Sierra Leone Economic Outlook

• Because of increased mining activity, including that at new iron ore mines, Gross Domestic Product (GDP) growth is expected to accelerate in 2012.
• Governance has improved in recent years and reducing corruption is one of the government’s priorities.
• Although there have been some improvements, the country’s social indicators are amongst the lowest in the world and further efforts need to be exerted to meet the MDGs.

Real GDP growth is projected to increase significantly in 2012 thanks to the recovery of the mining sector and the discovery of huge deposits of iron ore. In spite of this growth,the inflation rate was in double figures in 2011 because of high international oil and agricultural prices on the one hand and the depreciating national currency, the Leone (SLL), on the other. The rate of inflation is expected to fall progressively in 2012 and 2013 partly as a result of improvements in domestic agricultural production, new taxes, and a slower rate of currency depreciation. The removal of fuel subsidies and the rise in royalties from diamond production led to an improvement in the overall fiscal balance in 2011. In addition, corrective action taken in 2011 to strengthen fiscal discipline is expected to contribute to the reduction in the fiscal deficit in 2012 and 2013. However, the current account deficit increased substantially in 2011 because of the increase in the trade balance deficit which was fuelled by the rise in imports of machinery. The tightening of fiscal and monetary policy will also help Sierra Leone to manage better its debt sustainability. Furthermore, major reforms aimed at reducing corruption and providing free health care, as well as improving the decrepit transport, power and public health infrastructure, top the list of the government’s priorities. Governance has improved in recent years following the implementation of the national anti-corruption strategy.

Youth unemployment is a challenging social problem in Sierra Leone. At 60%, the youth unemployment rate is one of the highest in West Africa. The second Poverty Reduction Strategy Paper (PRSP II) for 2008-2012 contains new legislation for youthfriendly initiatives that aim to provide a favourable environment for youth development,employment and empowerment.