ECONOMY
Structural reforms began in the late 1980s, initially under pressure from international financial institutions. An initial privatization program (1988-1993) and the development of an export processing zone (EPZ) regime in the early 1990s were key milestones in this effort. A period of significant stagnation from 1991-96 was followed by 5 years of solid economic growth and accelerating foreign investment, driven by a second wave of privatizations and EPZ development. Although structural reforms advanced, governance remained weak and perceived corruption in Madagascar was extremely high. During the period of solid growth from 1997 through 2001, poverty levels remained stubbornly high, especially in rural areas. A six-month political crisis triggered by a dispute over the outcome of the presidential elections held in December 2001 virtually halted economic activity in much of the country in the first half of 2002. Real GDP dropped 12.7% for the year 2002, inflows of foreign investment dropped sharply, and the crisis tarnished Madagascar's budding reputation as an African Growth and Opportunity Act (AGOA) standout and a promising place to invest. Following resolution of the crisis, the economy rebounded with GDP growth of over 9% in 2003. Currency depreciation and rising inflation hampered economic performance in 2004-2005; by 2006 inflation had abated somewhat (to 11%) but growth remained sluggish (4.7% est.)
Following the 2002 political crisis, the government attempted to set a new course and build confidence in coordination with international financial institutions and the donor community. Madagascar developed a recovery plan in collaboration with the private sector and donors and presented it at a "Friends of Madagascar" conference organized by the World Bank in Paris in July 2002. Donor countries demonstrated their confidence in the new government by pledging $1 billion in assistance over five years. The Malagasy Government identified road infrastructure as its principal priority and underlined its commitment to public-private partnership by establishing a joint public-private sector steering committee.
In 2000,
Madagascar embarked on the preparation of a Poverty Reduction
Strategy Paper (PRSP) under the Heavily Indebted Poor Countries
(HIPC) Initiative. The boards of the IMF and World Bank agreed
in December 2000 that the country had reached the decision point
for debt relief under the HIPC Initiative and defined a set of
conditions for Madagascar to reach the completion point. In October
2004, the boards of the IMF and the World Bank determined that
Madagascar had reached the completion point under the enhanced
HIPC Initiative.
The Madagascar-U.S.
Business Council was formed in Madagascar in 2002. The U.S.-Madagascar
Business Council was formed in the United States in May 2003,
and the two organizations continue to explore ways to work for
the benefit of both groups.
The
government of President Ravalomanana is aggressively seeking foreign
investment and is tackling many of the obstacles to such investment,
including combating corruption, reforming land-ownership laws,
encouraging study of American and European business techniques,
and active pursuit of foreign investors. President Ravalomanana
rose to prominence through his agro-foods TIKO company, and is
known for attempting to apply many of the lessons learned in the
world of business to running the government.
GDP (U.S.$, 2007 est., official exchange rate): $7.322 billion.
GDP per capita (2007 est., purchasing power parity): $1,100.
Unemployment: no reliable data available.
Natural resources: Graphite, chrome, coal, bauxite, ilmenite, nickel, gold, tar sands, semiprecious stones, and hardwoods.
Agriculture (26.8% of GDP, 2007 est.): Products--rice, livestock, seafood, coffee, vanilla, sugar, cloves, cotton, sisal, peanuts, and tobacco.
Industry (15.8% of GDP, 2007 est.): Types--processed food, clothing, textiles, mining, paper, refined petroleum products, glassware, construction, soap, cement, tanning.
Trade: Exports (2007, f.o.b.) $989 million: apparel, shrimp, vanilla, coffee, cloves, graphite, essential oils, industrial minerals and gemstones. Major export markets--France, U.S., Germany, Italy, U.K. Imports (2007, f.o.b.) $1.933 billion: foodstuffs, fuel and energy, capital goods, vehicles, consumer goods and electronics. Major suppliers--France, China, Iran, Mauritius, Hong Kong.
