Liberia: Economic Outline

Economic Indicators

Since 2021, Liberia has experienced consistent economic growth, albeit not at a pace sufficient to expedite poverty reduction efforts. Liberia's economy was still recovering from the recession caused by the Ebola virus, falling commodity prices, and the gradual withdrawal of the United Nations peacekeeping mission (UNMIL) when the Covid-19 pandemic broke out. In 2023, Liberia's economy grew by an estimated 4.7%, primarily fueled by mining, particularly gold production. However, growth in the primary sector was sluggish, with key agricultural outputs like rubber and crude palm oil declining by 2.0% and 10.7% year-on-year (y/y) respectively. The secondary sector expanded by 13.9%, driven by mining, with gold production rising by 16.4% (y/y) due to heightened international demand, while iron ore output increased by 1.0% (y/y). In manufacturing, cement production grew by 5.6% owing to increased construction activity. The services sector also expanded, albeit more modestly, by 3.8%. The economy is projected to grow by 5.4% in 2024 and to average 5.9% annually from 2024 to 2026 (data World Bank).

In 2023, Liberia's fiscal deficit remained high, standing at approximately 5.5% of GDP. This was primarily due to decreases in revenue and grants alongside increased consumption spending. The deficit was largely covered by concessional resources, including budget support loans and IMF Special Drawing Rights. In March 2024, the new government submitted a revised 2024 budget to the legislature for approval. Projections indicate the fiscal deficit is expected to decrease to an average of 3.3% of GDP in the medium term, as the government enhances domestic resource mobilization and expenditure controls (World Bank). As per the IMF estimates, the debt-to-GDP ratio stood at 52.3% in 2023. Headline inflation climbed to 10.1% in 2023, up from 7.6% in 2022, attributed to rises in transport and food prices, as well as a weakened Liberian dollar. However, tightening monetary policy is expected to alleviate inflationary pressures, reducing inflation to 5.4% by 2026. In 2023, the Central Bank of Liberia (CBL) implemented two policy rate hikes in May and July, totaling 500 basis points to reach 20.0%, aimed at curbing inflation. Additionally, the CBL eliminated the ceiling on the offered amount of CBL bills to manage oversubscription, absorb excess liquidity in the banking system, and enhance monetary policy operations. The financial sector maintained satisfactory capitalization, with a minimum capital adequacy ratio of 21.2%. The Liberian authorities remain committed to the reform program agreed with the IMF and aiming at preserving macroeconomic stability, promoting sustainable and inclusive growth, and addressing weaknesses in governance. Achieving macroeconomic stability is vital, but it must be complemented by institutional reforms, improvements in the business environment, and substantial enhancements to basic services and infrastructure to unleash the country's growth potential (World Bank).

Liberia remains a poor country, with a high unemployment rate (reliable figures are not available, but the World Bank modeled ILO estimate is 2.9% for 2023). It is among the five poorest countries in the world; however, the extreme international poverty rate (USD 2.15 per person per day) is estimated to have decreased by 1.1 percentage points to 31.3% in 2023, down from 32.4% in 2022. Liberia also has one of the highest infant and maternal mortality rates. The country’s GDP per capita (PPP) was estimated at only USD 1,570 in 2022.

Monetary Indicators	2016	2017	2018	2019	2020
Liberian Dollar (LRD) - Average Annual Exchange Rate For 1 GBP	138.39	145.05	192.19	1.25	1.28

Source: World Bank - Latest available data.

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Latest Update: May 2024