Haiti

major macro economic indicators 

(e): Estimate (f): Forecast *2021 Fiscal year from 1st October 2020 to 30th September 2021

Risk assessment

Mild economic expansion amid rising violence and political uncertainty

The economy is expected to slightly rebound in 2022, following the three-year recession (2019-2021). Tourism (accounting for roughly 9% of GDP before the crisis) is not likely to recover strongly, due to the poor progress in terms of COVID-19 vaccination locally and the rising criminality across the country. Moreover, while higher remittances from expatriates in the U.S. support local households, consumption growth should still be somewhat hampered by weak income fundamentals and persistent inflation, induced by the monetary financing of the fiscal deficit and a chronic shortage of essential items. However, investment could increase moderately, thanks to some reconstruction work following the August 2021 7.2 magnitude earthquake, of which the damages and economic losses have been estimated at USD 1.5 billion (about 10% of GDP). Furthermore, the textile industry (the country´s largest export sector) should expand in 2022, thanks to vivid U.S. demand and preferential access to their market. Nonetheless, fuel shortages, security issues at ports and frequent power flicker outs limit the possible gains.  Finally, in September 2021, the World Bank approved a donation of USD 75 million from the International Development Association for the Jobs in the Private Sector and Economic Transformation Project in Haiti. The aim is to improve the demand for labour by supporting micro, small and medium enterprises. Downside risks to activity are related to a poor vaccination campaign and the bleak political environment.

Fiscal deficit quite stable, current account should return to a surplus

The challenges imposed by COVID-19 and the August 2021 earthquake further aggravated the fiscal situation in 2020 and 2021, because of higher social and health expenditures amid lower tax revenues. Moreover, the rise in oil international prices during 2021 also pressured fuel subsidy costs. To deal with these challenges, Haiti has counted on the IMF´s debt service payment relief and grants, while also relying on monetary financing and local commercial banks. Still, the country received roughly USD 224 million in August 2021 from the IMF Special Drawing Right (SDR) allocation. In 2022, the fiscal deficit should remain quite stable, in the absence of a bright economic recovery and the elevated social expenditure needs.

Regarding the external accounts, the country has to deal with a chronic trade deficit (roughly 34% of GDP in 2019), as under-diversified domestic production induces sizeable imports. In 2022, exports related to textile and traditional goods such as coffee, cocoa and mangoes are likely to expand, mostly due to a weak base of comparison since rural areas were hard-hit by the 2021 earthquake. Meanwhile, imports should recede somewhat mostly due to relatively lower annual average international oil prices (fuels account for 18% of total imports). Finally, the current account deficit should switch to a surplus, also supported by strong migrant remittances (roughly 21% of GDP in 2020) and grants (estimated by the IMF at 1.9% of GDP in 2020).

Murder of president Jovenel Moïse turned the political scenario even bleaker

On 7 July 2021, President Jovenel Moïse was shot dead at his home, deepening the long lasting political crisis in the country. According to the police, a group of mostly foreign mercenaries - 26 Colombians and two Haitian Americans - carried out the assassination. However, the attack´s intellectual authors and their motive remains unclear. Following the murder, then prime minister Claude Joseph took office, but was replaced by Henry Ariel days later. In fact, the latter had been announced as the new prime minister two days before the attack. It is important to note that, in early September 2021, a chief prosecutor was fired hours after asking the judge responsible for investigating Moïse's murder to charge Ariel as a suspect. Regarding elections, Ariel initially announced presidential and legislative votes in November 2021. Nonetheless, he canceled them in late September 2021, after he dismissed all nine members of the country's electoral council. Due to the lack of elections, the Haitian Parliament has had no deputies since January 2020, and only 10 of the 30 senators are still in office (Moïse had ruled by decree). The new election should take place after a referendum expected to take place in the first months of 2022 on a constitutional reform. This would encompass the creation of a unicameral legislative and the elimination of the prime minister position for a vice-president. Meanwhile, since Moïse´s death and the August 2021 earthquake, armed gangs have further gained territory across the country. In October 2021, 17 North American Christian missionaries and their families were kidnapped in the capital Port-au-Prince. Finally, with the worsening of the country´s humanitarian situation, migration has sharply increased. In September 2021, the U.S. deported around 7,000 Haitians who had attempted to enter the country through Mexico.

Last updated: February 2022