Somalia's economy will flourish despite its hardships.

Somalia's GDP expanded by 2.9 percent in 2021. This was 0.5 percent more than the 2.4 percent forecast last year. Even if shocks like delayed elections, drought, COVID-19 supply chain issues, and increased crime have hindered economic revival, this is true.

Somalia is experiencing a severe, 40-year drought. After four years of poor rains, 90% of the country is under a severe drought, with failing crop harvests, water shortages, and animal production. As people leave their houses to find food, water, and pasture for their animals, the drought is worsening the humanitarian crisis and driving the country into starvation. The Ukraine war has raised global food and gasoline costs, making matters worse. Higher prices damage the poor and worsen inequity.

The World Bank's Somalia Country Manager, Kristina Svensson, said, "Given the repeated climate shocks that Somalia faces, the medium-term growth outlook is still very uncertain, and the case for investing in social protection is stronger." "We think that social protection is one of the most important ways to deal with poverty and inequality in the country as a whole."

The newest Somalia Economic Update (SEU) research emphasizes social safety as a means of alleviating poverty and inequality in the country. Somalia requires an integrated, shock-responsive, and human capital-focused social security system to safeguard people throughout their lifetimes and promote inclusive policies. Somalia has vast untapped potential to increase its population's human capital.

Afrah Al-Ahmadi, World Bank Senior Social Protection Specialist, said, "By helping poor and vulnerable households meet their basic needs and get access to socioeconomic opportunities, social protection interventions can prevent and lessen the negative and long-lasting effects of shocks and chronic poverty." "These investments can also end long-term crises that hurt the development of human capital and make people happier and healthier."

The research also recommends transitioning Somalia from humanitarian aid to development as it recovers. Humanitarian aid and national social safety nets should share, if not a common, understanding and approach to monitoring and evaluation, policy support, institution building, and operational alignment in areas like targeting and eligibility, benefit levels, and data exchange. In situations like Somalia, where money is scarce, the international safety net must collaborate with state systems to tackle chronic poverty and promote long-term resilience.

The SEU report predicts GDP growth of 3.6% in 2023 and 3.7% in 2024 if demand recovers in 2023 and most of the shocks that are slowing the recovery disappear. Higher investment, consumption, and faster growth among Somalia's trading partners will be the driving forces behind this.

PRESS RELEASE NO: 2022/029/AFR - Nairobi, November 29, 2022

Rewritten from press release by Dr. Fatuma Hirsi Mohamed CBS, FPRSK

Contact: fhirsi@worldbank.org