MONROVIA – The World Bank has released the sixth edition of its Liberia Economic Update, titled “From Stabilization to Inclusion: Pathways to Resilient Growth and Productive Jobs,” presenting a cautiously optimistic picture of the country’s economic recovery while highlighting persistent structural challenges.
According to the report, Liberia’s macroeconomic performance strengthened in 2024, with the fiscal deficit narrowing from 7.1 percent of GDP in 2023 to 2.0 percent last year. Inflation fell to 8.3 percent, and the current account deficit was halved to 11.2 percent of GDP due to robust exports and declining imports. Public debt also declined modestly, signaling the government’s progress in fiscal consolidation.
However, the report notes that growth momentum moderated. Real GDP growth slowed slightly to 4.0 percent from 4.7 percent in 2023, reflecting a slowdown in industrial activity despite improvements in agriculture and services. Mining and manufacturing output dropped sharply, while rubber and rice production rebounded. Structural bottlenecks, including limited private investment and high dependence on non-concessional borrowing, continue to constrain Liberia’s economic potential.
The World Bank underscored that while poverty declined slightly, from 27.5 to 26.4 percent, most new jobs remain informal, low-paying, and concentrated in trade and services. High levels of informality, low educational attainment, and skills mismatches limit the capacity of Liberia’s labor force to benefit from macroeconomic gains, leaving a significant portion of the population vulnerable to underemployment and economic shocks.
Credit growth slowed in 2024, with lending concentrated on individuals and service-sector firms, leaving agriculture and manufacturing underfunded. Non-performing loans rose from 17.7 percent in 2023 to 21.5 percent in 2024, signaling risks to financial sector stability despite a well-capitalized and liquid banking system. The report emphasizes the need for reforms to improve asset quality and broaden private sector financing.
Exports improved significantly, driven by gold, rubber, and cocoa, while imports of capital goods and fuel fell. This trade adjustment helped narrow Liberia’s current account deficit, though the World Bank cautioned that reliance on a narrow commodity export base exposes the country to price shocks. Sustaining growth will require greater diversification and increased investment in industrial and manufacturing capacity.
Looking ahead, the World Bank projects GDP growth to average 5.2 percent between 2025 and 2027, supported by agriculture, services, and foreign direct investment-led mining activity. Inflation is expected to fall to 6.8 percent by 2027, and the fiscal deficit to average 2.4 percent of GDP. Yet, risks such as fiscal slippage, commodity-price volatility, and weak reform implementation could derail progress if left unaddressed.
The report highlights Liberia’s employment crisis as a central challenge to inclusive growth. The country’s labor market is marked by widespread informality, with 78 percent of workers in vulnerable employment lacking social protection benefits. The private sector is dominated by micro-sized firms, with only 2 percent of businesses classified as medium or large, limiting the capacity to generate quality jobs.
To address these challenges, the World Bank recommends a four-pronged strategy. This includes stimulating labor demand through investment in agro-processing and light manufacturing, enabling the emergence of productive firms through regulatory, financial, and technological support, reforming the business environment with coordinated legal and public-private measures, and expanding labor market participation for youth and women through skills development, active labor programs, and entrepreneurship support.
The report stresses that translating stabilization into inclusive growth will require structural reforms to enhance the domestic tax base, improve capital budget efficiency, and strengthen social policy targeting. More accurate poverty data from upcoming surveys will be critical for evidence-based policy design, ensuring that gains in fiscal consolidation and macroeconomic stability translate into meaningful improvements in living standards.
Liberia’s economic recovery, the World Bank concludes, is on a positive trajectory, but much work remains to convert stabilization into sustainable, job-rich growth. Expanding private sector capacity, addressing informality, and creating productive employment opportunities are essential to reduce poverty and sustain macroeconomic gains in the medium term.
The report provides a roadmap for Liberia: leveraging its stabilization achievements to unlock inclusive growth, strengthen institutions, and build resilience against both domestic and external shocks. While challenges remain formidable, strategic policy reforms and targeted investment could transform Liberia’s economic landscape and offer hope for a more prosperous and equitable future.
