Comoros Economic Update: Blue Economy as a Path to Sustainable Growth

Vibrant ocean scenery depicting marine resources, sustainable tourism, and flourishing fisheries in a blue color scheme.

Comoros’ economy is projected to grow by 3.4% in 2024, yet challenges like poverty and external vulnerabilities persist. The blue economy offers potential for sustainable growth through fisheries and marine tourism. Key reforms are necessary in fiscal policy, private sector development, and governance to ensure resilience and unlock economic opportunities for the nation.

The economy of Comoros is showing signs of recovery, projected to grow by 3.4% in 2024. However, this growth is still insufficient to tackle the ongoing issues of poverty and inequality. While there is a medium-term positive outlook, the country faces significant macroeconomic risks, like high reliance on imports, a lack of export diversity, and vulnerability to external shocks and climate change.

Sustaining growth in Comoros will necessitate not only strengthening fiscal sustainability but also enhancing the competitiveness of the private sector and improving governance. A promising avenue appears to be the blue economy, which could transform the nation’s economic landscape. Key areas include expanding fisheries and marine tourism, which are critical to unlocking this potential, along with robust environmental safeguards.

The first edition of the Comoros Economic Update, aptly named “An Ocean of Opportunities: Blue Economy as a Driver of Sustainable Growth,” delves into recent economic trends and offers a medium-term outlook. A focus of the report analyzes how the blue economy could stimulate growth, generate employment, and protect ecosystems while ensuring resources are managed sustainably in the long run.

Although Comoros’s economy saw a rise from 3% to 3.4% in 2024, driven primarily by household consumption and services, this improvement has not been enough to decrease poverty levels. Agriculture and industry did experience some growth, but stagnated per capita income remains a significant hurdle. Consequently, public finances are under strain; while revenues held at 16.6% of GDP, expenditures soared due to various externally financed initiatives, leading to a fiscal deficit that widened from 1.3% to 3.9%. Furthermore, public debt has escalated to 36.8% of GDP, placing the nation at high risk of debt distress according to the IMF and World Bank.

Remittances play a crucial role, accounting for an average of 11.3% of GDP over the last decade, yet they cannot bridge the trade deficits or finance development adequately. The banking sector showcases fragility, characterized by high non-performing loans and solvency issues, which ultimately restrict credit access for private businesses. Experts argue that inclusive reforms targeting public finance improvements and economy diversification will be essential for sustainable development.

In the forthcoming years, from 2025 to 2027, growth is expected to continue at a steady pace, driven largely by private consumption and public investments, particularly in preparation for the 2027 Indian Ocean Island Games. Inflation should see a decrease, partly due to reforms like liberalizing rice imports. Nevertheless, challenges persist: high import dependency, limited export diversification, and inflationary pressures remain significant issues. As the country approaches WTO accession, which could open new trade avenues, there is concern that without careful policies, trade revenues might diminish.

Climate change remains a wild card, with natural disasters and global economic volatility further complicating stability. Other systemic issues like poor governance, high levels of youth unemployment, and slow job creation exacerbate these challenges. Hence, a thorough reform of fiscal policies, along with initiatives to enhance private sector growth and governance is essential.

Public debt is expected to rise to 37% of GDP in 2024, which only emphasizes the need for immediate fiscal reform. Key initiatives must focus on broadening revenue sources, modernizing tax operations, and refining public financial management practices. Increasing transparency in debt management and prioritizing concessional financing will also be crucial in addressing the looming debt crisis.

For the private sector to flourish, it is imperative to dismantle regulatory barriers, increase financial accessibility, and effectively utilize remittances. WTO membership could pave the way for diversification, particularly in fisheries and agriculture, provided there are investments in trading infrastructure and logistics.

To fully harness its blue economy, Comoros must focus on governance reforms, infrastructure investment, and essential environmental protections. The nation is rich in potential, especially regarding its fisheries and marine tourism sectors. However, roadblocks such as outdated practices and inadequate market access hinder tapping into this wealth.

A strategic blue economy approach, built on governance reforms, sustainable practices, and infrastructure improvement, could significantly boost GDP growth. This plan aligns with the objectives of the “Plan Emergent Comores 2030,” which stresses sustainable resource management. Priorities such as modernized fisheries, enhanced aquaculture, and better financial inclusion, particularly for women and MSMEs, are crucial. Strong governance, effective resource planning, and innovative digital solutions will be needed to manage the nation’s resources sustainably.

In conclusion, while Comoros shows promising economic growth, serious challenges remain, particularly concerning poverty and inequality. Harnessing the blue economy could provide a significant avenue for growth and sustainability, but it will require comprehensive reforms to governance, fiscal policy, and private sector enhancement. As the country aims for upper-middle-income status by 2050, aligning its strategies with prudent financial practices and sustainable management of resources will be essential.

Original Source: www.worldbank.org

About Carmen Mendez

Carmen Mendez is an engaging editor and political journalist with extensive experience. After completing her degree in journalism at Yale University, she worked her way up through the ranks at various major news organizations, holding positions from staff writer to editor. Carmen is skilled at uncovering the nuances of complex political scenarios and is an advocate for transparent journalism.

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