For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Despite being rich in natural resources, Madagascar is among the poorest countries in the world. Political instability, weak institutions and poor governance have been impediments to the country's economic growth. After the recession induced by the COVID-19 pandemic in 2020, economic growth rebounded to 4.3% in 2021 and 4.2% in 2022 (IMF). According to IMF forecast, GDP growth is projected to further accelerate to 5.2% in 2023 and 2024, driven by high prices for nickel, cobalt, cloves and vanilla, consumption and increased capital spending (Coface). Risk factors that can affect growth include social fragility, fiscal imbalances and vulnerability to external shocks.
After experiencing one of the worst recessions in its history due to the Covid-19 pandemic, Madagascar’s economy recovered slowly in 2021-22. The country’s fragility was aggravated by multiple climate shocks (several storms and a drought) as well as by the inflationary pressures linked to the war in Ukraine. The latter lead to an increase in the import bill, a delayed recovery of the tourism sector and a reduced demand for exports (Coface). Inflation soared from 5.8% in 2021 to 9.8% in 2022, and it is expected to remain high in 2023 (8%) and 2024 (7.5%) (IMF). The central bank raised its key rate several times, and the government decided to cap prices on certain essential goods (rice, sugar, flour) (Coface). Fiscal deficit deteriorated from -2.9% GDP in 2021 to -6.5% GDP in 2022, and it is expected to remain high despite decreasing to -4.8% GDP in 2023 and -4.7% GDP in 2024 (IMF). Public debt slightly increased from 53.1% GDP in 2021 to 53.8% GDP in 2022, and while remaining high, it is expected to stay stable at 53.1% GDP in 2023 and 53.6% GDP in 2024 (IMF). As it is almost exclusively concessional, it is considered sustainable. In March 2021, the IMF and Malagasy authorities agreed on a medium-term program of about USD 320 million under the Extended Credit Facility (ECF). This program aims at supporting recovery, preserving macroeconomic stability, rebuilding fiscal space and advancing reforms. The overall program performance is mixed, as reforms remain hampered by limited capacity and weak governance (IMF). The 2023 budget envisages gradual fiscal consolidation. The authorities are also committed to pursue the delayed Madagascar Emergence Plan 2019/2023, that aims to stimulate the country's economic growth through an increase in public and private investments, the strengthening of human capital and the improvement of governance. Among the country's persistent socio-economic challenges are poverty, corruption and the infrastructure deficit.
The ILO estimates the unemployment rate in Madagascar in 2021 at 2.3% of the total active population, but Madagascar’s living conditions remain among the lowest in the world. According to the World Bank, poverty concern more than 80% of the population, as the pandemic worsened the situation. The ongoing famine in the South of the country is a major concern. Malagasy people have a low life expectancy due to poor living conditions, particularly in matters of sanitation and hygiene. According to WaterAid Madagascar, around 70% of the population does not have access to adequate sanitation and around 90% of Malagasy people do not have access to improved toilets. As a result, there is a high risk of the spread of major infectious diseases among the population. More than half of the country's children suffer from a serious form of malnutrition. In addition, the country remains extremely vulnerable to climate shocks, such as hurricanes, floods, locust infestations and public health crises. The south of the country faces security concerns due to armed robbery of livestock.
|Main Indicators||2020||2021||2022 (E)||2023 (E)||2024 (E)|
|GDP (billions USD)||13.05||14.56||15.23||15.97||17.14|
|GDP (Constant Prices, Annual % Change)||-7.1||5.7||4.2||4.2||4.8|
|GDP per Capita (USD)||477||517||526||536||560|
|General Government Gross Debt (in % of GDP)||51.2||52.3||57.0||53.1||52.0|
|Inflation Rate (%)||4.2||5.8||8.2||9.5||8.8|
|Current Account (billions USD)||-0.70||-0.73||-0.85||-0.91||-0.88|
|Current Account (in % of GDP)||-5.4||-5.0||-5.6||-5.7||-5.1|
Source: IMF – World Economic Outlook Database , Latest available data
Note: (e) Estimated Data
Madagascar is the leading exporter of vanilla in the world. Agriculture, including fishing and forestry, accounts for 24.7% of GDP and employs 64% of the population according to World Bank data (even though the majority of inhabitants practice subsistence farming). The main crop is rice, grown on almost half of the agricultural land. The main other agricultural products are: coffee, sugar cane, cloves, cocoa, cassava, beans, bananas, peanuts and livestock products. The agricultural sector is limited by low productivity due to the minimal use of modern agricultural techniques, the lack of infrastructure and a great vulnerability to climatic fluctuations, but benefits from numerous ongoing investments aimed at meeting these challenges. Deforestation and erosion, compounded by excessive use of firewood, are of serious concern.
The industrial sector contributes 19.5% of GDP and employs 9% of the active population (World Bank). It is dominated by mining (precious stones including rubies, sapphires, emeralds, etc.), textiles and agro-industry. Other business sectors include soap making, glassware, cement, automotive assembly, paper and petroleum.
The tertiary sector contributes to 50.4% of the GDP and employs 27% of the active population. Trade performed well before the global economic slowdown (with growth of around 5% per year), as well as tourism, which is one of the main assets of the country and whose potential is still untapped.
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Employment By Sector (in % of Total Employment)||64.1||8.7||27.1|
|Value Added (in % of GDP)||24.7||19.5||50.4|
|Value Added (Annual % Change)||-1.4||-21.6||-4.8|
Source: World Bank - Latest available data.
Find more information about your business sector on our service Market Reports.
|Malagasy Ariary (MGA) - Average Annual Exchange Rate For 1 MUR||89.37||90.37||98.27||101.92||96.27|
Source: World Bank - Latest available data.
Find out all the exchange rates daily on our service Currency Converter.
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.
Foreign trade accounts for 50% of Madagascar’s GDP (World Bank), a country that collects a large share of its revenues in the form of customs duties, import taxes and VAT on imports. Madagascar is the 135th exporting economy in the world and the 134th importer (WTO). The country is a member of the WTO and COMESA (Common Market for Eastern and Southern Africa) and does not have significant non-tariff barriers. In addition, most products can be imported without an import license. The country mainly exports vanilla (22.2%), raw nickel (18.4%), clothing (9.1%), titanium ores (5%), cloves (4.2%), cobalt (3.9%), crustaceans (3.4%) and essential oils (2.8%). Its main imports are petroleum oils (13.6%), rice (6.2%), fabrics (2.7%), palm oil (2.6%), medicines (2.5%), and sugar (2%) (Comtrade, 2021).
Madagascar's main customers are France (19.2% of total exports), the United States, China, Japan, the Netherlands and Canada. Its main suppliers are China (19.4% of total imports), France, Oman, India, the United Arab Emirates, Mauritius and South Africa (Comtrade, 2021). Despite its abundant resources, Madagascar still struggles to channel its trade revenues into further development. Like other island states, Madagascar faces high transportation costs. The lack of well-developed infrastructure makes commercial transactions expensive, hindering private sector competitiveness. However, the country aims to improve logistics at the main ports and airports in order to improve trade. While the European Union is by far the largest client of Malagasy products, exports to member states of North American Free Trade Agreement have received a huge boost since 2017 following a decision by the United States to reinstate Madagascar in its trade preference programme (Africa Growth and Opportunity Act).
The country's trade balance has been traditionally negative and despite a steady increase in exports, this trend is unlikely to be reversed over the medium-term as imports continue to outpace exports. In 2021, merchandise exports amounted to USD 2.73 billion, while imports reached USD 4.41 billion. Exports of services amounted to USD 589 million, and imports reached USD 1.18 billion (WTO). In 2021, exports of goods and services increased by 11.6% compared to 2020, while imports increased by 7.3% (World Bank).
|Foreign Trade Indicators||2017||2018||2019||2020||2021|
|Imports of Goods (million USD)||3,670||4,061||3,942||3,224||4,408|
|Exports of Goods (million USD)||2,848||3,110||2,696||1,987||2,726|
|Imports of Services (million USD)||1,089||1,123||1,022||650||1,180|
|Exports of Services (million USD)||1,244||1,341||1,449||626||589|
|Imports of Goods and Services (Annual % Change)||23.7||11.1||4.6||-16.6||7.4|
|Exports of Goods and Services (Annual % Change)||45.4||2.4||10.9||-36.6||11.6|
|Imports of Goods and Services (in % of GDP)||34.4||36.3||34.2||28.9||29.4|
|Exports of Goods and Services (in % of GDP)||30.9||31.5||28.4||20.1||21.0|
|Trade Balance (million USD)||-450||-458||-844||-900||-969|
|Trade Balance (Including Service) (million USD)||-344||-414||-603||-1,129||-1,427|
|Foreign Trade (in % of GDP)||65.3||67.8||62.6||49.0||50.4|
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
(% of Exports)
|See More Countries||35.4%|
(% of Imports)
|United Arab Emirates||5.9%|
|See More Countries||46.0%|
Source: Comtrade, Latest Available Data
|2.8 bn USD of products exported in 2021|
|Unwrought nickelUnwrought nickel||18.4%|
|Titanium ores and concentratesTitanium ores and concentrates||5.0%|
|Cloves, whole fruit, cloves and stemsCloves, whole fruit, cloves and stems||4.2%|
|Cobalt mattes and other intermediate products of...Cobalt mattes and other intermediate products of cobalt metallurgy; cobalt and articles thereof, n.e.s.; cobalt waste and scrap (excl. ash and residues containing cobalt)||3.9%|
|See More Products||46.3%|
|4.4 bn USD of products imported in 2021|
|Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals||13.6%|
|Fabrics, knitted or crocheted, of a width of > 30...Fabrics, knitted or crocheted, of a width of > 30 cm (excl. warp knit fabrics "incl. those made on galloon knitting machines", those containing by weight >= 5% of elastomeric yarn or rubber thread, and pile fabrics, incl. "long pile", looped pile fabrics, labels, badges and similar articles, and knitted or crocheted fabrics, impregnated, coated, covered or laminated)||2.7%|
|Palm oil and its fractions, whether or not refined...Palm oil and its fractions, whether or not refined (excl. chemically modified)||2.6%|
|Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006)||2.5%|
|See More Products||72.4%|
Source: Comtrade, Latest Available Data
To go further, check out our service Import Export Flows.
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.).
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.
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: September 2023