand and private transfers as well as an
increased deficit of the balance on goods. With the COVID-19
pandemic, goods exports declined while non-oil imports were
boosted by donor-funded investments. CAR’s current account
deficit is not expected to be as severe as that of
comparator FCV, CEMAC, and Sub-Saharan African (SSA)
countries. The capital account balance improved
significantly in 2020 due to the rise in external grants,
while the financial account surplus shifted into a deficit.
The improvement in the capital account has helped narrow the
balance of payments deficit and increasing foreign reserves,
which reached a level equivalent to about 3.5 months imports
at end-2020. |
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