South Sudan Economic Outlook
- Macroeconomic performance has continued to deteriorate because of the country’s fragile situation and continuing low worldwide oil prices while growth fell by 0.2% in 2015 and the fiscal and current account deficits have increased sharply.
- On 14 December 2016 the president announced the launch of a national dialogue initiative with the aim of protecting and preserving the unity of the people of South Sudan, ending their suffering, restoring the economy, and focusing on state and nation building.
- South Sudan does not have a broad and substantive history of private sector development from which entrepreneurial culture will easily develop.
Economic performance has continued to deteriorate because of the civil war, the sharp fall in oil production, and the collapse of global oil prices. This has meant that the government is unable to raise the resources required to finance peace-related costs. In fact, financing even the normal 2015/16 budget, as approved by the assembly, remains a daunting challenge. South Sudan is the most oil-dependent country in the world, with oil accounting for almost the totality of exports, around 60% of its gross domestic product (GDP), and over 95% of government revenues in previous fiscal years. Global oil prices fell from USD 110 in 2014 to USD 30 before recovering to about USD 50 per barrel in early 2017. Net oil revenues in 2015/16 are expected to be only 17% of those of the previous year. This has had an adverse impact on economic performance. Real GDP growth fell by 0.2% in 2015. The fiscal budget and current account deficits have risen sharply resulting in a huge drop in foreign reserves, an increase in domestic and external debts, depreciation of the parallel domestic currency exchange rate, and acceleration in consumer inflation. GDP is estimated to have fallen drastically by 13.1% in 2016. The country’s economic prospects remain bleak, and will depend on the successful implementation of the peace agreement, a significant recovery in global oil prices, and the implementation of the economic and fiscal measures announced in September 2016.
On 14 December 2016, President Salva Kiir announced the launch of a National Dialogue initiative with the purpose of protecting and preserving the unity of the people of South Sudan, ending their suffering, restoring the economy, and focusing on the state and nation building. It is both a process and a forum through which the people of South Sudan should redefine the basis for their unity as it relates to nationhood, refine citizenship and belonging, restructure the state and renegotiate the social contract, and revitalise their aspirations for development and membership of the world of nations. The national dialogue does not violate the terms of the Agreement on the Resolution of the Conflict in South Sudan (ARCSS). The political situation remains tense. In August 2015 parties to the South Sudan civil conflict signed a peace agreement, led by the Intergovernmental Authority on Development (IGAD). A key step in this peace accord was the formation of a unity government, which was finally announced on 29 April 2016. However, on 7 July 2016 new fighting erupted between the South Sudanese army (SPLA) and the opposition forces of the SPLA-IO. This opened a new wave of violence and since then a precarious calm has prevailed in the country.
The overall humanitarian situation continues to deteriorate sharply. In November 2016 about 1.67 million people remained internally displaced, while over a million had fled to neighbouring countries and 201 997 were seeking United Nations (UN) shelter. UN reports point to a borderline famine situation in many regions, especially in parts of the Unity State. An estimated 4.8 million people are in emergency or crisis level food insecurity. The food crisis and displacement of the populations are expected to worsen if insecurity continues.