Central African Republic: Economic Outline

Economic Indicators

The precarious political and security situation that characterizes the Central African Republic (CAR) since 2013 negatively impacts economic growth. From an economic standpoint, the GDP of Central Africa, pegged at XAF 1,530 billion (approximately EUR 2.3 billion) in 2023, stands 20% lower in real terms compared to 2012. Recent economic growth has been chiefly propelled by forestry, gold and diamond mining, as well as construction and public works. Economic growth saw a modest uptick to 0.9% in 2023, a slight improvement from 0.5% in 2022, primarily influenced by restricted fuel availability and mixed agricultural performance. The scarcity of fuel has led to elevated transportation costs and disrupted local production and trade. Furthermore, diamond production, a significant export commodity, declined by 6.7% in FY2022/23 due to reduced international demand amid a surge in synthetic diamonds. The medium-term outlook indicates a gradual economic recovery but remains susceptible to challenges. Real GDP growth is forecasted to slowly rebound, reaching 1.3% in 2024 and averaging 1.8% in 2025-26, contingent on factors like the second disbursement of budget support from the African Development Bank (AfDB) and policy adjustments to enhance fuel availability (data World Bank).

Since 2020, the Central African Republic's macro-fiscal vulnerabilities have worsened due to a succession of external shocks, including renewed insecurity and violence, the COVID-19 pandemic, and the Russian invasion of Ukraine. These shocks have strained public finances, heightened inflationary pressures, endangered food security, and impeded poverty reduction initiatives. Additionally, climate-related shocks such as droughts and floods persist, exacerbating an already dire humanitarian situation, especially in remote regions. Despite ongoing improvements, the overall fiscal balance remained structurally in deficit in 2023, with public debt increasing to 55.7% of GDP. Fuel shortages in the final quarter of the year led to reduced petroleum tax collection, contributing to the deficit. Efforts in domestic revenue mobilization, including the implementation of a new tax on electronic communications, along with controlled current spending and increased external grant financing, facilitated a reduction in overall fiscal imbalances in 2023. However, domestic debt is projected to reach 21% of GDP in 2023, with yields on 3-year issuances persisting around 11%, among the highest in the CEMAC region. Despite rising transportation costs, inflation declined from 5.6% in 2022 to 3.0% in 2023, marking its lowest level since 2021. However, inflation is projected to surpass the regional ceiling in 2024 and remain elevated in the medium term (World Bank). According to the IMF, several economic and social challenges persist in the short to medium terms. Firstly, the ongoing crisis in the energy sector, particularly in fuel and electricity, continues to affect both business activity and household welfare. Secondly, a series of recent shocks, coupled with inadequate social safety nets, have exacerbated the complex humanitarian crisis facing the country. Finally, these challenges are further exacerbated by the limited fiscal space available to the government, given the heightened risks associated with public debt. Apart from the IMF, various technical and financial partners, including the World Bank, African Development Bank, European Union, among others, are actively engaged in the Central African Republic. Their interventions encompass a wide range of projects across multiple sectors.

Poverty persists at high levels, with an estimated 65.9% of the population living in extreme poverty in 2023, defined as falling below the international poverty line of USD 2.15 per person per day (2017 PPP). The extreme poverty rate is projected to rise by one percentage point over the next two years due to negative per capita growth (World Bank). By December 31, 2023, the tally of internally displaced persons reached approximately 511,803 individuals, while about 754,421 people were registered as refugees in neighboring countries. Meanwhile, the World Bank estimated the country’s unemployment rate at 6.3% in 2023, while the GDP per capita (PPP) stood at USD 973, the second-lowest in the world.

Monetary Indicators	2016	2017	2018	2019	2020
CFA Franc BEAC (XAF) - Average Annual Exchange Rate For 1 GBP	800.68	749.15	741.42	732.38	737.93

Source: World Bank - Latest available data.

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Latest Update: May 2024