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).

Monetary Indicators	2020	2021	2022	2023	2024
Djibouti Franc (DJF) - Average Annual Exchange Rate For 1 GBP	227.85	244.44	219.06	220.90	227.14

Source: World Bank - Latest available data.

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Latest Update: November 2025