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Madagascar has no strong economic rebound in Q1: World Bank

Xinhua, June 17, 2015 Adjust font size:

Madagascar had no strong economic rebound in the first quarter 2015, the latest economic note of the Word Bank said.

"Tropical storm Chedza and Fundi and heavy rains destroyed cultivated areas, infrastructure and houses, and took a heavy human toll as well," the World Bank said.

The World Bank said that damages to agricultural products led to higher inflation, which reached 7.9 percent in March.

Household purchasing power was eroded and economic activity has slowed down, it said.

The majority of households judged that they are unhappy with their standard of living and that their income is too low to cover household needs, it said, adding that almost half of households thought that their well-being declined compared to 2008, mainly because of the cost of living.

After a period of stability, the Malagasy currency Ariary depreciated strongly in March as U.S. dollar appreciated, the World Bank added.

New business creation in Madagascar declined by 30 percent with only 3,289 new business creation compared to the same period in 2014.

Furthermore, there was no corresponding increase in employment, according to the number of workers registered with the pension fund for the private sector (CNaPS), which remained stable.

The volume of consumption of petroleum products also declined, it said.

The World Bank said nevertheless that two positive changes can be pointed out. Fiscal revenue increased by 20 percent in the first quarter compared to the same period in 2014.

The value of imports decreased by 17 percent in first quarter 2015, due to falling world energy prices and reduced rice imports.

The value of exports rose by 12 percent as the increase in export volume of nickel and cobalt compensated lower prices and as well as the country recorded good production and price of cloves and vanilla.

The performance of nickel and cobalt recovered also the decline in export value of shrimp, tones and textiles, which are the flagship products of the free zones.

However, the World Bank thought that Madagascar's economy could still rebound in 2015 with the implementation of the National Development Plan. Endi