(2022-S2) Perspectives macroéconomiques et pauvreté - Haïti

HAITI Table 1 2021 Population, million 11.5 GDP, current US$ billion 20.9 GDP per capita, current US$ 1814.6 International poverty rate ($2.15) a 29.2 Lower middle-income poverty rate ($3.65) a 58.0 Upper middle-income poverty rate ($6.85) a 85.8 Gini index a 41.1 Life expectancy at birth, years b 64.3 Total GHG emissions (mtCO2e) 11.2 Source: WDI, Macro Poverty Outlook, and official data. a/ Most recent value (2012), 2017 PPPs. b/ Most recent WDI value (2020). GDPisexpectedtocontractfora fourthconsecutiveyearin2022,against thebackdropofacontinuedinstitution- alandpoliticalcrisis.Increasedinsecu- ritycreatesanuncertainenvironment forbusinesses,whichwillfurtherham- pergrowth.Beyondthesechallenges, lowhumancapitalaccumulationand highvulnerabilitytoshocks,including naturalhazards,continuetohamper growthprospects,andlimitsocialmo- bilityandpovertyreduction,especially giventhatthepooresttakelongertore- coverafteradisaster. Key conditions and challenges Haiti’s political and institutional crisis, compounded by insecurity, continues to hinder economic performance. Other key challenges to growth include inadequate infrastructure, limited human capital, weak governance, and an unfavorable business environment characterized by uncertainty, under-developed finance markets, and limited market contestability. At below 6.0% of GDP, tax revenue is the lowest in the LAC region, while govern- ment spending priorities do not support growth-enhancing activities. A large infor- mal sector with low-quality jobs combined with anemic growth makes escaping poverty elusive. Limited access to quality healthcare and education compounds the difficulty of building human capital and the ability to break the cycle of poverty. The structural issues that have constrained growth could rise in importance, including low agricultural productivity hampered by watershed degradation and land frag- mentation. Vulnerability to natural hazard shocks and climate change will likely con- tinue to hinder growth, hurting the poor and the vulnerable most. Recent developments The index of economic activity fell by 1.9 percent y-o-y in Q2 FY22, amid depressed investor confidence due to continued po- litical uncertainty and insecurity caused by violent gangs. Nearly all sectors of the economy contracted; the agricultural sec- tor, where most poor households work and live, was affected to a greater extent. Agricultural output dipped 6.4% y-o-y in Q2 FY22, following low rainfall which ad- versely affected the spring harvest that ac- counts for 60% of yearly sector output. In the industrial sector, construction and elec- tricity production, which are harbingers of future growth, registered their fourth con- secutive quarterly decline. Manufacturing advanced slightly (1.0%), supported by a weakened gourde and labor expansion in the textile sector. All sub-branches of the services sector contracted, except the bank- ing sector and non-market services. Being more directly impacted by increased inse- curity, the decline in the hospitality sub- branch has been particularly severe. At the end of June, tax revenues were be- low the indicative target under the IMF’s Staff Monitored Program, as security is- sues inhibited the normal operation of Customs administration and forced some businesses to close. Meanwhile, public expenditures rose, driven by fuel subsi- dies that reached 3.5% of GDP at the end of July because of rising oil prices trig- gered by the Russia-Ukraine war. The re- sulting deficit (2.0% of GDP) was mon- etized by the central bank (BRH), im- pacting the gourde which depreciated by 21.6% against the USD at the end of Au- gust. Inflation rose to 30.5% on deficit monetization, higher food and fuel prices, and insecurity that impeded the seamless flow of goods across regions. FIGURE 1Haiti/ Sectoral growth rates, year-over-year -20-15-10-50510 Agriculture Mining and quarrying Manufacturing Construction Water and Electricity Commerce Hotel and Restaurants Transport and Communication Financial institutions Other market services Non-market services Tertiary = -1.1Secondary = -0.8Primary = -2.0ICAE = -1.9 Percent change Source: Haiti Statistical Office (IHSI). FIGURE 2Haiti/ Actual and projected poverty rates and real GDP per capita 48000 50000 52000 54000 56000 58000 60000 0 10 20 30 40 50 60 70 80 90 100 2012201420162018202020222024 International poverty rate Lower middle-income pov. rate Upper middle-income pov. rateReal GDP pc Real GDP per capita (constant LCU)Poverty rate (%) Source: World Bank. Notes: see Table 2. 1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized The negative impact will be disproportion- ately felt by the poor since they typically do nothavetheassetstohedgeagainstinflation. The BRH enacted a series of restrictive measures to tame inflation, including mopping up excess liquidity in the banking sector through bond sales, hik- ing the key policy rate by 150 basis points, restrictions on forex transactions, andcapitalcontrol. In the external sector, despite export growth, the current account ran a 0.3% of GDP deficit due to low remittances and a high fuel and food import bill. Foreign di- rect investment was not enough to offset the CAD. The resulting balance of pay- ments deficit (0.4% of GDP) was financed by an accumulation of arrears, debt write- off, and a drawdown of foreign exchange reserves. Net forex reserves are down by 39.2% in end-August, but gross reserves re- main solid above five months of import. Outlook Uncertainty around the political process and insecurity will continue to depress pri- vate investment and hinder growth. The restrictive policy measures taken by the BRH in Q4 FY22 will affect the efficiency of capital allocation and impair growth go- ing forward. GDP is therefore expected to contract by 1.5 percent in FY22, with all three economic sectors receding, adversely impacting jobs, especially for women. In the baseline, growth is expected to firm up into positive territory with a rebound in 2024, assuming a resumption of economic activity should the political context follow- ing elections in 2023 becomes more stable and security improves. Growth, however, will not be strong enough to make much of a dent against poverty. Despite tightening fiscal conditions under the IMF SMP, the fiscal deficit is expected to widen to 3.2% of GDP, mainly due to high energy sector subsidies. The deficit will be financed by the BRH at 2.4 per- centage points of GDP and the remaining by T-bills. The fiscal deficit will continue to widen during the election year. But fis- cal consolidation efforts are expected to re- sume over the medium term, bringing the fiscal deficit below the 3.0% of GDP mark. Import volume is expected to contract but the value will expand on a higher fuel and food import bill. Concurrently, exports are set to expand thanks to greater output in the garment and apparel sector. Lower re- mittances due to higher inflation, and re- cession prospects in the major remittances- sending countries in North America and Europe mean that expectations for the CAD are around 1.4% of GDP. Over the medium term, this is expected to further widen as investment picks up, provided that security improves, and that elections are held in 2023 and are not contested. Sustained high fuel and food prices cou- pled with low agricultural productivity will continue to exert pressure on CPI in- flation, which is expected to close the fis- cal year at 26.5% on average. The widen- ing of the CAD toward the end of the FY will translate into increased depreci- ation of the gourde, creating a feedback loop between the exchange rate and infla- tion. This may exacerbate food insecuri- ty that affected 5.6 million people in Au- gust 2022. Nonetheless, as BRH financing is gradually replaced by T-bills issuance, inflation is expected to trend down over themediumterm. The outlook is fraught with downside risks and depends heavily on the political process and the security context. Reforms in the energy sector are critical for cre- ating fiscal space to expand spending in growth-enhancing sectors. Strengthening the institutional framework for disaster risk management, including better pre- paredness and response is key to laying the foundations for long-term, sustained, andinclusivegrowth. TABLE 2Haiti/ Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2018/19 2019/20 2020/21 2021/22e 2022/23f 2023/24f Real GDP growth, at constant market prices -1.7 -3.3 -1.8 -1.5 -0.1 2.0 Private Consumption -1.0 -4.0 1.2 -1.1 0.4 0.9 Government Consumption -8.6 11.1 9.7 5.2 8.3 9.0 Gross Fixed Capital Investment 7.7 -20.6 -21.8 -10.1 -8.1 15.9 Exports, Goods and Services 6.8 -39.7 1.4 2.0 4.0 2.0 Imports, Goods and Services 4.2 -18.3 2.7 -0.4 2.5 4.5 Real GDP growth, at constant factor prices -1.1 -2.9 -2.5 -1.2 -0.1 2.0 Agriculture -1.9 -2.5 -4.1 -3.1 0.4 2.0 Industry -6.8 -6.9 -2.5 -1.0 0.0 1.5 Services 2.1 -1.2 -2.0 -0.7 -0.3 2.2 Inflation (Consumer Price Index) 17.3 22.9 15.9 26.4 23.1 21.4 Current Account Balance (% of GDP) -1.1 1.5 0.7 -1.4 -2.6 -2.5 Net Foreign Direct Investment Inflow (% of GDP) 0.5 0.2 0.2 0.5 0.5 0.5 Fiscal Balance (% of GDP) -2.0 -3.0 -2.5 -3.2 -3.3 -1.9 Debt (% of GDP) 26.2 24.4 25.6 27.7 22.4 23.8 Primary Balance (% of GDP) -1.7 -2.7 -2.2 -2.3 -2.5 -1.3 International poverty rate ($2.15 in 2017 PPP) a,b 28.2 29.5 30.3 30.8 30.7 30.5 Lower middle-income poverty rate ($3.65 in 2017 PPP) a,b 57.5 58.2 58.7 58.9 58.9 58.8 Upper middle-income poverty rate ($6.85 in 2017 PPP) a,b 84.3 86.3 87.6 88.3 88.2 87.8 GHG emissions growth (mtCO2e) 0.9 0.0 0.2 0.4 0.7 1.0 Energy related GHG emissions (% of total) 36.6 36.0 35.4 34.8 34.6 34.7 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. Poverty lines are expressed in 2017 PPP, resulting in changes from earlier editions that used 2011 PPP. See pip.worldbank.org. a/ Calculations based on SEDLAC harmonization, using 2013-, 2019-, and 2012-ECVMAS. Actual data: 2012. Nowcast: 2013-2021. Forecasts are from 2022 to 2024. b/ Projection using point-to-point elasticity (2013-2019) with pass-through = 0.87 based on GDP per capita in constant LCU. 2