major macro economic indicators (1)
|GDP growth (%)||2.8||1.2||1.5||1.9|
|Inflation (yearly average) (%)||6.8||3.9||7.4||8.9|
|Budget balance (% GDP) (*)||-7.2||-6.3||-2.7||-2.3|
|Current account balance (% GDP) (2)||-6.3||-6.3||-4.3||-3.4|
|Public debt (% GDP) (2)||21.4||26.6||26.4||26.4|
(e) : estimation (p) : prévision * dons inclus
Fiscal year from October 1st to September 30th
**Forecasts for 2016-2017 do not take into account the impact of hurricane Matthew
- Development and reconstruction programs agreed with donors
- Membership of several regional organisations (Association of Caribbean States, Organisation of American States, CARICOM, CARIFORUM)
- Extreme underdevelopment and poverty (ranked 163rd out of 188 in HDI)
- Extremely vulnerable to natural catastrophes (earthquakes, hurricanes, etc.)
- Fall-off in international aid since the 2010 earthquake (from 16.5% of GDP in 2011 to 5.6% in 2015)
- Inadequate infrastructures
- Political instability and insecurity
- Energy dependency
- Dependence on remittances from workers abroad and international aid
- Poor governance and business climate
Hurricane Matthew lowers already weak economic outlook
In 2016, there was a small uptick in Haitian growth. With slow growth and an uncertain political context, the outlook for growth in 2017 was further weakened by hurricane Matthew which struck the island on 4 October 2016. The human cost of this climatic catastrophe was extremely high, including more than 500 dead, 1.4 million people requiring emergency humanitarian aid and a re-emergence of the cholera epidemic that struck following the 2010 quake. The economic cost is equally disastrous for the island, with critical infrastructures and productive capacities destroyed in a part of the country that had barely recovered from the damaged inflicted by the 2010 earthquake, consecutive droughts and the falling off in external aid. Preliminary estimates put the cost of the damage at 1.9 billion dollars, almost 25% of GDP. The persistence of political uncertainty is slowing the flow of external donor aid and investment.
Following a sharp rise in 2016 with a leap in the cost of food products and the depreciation of the gourde, inflation is likely to increase in 2017. Prices of foodstuffs are expected to rise because of the damage caused to the plantations. On top of this, the depreciation will continue to lead to inflation in the cost of the imported goods that account for 70% of the basket
Twin deficits aggravated by the hurricane
As part of an IMF program, progress was being made in terms of budget consolidation with a sizeable reduction in the deficit during the 2015-2016 fiscal period. However, expenditure incurred on reconstruction will have a major impact on the deficit. Given the low level of government revenues, Haiti will need international aid for its reconstruction. Obtaining this financial support will however be problematic because of the ineffective management of the funds allocated in the aftermath of the 2010 earthquake which creates reluctance among donors. In the weeks immediately after the hurricane, there was a failure within the international community to mobilise as it did in 2010. Assistance from Venezuela’s Petrocaribe fund faded because of low oil and gas prices and the deterioration of the political situation in Venezuela. With the aim of continuing the efforts to improve the budget situation already achieved, the government has however made a commitment to maintain the deficit, excluding the hurricane, at 2.3% of GDP. The public debt is likely, despite this commitment, to rise rapidly.
The current account deficit is also set to widen as imports increase with the reconstruction. The destruction of part of the country’s productive capacities will also impact on export revenues, which are already weak. The trade deficit will therefore be the main cause for the worsening of the current account balance. The 41.6 million dollar Rapid Credit Facility (RCF) from the IMF was granted to help mitigate any sudden deterioration in the current account. Remittances from Haitians working abroad, the leading positive contribution to the current account balance, are also expected to increase in 2016-2017.
The presidential elections have not relieved the political uncertainty
Rescheduled for 9 October 2016, as it turned out five days after hurricane Matthew struck, the presidential elections, the first round of which had been annulled in October 2015 following accusations of fraud, were finally held on 20 November 2016. Jovenel Moïse, chosen by the former Head of State, Michel Martelly, to succeed him as head of the Haitian Tèt Kale Party (PHTK), was declared the winner with 55.67% of the votes based on the preliminary results from the Provisional Electoral Council (PEC). The country was plunged into political uncertainty with the postponing of the elections, and despite the appointment of a transitional government to take over from Martelly in February 2016. The election of J. Moïse, already in the lead in the earlier annulled election, is not however expected to bring the political instability to an end. With the declaration of results only being signed by 6 of the 9 members of the Council, the results will undoubtedly be contested by the 26 candidates opposing J. Moïse. Demonstrations of violence sporadically struck in the streets of Port au Prince after the polls and the announcement of the results. With a turnout of just 21.7%, the legitimacy of J. Moïse is already being questioned. Moreover, M.Moise’s plans to govern are blurry. The fragmentation of the Haitian political landscape is reflected by the segmentation of the Chamber of Deputies which would not provide a parliamentary majority for the new president who would then be blocked in implementing any socio-economic reforms. In responding to this instability, the mandate for the United Nations Stabilization Mission in Haiti (MINUSTAH) has been extended again to facilitate the political transition process and the reconstruction. The Mission, unpopular among the population, is itself mired in controversy. In an already critical business climate (181st out of 190 in the World Bank’s Doing Business 2017 survey), the political uncertainty remains a serious handicap.
In diplomatic terms, despite the degree of solidarity between the two countries on the island of Hispaniola following the devastation of the hurricane, relations with the Dominican Republic remain tense since the 2013 decision by the Dominican Constitutional Court to withdraw nationality from people born outside the country after 1929.
Last update: January 2017