Madagascar Economic Update : Navigating Through the Storm

Development prospects in Madagascar continue to be hampered by the country's low growth potential and exposure to frequent, deep, and persistent crises. Following a recession in 2020 that was about three times deeper than in the rest of Sub-Saharan Africa, an economic recovery started in Madagascar in 2021 but was interrupted in 2022 by a sequence of domestic and international shocks. In addition to these new headwinds, the growth potential of the economy has been negatively impacted during the crisis by a retrenchment in private investment, deteriorating human capital and weakening governance. In this context, growth projections were downgraded to 2.6 percent in 2022 and to an average of 4.4 percent in 2023-2024, with the poverty rate now expected to remain close to 80 percent by 2024. This can only happen if the government kickstarts far-reaching reforms supporting private investment and job creation, better access to basic services and infrastructure, and greater resilience to shocks. Several policy priorities are highlighted as particularly urgent in this Economic Update. This report also highlights the importance of boosting public school performance following the continued deterioration in learning outcomes and advocates for a set of reforms reinforcing teachers' selection and evaluation, salary and school grant management, redress mechanism and local community engagement