Liberia Economic Outlook

Economic performance and outlook

Economic growth has stagnated in Liberia since 2014 due to low commodity prices and the Ebola outbreak in 2014–15. After estimated growth of 0.7% in 2014 and 0% in 2015, the economy contracted 1.6% in 2016. A modest pickup in gold exports supported growth at an estimated 2.6% in 2017. Further gold and iron ore expansion, commercial palm oil production, and normalization of investment after the political transition are projected to support a growth rate of 3.9% in 2018 and 5% in 2019. Nevertheless, medium-term growth is expected to remain below pre-Ebola levels of over 7%.

Macroeconomic evolution

The fiscal outlook is challenged by weak economic growth, lower revenues, and expenditure pressures for elections and security. Recurrent expenditure dominates government spending; at $295 million, employee compensation accounts for more than 56% of total expenditure. Monetary policy continues to be constrained by high dollarization, estimated at 67% of broad money. As of October 2017 the Liberian dollar has depreciated 21% since 2013; the pace of depreciation has increased since 2016. Public external debt increased from an estimated 23% of GDP in 2015 to 28% in 2016 and is projected to be 35% in 2017. The risk of debt distress is moderate but close to high, according to a Debt Sustainability Analysis conducted in 2017 by the International Monetary Fund. Additional decreases in export values could put the country at high risk of debt distress.


Liberia continues to grapple with low commodity prices for iron ore, but a recent increase in rubber prices could support production in the sector. Commercial gold production provided some cushion to exports in 2016 and is likely to

continue in the medium term. Weaker commodity prices offer an opportunity to build the foundation for diversification, particularly in light of recent infrastructure improvements. Energy production and access are expected to improve; three heavy fuel oil plants were installed in 2016, and the relaunch of the Mount Coffee hydropower plant in 2017 added 88 MW of capacity during the rainy season. In transport, progress has been made in key economic corridors. The main corridors from Monrovia to the Ganta and the Guinea border have been paved, as well as the road from Monrovia to Buchanan, another economic center. The government launched an Agriculture Transformation Agenda focusing on agricultural value chains, which could help transform a sector that accounts for 70% of employment.


The drawdown of the UN Mission in Liberia underscores the urgency of the need for the government to fully provide and improve state security services and ensure political stability. The resolution of elections, followed by the expected political transition in January 2018, will test the capacity of already challenged state institutions. This greater uncertainty is slowing investment. An onerous business environment impedes competition and investment, highlighted by the country’s ranking of 172 out of 190 countries in the World Bank’s 2018 Doing Business report. The education system faces serious challenges, including untrained teachers, which could jeopardize human capital development and constrain long-term economic growth. Dependence on primary commodity exports and imports of food and fuel makes the country highly vulnerable to external shocks. A slowdown in advanced economies or China could hurt demand for Liberia’s commodity exports. Changing aid policies in advanced economies, particularly in the United States and the United Kingdom, could reduce donor funding, which accounts for approximately 60% of GDP.