Haiti’s economy to worsen as political turmoil intensifies
AWorld Bank report published in April indicated that Haiti’s gross domestic product (GDP) is expected to contract for a third-consecutive year by 0.7 per cent in 2021 as the country remains engulfed in political turmoil. By all indications that projection could worsen following the assasination of Haiti’s President Jovenel Moïse on July 7.
Though no official data are available to indicate the extent of the economic fallout, the World Bank says that a return to pre-pandemic GDP levels in Haiti is not envisioned until after 2023, under the proviso of a return to some political stability.
This on the back of an already challenging 2020 where both the novel coronavirus pandemic and Haiti’s protracted political crisis took a toll on economic activity. Haiti’s GDP is estimated to have contracted by 3.4 per cent in the 2020/21 financial year.
While the country struggles to get its political house in order, its citizens are sinking deeper into poverty.
The poverty rate in Haiti is estimated to have risen to 25.1 per cent in
2020, from 23.6 per cent in 2019, in line with the economic slump. The World Bank has painted a grim outlook this year with the poverty rate projected to increase further to 25.6 per cent in 2021 as economic opportunities remain limited.
According to the World Bank, the political crisis started intensifying in the first quarter of this year, keeping economic activity subdued. That’s why the World Bank has posited that Haiti’s most critical challenge is solving its protracted political crisis. That’s aside from the country’s lingering social and economic challenges.
Also high on the reform agenda are improving governance and the justice system, upgrading basic infrastructure to eliminate spatial frictions that impede movement of goods and disconnect rural communities from urban markets and creating a more enabling business environment.
Haiti’s Post COVID-19 Economic Recovery Plan 2020-2023 (PREPOC) intends to tackle these challenges by relaxing the structural constraints that hinder growth through, inter alia, boosting human capital, strengthening governance, and improving resilience to natural hazard shocks. However, the World Bank highlighted that the 2021 budget is not clearly aligned with PREPOC’S stated intentions. The budget prioritises security and electricity generation over the PREPOC’S pillars.
With all this in mind, the World Bank noted that the path ahead remains fraught and exposed to ongoing political instability that could continue to hinder economic recovery.