Chad Economic Outlook
Economic performance and outlook
Economic activity in Chad continued to be hurt by the decline in world oil prices in mid-August 2014 and the security and humanitarian crises facing the country. GDP growth fell from 6.2% in 2014 to 1.8% in 2015 to –6.4% in 2016 and was estimated to turn positive in 2017. Inflation, –1.9% in 2016, increased in 2017 and is projected to do so in 2018 as well. Declining investment, particularly in oil and in building and public works, large workforce cuts, high domestic arrears, and the sharp decline in public spending largely explain the contraction over the past two years. The outlook for 2017 and 2018 depends heavily on the country’s ability to intensify fiscal consolidation in an economic and financial environment characterized by falling oil prices.
The decline in oil prices continues to impede growth and macroeconomic performance. Lower oil revenues and nonoil tax revenues led authorities to greatly reduce operating and capital expenditures to contain deficits in public accounts. Capital expenditure, which accounted for 9.6% of GDP in 2014, fell to 3% in 2016. The budget surplus reached an estimated 1.7% of GDP in 2017, up from a 2% deficit in 2016. The decline in oil prices also affected foreign exchange reserves, which in 2016 were only 0 months of imports of goods and services.
The success of the September 2017 international donor conference in Paris to mobilize resources for financing programs in the National Development Plan 2017–2021, which was derived from Vision 2030—The Chad We Want, has led to promising actions. Development partners pledged $6 billion and private-sector actors pledged $13.2 billion to increase the country’s economic diversification.
Despite progress, the business environment remains problematic, as highlighted in the World Bank’s 2018 Doing Business report. Structural reforms are required to enhance the attractiveness and competitiveness of the domestic economy. Progressively closing the infrastructure deficit, particularly in the vital sectors of energy and transport, is essential to the success of the economic emergence policy.