Economic Studies


Population 28.5 million
GDP per capita 462 US$
Country risk assessment
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major macro economic indicators

  2019 2020 2021 (e) 2022 (f)
GDP growth (%) 4.4 -6.2 3.5 5.2
Inflation (yearly average, %) 5.6 4.2 5.9 5.2
Budget balance (% GDP) -1.4 -4.0 -6.2 -4.5
Current account balance (% GDP) -2.3 -5.3 -5.5 -4.6
Public debt (% GDP) 38.5 46.0 48.8 49.3

(e): Estimate (f): Forecast


  • Significant mineral reserves (precious stones, nickel, cobalt and petroleum)
  • Agricultural potential, world’s leading producer of vanilla
  • Positive tourism development before the pandemic (tourism accounted for 16.1% of GDP in 2019)
  • Public debt mainly on concessional terms (65% of total in 2019)


  • Reliant on agriculture/farming (22% of GDP in 2019) and mining (especially petroleum and oil, 6% of GDP in 2019), vulnerable to terms of trade fluctuations
  • Vulnerable to climatic hazards and natural disasters
  • High poverty, with 79% of the population living below the extreme poverty line of USD 1.90 per day
  • Highly dependent on foreign aid
  • Inadequate road, water and electricity networks (only 27% of people had access to electricity in 2019)
  • High corruption, Madagascar is ranked 149th out of 179 countries in Transparency International’s 2020 Corruption Perceptions Index
  • Chronic political instability (crises in 1972, 1991, 2002 and 2009)


Foreign trade and investment are driving the recovery

At the beginning of 2022, Madagascar was still struggling with the COVID-19 crisis. Due to a chaotic pandemic management and a poor health system, there was no national vaccination campaign set yet. Low vaccine shipments will probably delay a national campaign to the end of the year. Another big obstacle to growth is the fourth consecutive year of draught in the south of the country, which has led to a famine. 1.1 million people are affected by it (almost double the numbers of 2020). The UN Office for the Coordination of Humanitarian Affairs (UNOCHA) announced in September 2021 that it would send USD 139.6 million in aid for southern Madagascar (until at least May 2022). An additional USD 91 million are coming from other donors. Tourism should remain low (7% of GDP), despite borders being opened for EU citizens (60% of tourists come from France) in early November 2021. However, the pandemic should discourage tourism, which should recover noticeably at the end of 2022. While exports of services should remain muted, exports of goods should further increase due to a prolonged boom of vanilla sales (21% of all goods exports), sustained garments purchases (20%), a strong global demand for nickel and titanium (17%), and a general strong economic recovery in the main export destinations. However, imports of goods should increase too due to a moderate domestic recovery. Private consumption should pick up somewhat from 2021, although it will be held back by the strong inflation pressure coming mainly from food and energy prices, as well as by COVID-related restrictive measures. A further depreciation of the Ariary against the Euro or USD (due to the divergent monetary policy developments) would also lead to higher inflation. A stronger vanilla harvest will not make up for the constraint put on (mostly subsistence) agriculture (which employs 80% of the population and provides 80% of household income) by the draught in the South, so the main domestic growth drivers will be government spending and investments. The Initiative Emergency Madagascar programme (9.5% of GDP) that was launched in 2020 and will last until 2023 is the framework for projects that focus on upgrading transport infrastructure or ensuring reliable water and electricity supplies, e.g. the construction of a 135 km power cable between the industrial cities Antananarivo and Antsirabé. Furthermore, a support program for the South (USD 167 million) should start in 2022, with the construction of a water pipeline from the Efaho River to Ambovombe. 


Twin deficits decrease

In March 2021, the IMF approved another 40-month financial rescue package consisting of an Extended Credit Facility (ECF) worth USD 312.4 million. The IMF allowed disbursements of USD 138.4 million for 2021. The programme deals with the social and economic impacts of the pandemic, as well as long-term reforms of the economy and exposure to climate-related shocks. Initial IMF-backed tax reforms should increase public revenues and more than match the increase in expenditures. This should reduce the public deficit, which is mainly financed by multilateral and, to a lesser extent, bilateral aid. However, the significant grant element will limit the increase in public debt. Due to stronger exports, the goods trade deficit should shrink in 2022, even with increasing import prices, especially in the food and energy sectors (18% of all imports). While the services trade deficit should remain muted, the investment income deficit should widen as the profit repatriation of international companies in Madagascar, e.g. in mining, should increase. Overall, this should lead to a moderate decrease of the current account deficit. 


An (alleged) coup attempt as a symptom of political frailty

President Andry Rajoelina’s position at the beginning of 2021 was already disputed after a senatorial election in 2020, which included changes in the voting system, had given his party full control over both chambers of the parliament. In addition, Rajoelina had initially rejected vaccines against COVID-19, but, instead, promoted some herbal tea. In this context, the Malagasy authorities announced in July 2021 that they had foiled an assassination attempt on several high-profile political persons, including the president. Over 20 persons, including high-ranking army and police officials and two French nationals, were arrested. Whether this was a serious attempt or not is unclear, as the suspects’ plans look unsophisticated in “Malagasy terms” (Madagascar was home to several coups in the past; the last one, in 2009, had brought President Rajoelina to power). In mid-August 2021, the president reshuffled his cabinet and fired 10 out of 24 ministers due to incompetence. Moreover, he introduced eight new cabinet posts. Even with all these obstacles, it is expected that Rajoelina will stay in office until at least the next presidential election in 2023.


Last updated: February 2022