Madagascar Economy

Madagascar Economy 

Madagascar has performed relatively well in limiting its trade barriers, encouraging an agriculture industry that accounts for 80 percent of the economy. However, recent years’ progress on institutional development and economic liberalization has been uneven and often disrupted by political volatility.

Economic Freedom Snapshot
2016 Economic Freedom Score: 61.1 (down 0.6 point)
Economic Freedom Status: Moderately Free

• Global Ranking: 87th

• Regional Ranking: 9th in Sub-Saharan Africa

• Notable Successes: Trade Freedom

• Concerns: Property Rights, Corruption, and Regulatory Efficiency

• Overall Score Change Since 2012: –1.3

Poverty remains a serious challenge, and efforts to promote private-sector job growth and business development are undermined by a weak judicial system and corruption. Poor governance exacerbated by political instability and a deteriorating rule of law continues to undermine prospects for long-term economic development.



Background 

The former French colony of Madagascar, after decades of military coups, political violence, and corruption, has stabilized in recent years. Hery Rajaonarimampianina was elected president in January 2014 after years of political instability sparked by a 2009 coup. In January 2015, a general, Jean Ravelonarivo, succeeded Roger Kolo as prime minister when Kolo and his government resigned after less than a year in office. Given the country’s improved stability, international organizations and foreign donors have restored ties that had been severed following the 2009 coup. Madagascar’s economy is largely agricultural. Sitting just off the east coast of Africa, the country is highly vulnerable to natural disasters and weather shocks. The World Bank estimates that 92 percent of Malagasy live on less than $2 a day.


Open Market

Madagascar’s average tariff rate is 6.4 percent. Foreign and domestic investors are treated equally under the law. State-owned enterprises operate in the energy, air transportation, and other sectors of the economy. Despite some progress, the relatively high cost of financing hinders entrepreneurial growth, particularly for small and medium-size firms. Capital markets remain underdeveloped.

تصنيف : Countries