Economic Outline

flag Djibouti Djibouti: Economic Outline

Economic Indicators

Being one of the smallest countries in Africa, Djibouti faces limitations in diversifying its production due to the size of its economy. This reliance on foreign markets renders it more susceptible to market downturns and hinders its access to external capital. The engine of the country’s economy is its state-of-the-art port complex, ranked among the most advanced globally. After slowing to 3.2% in 2022, during 2023, as shocks eased, growth surged to approximately 7%, buoyed by robust port traffic, which increased by 31% until the end of September 2023, and the construction sector. The IMF anticipates that the recovery will persist in 2024, albeit at a reduced pace (+6%), and is contingent upon significant risks associated with the situation in the Red Sea and developments in Ethiopia.

Djibouti is facing fiscal pressure stemming from reduced tax revenues, recent tax exemptions, and escalating costs associated with servicing public debt. However, its banking sector remains robust, marked by stability, heightened profitability, and a decrease in non-performing loans, despite recent economic upheavals (World Bank). Total public spending surged in 2023, mainly driven by increased capital expenditure, leading to a widened budget deficit of 1.9% of GDP. Djibouti's external debt reached 69.4% of GDP in 2023, up from 66.5% in 2022, due to new loans and the inclusion of last year's debt arrears. Furthermore, Djibouti's stock of external arrears significantly increased to 6% of GDP by the end of September 2023 (data World Bank). In late 2023, Djiboutian authorities reached a preliminary agreement with its main creditor, EXIMBANK CHINA, for debt reprofiling, including a 4-year moratorium for rail and water supply projects, aiming to secure more favorable terms. However, addressing outstanding arrears with other creditors remains crucial to mitigate continued debt distress. Inflation reached its peak at 11% in July 2022 but slowed down to 3.8% by December 2023, primarily due to global decreases in food prices and government interventions. The government “Vision Djibouti 2035” strategy aims to transform the country into a middle-income economy and a logistics and commercial hub for East Africa. The key challenge pointed out by the IMF is for Djibouti to adjust its growth model to reduce dependence on debt-financed investments while supporting an inclusive recovery. Domestic revenue mobilization, improved oversight of public enterprises and rationalization of subsidies are essential. Other challenges include poor governance, the increasing dependency on Ethiopia and China, and the widening gap separating the modern portion of the economy and the archaic informal portion on which the population is largely dependent (Coface). In addition, the deterioration of economic and security climate among Djibouti's major economic partners (Yemen, Somalia and Ethiopia) poses risks to the country's economy, which accommodates an increasing number of refugees fleeing the conflict in Yemen.

Djibouti remains a poor country with a high unemployment rate of 26.3% of the total labor force in 2023 (World Bank, modeled ILO estimate), vast inequalities and a low level of education. Despite this, poverty rates are expected to have decreased from the 19% baseline in 2017 to approximately 14.7% in 2024. Projected poverty rates are anticipated to decrease in tandem with GDP growth, with poverty rates projected to reach 13.5% in 2026 (based on the international poverty line) and 33.1% (based on the lower middle-income poverty line – data World Bank).

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 3.734.024.364.725.10
GDP (Constant Prices, Annual % Change) 3.97.06.56.05.5
GDP per Capita (USD) 3,6673,9074,1844,4654,775
General Government Gross Debt (in % of GDP) 67.960.856.551.746.3
Inflation Rate (%) 5.21.81.81.92.0
Current Account (billions USD) 0.660.950.220.190.15
Current Account (in % of GDP) 17.623.55.14.02.9

Source: IMF – World Economic Outlook Database - October 2021.

Note: (e) Estimated Data


 
Monetary Indicators 20162017201820192020
Djibouti Franc (DJF) - Average Annual Exchange Rate For 1 MUR 5.005.155.245.014.52

Source: World Bank - Latest available data.

 

Main Sectors of Industry

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 1.2 6.1 92.7
Value Added (in % of GDP) 1.7 14.9 77.3
Value Added (Annual % Change) 11.5 -4.4 3.1

Source: World Bank - Latest available data.

 

The Active Population in Figures

201820192020
Labour Force 406,886414,572412,419

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 63.82%63.75%63.70%
Men activity rate 72.63%72.33%72.08%
Women activity rate 53.89%54.06%54.24%

Source: International Labour Organization, ILOSTAT database

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
56,2/100
World Rank:
126
Regional Rank:
22

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Not Free
Political Freedom:
6/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
176/180

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Sources of General Economic Information

Useful Resources
Ministry of Economy, Finance, Planning and Privatization
Central Bank
 
 

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Latest Update: May 2024