Population 10.163 million
GDP 7.895 US$ billion
@rating
country
Business climate
assessment
| 2010 | 2011 | 2012(e) | 2013(f) | |
|---|---|---|---|---|
| GDP growth (%) |
-5.4 |
5.6 |
2.5 |
6 |
| Inflation (yearly average) (%) |
4.1 |
7.4 |
6.7 |
5.9 |
| Budget balance (% GDP) |
2.4 |
-3.7 |
-3.6 |
-4.7 |
| Current account balance (% GDP) * |
-2.5 |
-4.6 |
-4.3 |
-5.3 |
| Public debt (% GDP) |
17.3 |
11.7 |
16.6 |
20 |
| (e) Estimate (f) Forecast * Grants included | ||||
STRENGTHS
- Mobilisation of massive aid from the international community following the earthquake
- Reconstruction policies and economic development strategy defined with donors
- Membership of various regional organisations (Association of Caribbean States, Organization of American States, CARICOM, CARIFORUM)
WEAKNESSES
- Extreme poverty
- Country ranked 158th out of 187 on the UNDP Human Development Index
- Vulnerable to natural disasters (earthquakes, hurricanes…)
- Infrastructures destroyed
- Political instability and insecurity
- Energy dependence (oil)
- Tax evasion
- High levels of corruption
Risk assessment
Economy sustained by international aid and migrants’ transfers
After In 2013, growth will be driven by infrastructure investment (roads, airports, electricity grid) and by an acceleration of construction activity, with, in particular, the completion of new hotels (in Port au Prince, Pétionville…). Rising domestic demand, stimulated by transfers of funds from the diaspora (20% of GDP), will also buoy activity. In contrast, agricultural production (25% of GDP) is likely to slow down, as production capacity has been hit by the recent storms sweeping across the country. Meanwhile, uncertainties persist over the speed and scale of the reconstruction projects and hence the recovery. Reconstruction is dependent on the disbursement of aid, a slow and complex process because of the often-difficult coordination of local and international players and insufficient infrastructure.
Inflation is set to slow in 2013, due to the slight expected decrease in energy and food prices. The exchange rate policy conducted by the Central Bank also keeps inflation under control. To curb the depreciating trend of the gourde, the Central Bank is effectively increasing its purchases of national currency (administered float) with the country’s sizeable levels of foreign exchange reserves (5 months of imports).
Current and fiscal accounts deficits largely cushioned by international donations
The current account deficit is expected to widen in 2013. Textile exports will increase, thanks in particular to the opening in October 2012 of the Caracol Industrial Park, which will allow production capacity to expand. In addition, the textile industry is expected to profit from preferential access to the United States under the HOPE II grant programme (exemption of customs duty on textile products until 2018). However, this will be broadly offset by imports of goods used in reconstruction projects. Meanwhile, food imports are likely to increase due to the damage to production capacity caused by Hurricane Sandy. International donations and migrants’ fund transfers will continue to fuel the transfer balance surplus and partially offset the trade deficit. Nonetheless, the services balance will remain largely in deficit due to freight and insurance costs and the remuneration of foreign personnel.
The fiscal deficit is expected to widen slightly in 2013 due to higher public spending especially on the reconstruction efforts, 47% financed out of internal resources with the remainder financed through international donations (IDB, IDA, and EU) and concessional loans granted mainly by the Petrocaribe Initiative. Furthermore, since 2012 Haiti has enjoyed an Extended Credit Facility (ECF) totalling almost $63 million. In July 2012, the IMF decided to disburse an additional $7.4 million under the ECF, bringing the total already agreed to almost $48 million.
A political system paralysed by a still precarious security situation
The political system appears paralysed. The president lacks a majority in parliament, which is controlled by the opposition Inite party. The mandate of 10 senators expired in May, leaving seats vacant. This has slowed the legislative process and accordingly the government programme. The government is under fire from critics over its slow pace of progress on resettling the victims of the 2010 earthquake. High levels of unemployment and poverty exacerbate popular discontent, a context in which the security situation remains precarious (violent demonstrations, criminality). However, President Martelly wants to work with the United Nations on withdrawing troops from MINUSTAH (United Nations Stabilization Mission in Haiti). The Mission has been criticised on many occasions by the local population (assaults of civilians, introduction of a cholera epidemic) who want it to leave. However, the United Nations renewed the Mission’s mandate for another year (until October 2013), although troops will probably gradually be withdrawn. Finally, diplomatic relations with the Dominican Republic are likely to remain solid, despite the tensions generated by a continuous flow of emigrants from Haiti to its neighbour.
