major macro economic indicators
|2016||2017||2018 (e)||2019 (f)|
|GDP growth (%)||1.5||1.2||1.4||2.8|
|Inflation (yearly average, %)||13.4||14.7||13.3||11.6|
|Budget balance (% GDP)**||-0.1||-0.5||-2.7||-2.3|
|Current account balance (% GDP)**||-1.0||-4.0||-4.0||-2.9|
|Public debt (% GDP)||33.9||31.1||33.3||35.3|
(e): Estimate. (f): Forecast. *2019 year runs from the 1st October 2018 to the 30th September 2019. **Grants included.
- Development and reconstruction programmes defined with donors
- Membership of regional organisations (Association of Caribbean States, Organization of American States, CARICOM, CARIFORUM)
- Low level of development and extreme poverty (HDI ranking of 168 out of 189)
- Dependent on expatriate remittances, international donations and the United States
- Highly vulnerable to natural disasters (hurricanes, earthquakes, etc.)
- Poor governance and low-quality business environment
- Lack of infrastructure, particularly energy infrastructure
- Political instability and insecurity
Growth prospects for a still fragile economy
The Haitian economy is expected to continue growing thanks to the continued recovery of the agricultural sector (which accounted for about 18% of GDP in 2017) after the deadly devastation of Hurricane Matthew in 2016. The economy will also be driven by the construction sector, which will benefit from the international aid mobilised to help reconstruct the country after it was hit by natural disasters. Although they will remain strong, exports, principally textiles, are expected to be less dynamic than last year. Exports could suffer from a gradual slowdown in the US economy, with more than 80% of these going to the world’s leading power. Private consumption will be boosted by remittance flows from expatriates (about 30% of GDP), mainly from the United States, but will continue to be penalised by high inequality and extreme poverty. Private consumption will also be affected by the high level of inflation, fuelled by elevated oil prices, which will constrain household purchasing power. However, price increases are expected to continue decelerating in 2019, as domestic production of food products (which make up almost half of the consumer price index) recovers, limiting inflationary pressures. In addition, the reduction in the government deficit should limit monetary creation, a financing method used by the Haitian government that encourages inflation.
Reduction ahead for the twin deficits
Haiti’s public accounts could not withstand the effects of Hurricane Matthew, which caused a significant increase in the government deficit in 2018. The deficit is expected to decline again thanks to the implementation of budgetary measures encouraged by the IMF. However, the possibility that it might widen cannot be ruled out, due to the potential pushback from the Haitian people to proposed budget cuts. Weather events could also lead the government to incur additional expenses. In order to finance the public deficit, the government should recourse to borrowing, which will contribute to the increase in the public debt burden. A large part of the debt is external and denominated in dollars due to the concessional loans contracted with Venezuela under the Petro Caribe program.
The current account deficit, linked to the trade deficit (37% of GDP in 2017), is also expected to decline in 2019. However, it will not return to its 2016 level, as high oil prices will push up the cost of imports, and the country has not received low-cost oil from Venezuela since 2017. Imports of inputs for the textile industry and for projects related to reconstruction will likewise have an impact. While exports will be helped by trade agreements with the United States, they will remain lower than imports. The current account deficit will nevertheless continue to be lowered by expatriate remittances (30% of GDP in 2017) and grants (5% of GDP in 2017), and will be financed by inward FDI.
A government facing many difficulties
Jovenel Moïse of the Haitian Tel Kale Party, who was elected President in February 2017, is struggling to reduce the country’s instability. In addition to clashes between armed gangs, the head of state is having to cope with violent protests from the population. In July 2018, a wave of violence broke out in the country in response to the abolition of fuel subsidies. These events eventually caused the measure, a joint initiative by the government and the IMF, to be abandoned and led to Prime Minister Jack Guy Lafontant’s resignation. In addition, in October 2018, anti-corruption demonstrations involving thousands of people were held throughout the country in response to a scandal over the government’s misappropriation of Venezuelan aid received through Petro Caribe funds. Given how unhappy people are, the parliamentary elections scheduled for October 2019 will probably not allow the President to reassert hispower.
Across the border, relations with the Dominican Republic continue to sour. The repatriation of many Haitian migrants, following the non-renewal in August 2018 of the National Plan for the Regularisation of Foreigners (PNRE), which allowed migrants to obtain a right of temporary residence in the Dominican Republic, has added to the tension between the two countries. This friction could impact trade between the two nations, bearing in mind that the Dominican Republic is one of Haiti’s most important trading partners.
Last update: February 2019