Liberia Economic Outlook

• Liberia is expected to experience high growth in 2012 and 2013 thanks to exports of natural resources.
• Reforms in public financial management have improved public sector efficiency and transparency.
• The development of the human capital of young people remains a challenge.

In 2011 Liberia’s growth was driven by the first exports of iron ore since the end of the war, strong rubber exports and increased timber production. Foreign direct investment (FDI) in mine construction and recent investments in palm oil plantations will contribute to growth in the coming years and the growth rate should be even higher in 2012 and 2013. Long-term growth is expected to be driven by natural resource extraction, but to avoid the bias in favour of natural resource-based growth of the past that contributed to the conflict, there are attempts to diversify the sources of growth and create employment. The rate of inflation was low in 2011 and is projected to remain  low in 2012 and 2013.

Although public expenditure increased, the budget deficit was low in 2011 and it is projected to remain stable in 2012 and 2013. The government has simplified procedures to start a business and improved access to credit. Nevertheless, the general business climate remains difficult and development is constrained by poor transport, inadequate energy infrastructure, especially in rural areas, and scarcity of the skills demanded by the private sector. Efficiency, transparency and accountability have been improved through public financial management reforms and the introduction of information management systems, but institutional capacity is still weak.

Liberia has improved youth literacy and made strides in preventing and treating infectious diseases. However, it still faces some of the highest maternal mortality rates in the world and access to sanitation facilities is very limited, especially in rural areas. Free public education is provided for younger children but its quality needs improvement.Liberia has numerous programs for improving youth employment and career training but coverage is limited and coordination is poor.