World Bank projects 30% economic contraction in South Sudan

Investing.com -- The World Bank has called for rapid and sustained reforms in South Sudan to stimulate economic recovery and inclusive growth, according to the 7th edition of South Sudan Economic Monitor (SSEM) released on March 13, 2025. The report, titled ’A Pathway to Overcome the Crisis’, projects a 30% contraction in South Sudan’s economy for FY24/25, with a potential rebound in FY25/26, contingent on the resumption of the country’s Dar Blend Oil exports.

The SSEM notes that the South Sudanese economy has been in decline for five consecutive years, leading to a projected halving of the Gross Domestic Product (GDP) per capita from FY20 levels. The contraction is primarily attributed to disruptions in oil production, causing a significant drop in export revenues, estimated at $7 million per day. This has strained public finances, leading to salary arrears and reduced spending on essential services such as health and education.

The report also highlights the impact of hyperinflation and widespread food insecurity affecting nearly 80% of the population. Poverty is estimated to have increased to 92%, according to available data. The issues are further compounded by weak governance, poor oil revenue management, ineffective fiscal policies, and an underdeveloped financial sector limiting economic diversification and access to credit.

Despite these challenges, the SSEM emphasizes the potential for South Sudan’s economic improvement through decisive action and comprehensive reforms. "The situation is very challenging, but the government has committed to undertaking reforms to tackle macroeconomic and fiscal challenges and enhance governance," said Charles Undeland, World Bank Group Country Manager for South Sudan.

The SSEM suggests several policy measures for the South Sudanese government to address inflation and fiscal challenges. These include strengthening the macroeconomic framework, increasing exchange rate flexibility, improving oil revenue management, boosting non-oil revenues, supporting economic diversification, prioritizing social spending, and implementing a credible strategy to clear government employees’ salary arrears.

Kamer Karakurum Ozdemir, World Bank Senior Economist, stressed the need for a fundamental shift in South Sudan’s policy and institutional framework to reduce poverty and enhance economic growth. The SSEM is an annual World Bank report series that assesses key economic developments, prospects, and policies in South Sudan, intended for policymakers, business leaders, analysts, development partners, and the general public.

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