South Sudan Economic Outlook
- South Sudan’s GDP grew by 30.7% in 2014 but 2015 is likely to see negative growth as the ongoing conflict and declines in national oil production and global oil prices devastate the economy.
- The outlook for economic growth largely depends on a recovery in global oil prices and a comprehensive resolution of civil conflict rather than a mere cessation of hostilities.
- South Sudan could face a widening financing gap this fiscal year and long-term economic troubles due to its political crisis and declines in national oil production and global oil prices.
Although rich in natural resources, the economy is centred on oil production and subsistence agriculture: almost all intermediate and consumer goods are imported. In the past year, oil production accounted for 99% of exports, 95% of government revenue and about one-half of GDP. Prior to the outbreak of conflict on 15 December 2013, South Sudan had positive development prospects. The country was expected to achieve an average growth rate of 30.7% of GDP in 2014 after a sharp decline of -26.7% in 2013. The current economic growth outlook is largely dependent on peace prospects and international oil prices. It is estimated that GDP will contract by -7.5% in 2015 as the recent conflict and the falling international oil price continue to cast a shadow over economic prospects. The GDP growth is projected to continue to benefit from oil production, but oil production has fallen by 20% and might further decrease.
The government is faced with challenges that complicate fiscal management. Oil revenue inflows, accounting for over 95% of government revenues, are volatile and unpredictable. The situation has put more pressure on foreign reserves. Non-oil revenue is not expected to significantly increase in the short term.
South Sudan has enormous opportunities for spatial inclusion. While the impact of ongoing conflict and international oil prices cannot be underestimated, opportunities to develop value chains that create jobs and improve household incomes exist. Notable among them include Gum Acacia (also known as Gum Africa or Gum Arabic), shea nuts and significant herds of cattle. Gum Acacia, for example, is estimated to be available in significant amounts in seven of the ten states, occupying 46% of the land area. The benefits of developing such value chains extend to creating community interdependences and therefore peaceful coexistence.