Djibouti Economic Outlook

Growth is expected to accelerate in 2012/13 thanks to a resumption of port activities and foreign direct investment (FDI).
The country conducts prudent macroeconomic policies and pursues the structural reforms agreed with the International Monetary Fund (IMF).
More than 70% of the population live in poverty and more than half of those of working age have no jobs.

Growth is expected to speed up in 2012 and 2013 as a result of resumption of activity in the port sector, the implementation of investment postponed since the start of the international economic and financial crisis, the extension of the container terminal at Doraleh and the exploitation of the country’s geothermic resources. In February 2012 the country signed an historic tripartite co-operation agreement with Ethiopia and South Sudan envisaging the construction of telecommunications, road, railway and oil transport infrastructure to link landlocked South Sudan with Djibouti. The country has ambitions to become a regional platform for commercial, logistical and financial services.

The government continued during the year faithfully to respect the IMF programme, the fourth review of which was concluded in July 2011. But improvements in the population’s living conditions, and in particular the reduction of poverty levels, are major challenges for a country where 75% of people live in poverty and 42% in extreme poverty.

Young people are hit very hard by the unemployment which is endemic in the country. The authorities have instituted initiatives seeking to encourage young people to start their own businesses to absorb the unemployment among them and to stimulate private sector development. Historically the state has been the main source of jobs, which explains the mismatch between young people’s skills and the needs of the labour market. The authorities are seeking to remedy this state of affairs through training that adequately corresponds to the expectations of employers.