(2024-S1) Èspektiv Makroekonomik ak Povwte - Ayiti

HAITI Table 1 2023 Population, million 11.7 GDP, current US$ billion 19.9 GDP per capita, current US$ 1694.1 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 63.2 Total GHG emissions (mtCO2e) 11.3 Source: WDI, Macro Poverty Outlook, and official data. a/ Most recent value (2012), 2017 PPPs. b/ Most recent WDI value (2021). Thepoliticalcrisisandincreasinggang violencecontinuetoimpacteconomic activity,withHaitiexperiencinganother yearofnegativegrowthinFY23.Haiti hasoneofthehighestlevelsoffoodinse- curityintheworld,triplingthenumber offood-insecurepeoplesince2016.Infla- tionremainshighbutisdeceleratingas monetarypolicytightensandglobal pricepressuresease.Despitesignificant joblossesinthetextilesector,remit- tancesremainbuoyant,supporting householdconsumptionlevels. Key conditions and challenges Haiti’s economy has been hindered by deep structural challenges, including a weak business environment and inade- quate public services, with limited job growth, a large share of unskilled workers, and few employment opportunities. The small industrial base related to textiles, ap- parel, and light manufacturing, relies heavily on imports and suffers from weak institutions. Growth has been hampered by a persistent political crisis and escalat- ing gang violence, further eroding the al- ready low human capital and institutional capacity and Haiti has become highly un- safe. Though gang violence manifests mainly in Port au Prince, it has spread to other parts of the country. Haiti is vulnerable to natural hazard shocks, which are compounded by in- adequate disaster risk management and response systems, leaving the country poorly equipped to handle the impacts of climate change. Issues such as wide- spread deforestation, watershed degrada- tion, inadequate land use practices, limit- ed infrastructure, unmaintained drainage infrastructure, and inadequate waste management, make Haiti extremely sen- sitive to natural hazards, which further exacerbates food insecurity and intensi- fiesdiseaseoutbreaks. Inflation is declining, yet food prices re- main elevated, disproportionately affect- ing the poorest households. To sustain the downward inflation trajectory, it is crucial to tackle the persistent fiscal chal- lenges arising from low tax revenue col- lection and to curtail monetary financing ofthebudget. Recent developments GDP continues to fall, due to heightened insecurity that affects all sectors. The agri- cultural sector, which employs over 40 per- cent of the labor force, registered the largest decline (-5.6 percent), contributing to increased poverty and food insecurity, as many poor households depend on agri- culture for their livelihood. Enhancing agricultural productivity is therefore a crit- ical policy focus to foster inclusive growth and improve equity. The textile sector, the largest formal private-sector employer, lost about 26,000 jobs (nearly half of the 56,000) in FY23, as two large textile/appar- el operations closed and others had op- erations disrupted. In the current context where economic opportunities are scarce and social safety nets limited, job losses have driven many of these workers and their families into poverty. The poverty rate in FY23 was estimated at 63 percent ($3.65 per day). Other sectors, such as con- struction, electricity, water, and transport have also seen significant declines. The ser- vices sector contracted by 2.9 percent, with the hospitality industry most affected. On the demand side, both public and private investments have collapsed due to the high level of insecurity and uncertainty, and government spending remains muted. FIGURE 1Haiti/RealGDPgrowthandsectoralcontributions to real GDP growth, supply side -4 -3 -2 -1 0 1 2 3 201820192020202120222023e2024f Agriculture Industry Services GDP Percent, percentage points Source: World Bank staff calculations. FIGURE 2Haiti/ Actual and projected poverty rates and real GDP per capita 0 10000 20000 30000 40000 50000 60000 70000 0 10 20 30 40 50 60 70 80 90 100 20122014201620182020202220242026 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 Consumption remains relatively buoyant, supported by remittances, which remain strong. However, the disruption to imports and transportation by gangs undermines access to food and essential goods. Tax revenue collection improved in FY23, thanks to tighter customs control and in- creasedoiltaxrevenue.However,thetax-to- GDP ratio remains low at 6.3 percent. Efforts to reduce energy subsidies and limit capital spending have improved the fiscal position, lowering financing needs. The fiscal deficit narrowedto2.3percentofGDPinFY23from 3.2 percent in FY22. Consequently, central bank (BRH) monetary financing of the deficit declined but continued to exceed statutory limits.Inflation decelerated dur- ing the second half of FY23 but remained high at 44.2 percent in FY23 due to contin- ued monetization of the deficit, low agri- cultural productivity, and gang-related disruptions that hinder the transport of goods, affecting poor and vulnerable households the most. As of June 2023, an estimated 49 percent of Haiti’s population was facing acute food insecurity. The exchange rate depreciated by 13.7 percent in FY23, following a 16.4 percent depreciation in FY22, though it has ap- preciated marginally over recent months. In the external sector, exports declined more rapidly than imports, principally due to the downturn in the textile industry. Re- mittances remained strong at 18.9 percent of GDP, a slight decrease compared with FY22. Overall, the current account deficit widened to 3.4 percent of GDP. Outlook Haiti will experience another year of neg- ative growth in FY24 (-1.8 percent) due to heightened insecurity, though the growth path remains highly uncertain and depen- dent on security improvements and polit- ical developments. Public and private in- vestments are expected to continue to fall significantly in this insecure environment from already low levels. Private consump- tion should remain stable, supported by decelerating inflation and strong remit- tances. With negative real growth, per capita GDP is projected to further decline in FY24 (-3.0 percent), leading to an in- crease in poverty rates to over 64 percent ($3.65 per day). The anticipated decline in energy subsi- dies, creating additional fiscal space, should help narrow the fiscal deficit to 1.4 percent of GDP in FY24. Fiscal consolida- tion efforts are expected to continue over the medium term, and with revenue in- creases, the fiscal deficit should fall to near 1.0 percent of GDP. Despite a decrease in global price pres- sures, persistent high fuel and food prices, along with low agricultural pro- ductivity will keep inflation high at 27 percent in FY24 and 20 percent in FY25. The ongoing erosion of household pur- chasing power and the sustained econom- ic downturn are expected to exacerbate poverty and food insecurity. Challenges in the export sector, lower imports, and high remittances, are projected to result in amodestcurrentaccountdeficit. Haiti is facing a severe crisis and the inability to achieve a resolution carries large downside risks. Addressing the se- curity situation and bringing inflation un- der control by reducing monetary financ- ing of the fiscal deficit are key for macro- economic stability, growth, and poverty reduction. Reducing disaster risks by strengthening the institutional framework and response system is also essential for inclusive growth as the risk of natural disastersishigh. TABLE 2Haiti/ Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2020/21 2021/22 2022/23e 2023/24f 2024/25f 2025/26f Real GDP growth, at constant market prices -1.8 -1.7 -1.9 -1.8 1.9 2.0 Private consumption 1.2 -0.7 0.1 0.0 0.7 0.6 Government consumption 9.7 17.6 3.3 27.5 15.0 15.1 Gross fixed capital investment -28.8 -9.9 -17.6 -53.0 16.5 12.3 Exports, goods and services 23.5 2.4 -9.6 -5.4 1.5 2.1 Imports, goods and services 2.3 4.9 -0.4 1.6 5.5 5.5 Real GDP growth, at constant factor prices -2.8 -1.8 -3.6 -1.9 1.9 2.1 Agriculture -4.1 -4.5 -5.6 -1.0 1.5 2.0 Industry -2.5 -0.4 -3.8 -2.2 2.0 1.5 Services -2.5 -1.6 -2.9 -2.1 2.0 2.4 Inflation (consumer price index) 15.9 27.6 44.2 27.1 20.0 11.5 Current account balance (% of GDP) 0.4 -2.4 -3.4 -3.6 -4.2 -3.7 Net foreign direct investment inflow (% of GDP) 0.2 0.2 0.1 0.2 0.2 0.2 Fiscal balance (% of GDP) -2.5 -3.2 -2.3 -1.4 -1.4 -1.0 Revenues (% of GDP) 6.9 6.6 8.0 8.0 7.8 7.8 Debt (% of GDP) 28.4 27.6 30.2 30.0 26.5 22.7 Primary balance (% of GDP) -2.2 -2.9 -2.0 -1.1 -1.1 -0.8 International poverty rate ($2.15 in 2017 PPP) a,b 31.3 32.3 34.2 35.3 34.9 34.6 Lower middle-income poverty rate ($3.65 in 2017 PPP) a,b 60.1 61.6 62.8 64.4 64.1 63.9 Upper middle-income poverty rate ($6.85 in 2017 PPP) a,b 87.5 88.0 88.6 89.1 89.0 88.8 GHG emissions growth (mtCO2e) 3.5 0.3 -0.6 0.6 1.4 1.5 Energy related GHG emissions (% of total) 37.6 37.1 36.1 35.7 35.7 35.7 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. Notes: e = estimate, f = forecast. a/ Calculations based on 2012-ECVMAS. Actual data: 2012. Nowcast: 2013-2023. Forecasts are from 2024 to 2026. b/ Projection using neutral distribution (2012) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU. 2