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Sudan

Sudan

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Key Facts

  • Capital: Khartoum
  • Region: East Africa
  • Official language: Arabic and English
  • Independence Day: January 01, 1956
  • Area: 2,506,000 sq km
  • Population (2018): 48.1 million
  • REC membership: IGAD
  • WTO membership: Observer
  • GDP (2015): US$ 40.852 billion
  • GNI per capita (2015): US$ 1 560
  • Currency: Sudanese Pound

Economic overview

Real GDP contracted in 2019 by an estimated 2.4% driven by a contraction in the services sector and investment in real estate and business services. Agriculture, accounting for 32% of GDP, also contracted in 2019, due to shortages of inputs – especially fuel. And a weak business environment, where political uncertainty discouraged private investment, dampened confidence and productivity in manufacturing and construction. GDP is projected to contract further by 1.6% in 2020 and 0.8% in 2021 due to the political situation, tepid domestic demand, and weak private sector investment. Inflation reached 50.6% in 2019, fueled by high production input costs due to currency depreciation.

Inflation, projected at 61.5% for 2020 and 65.7% for 2021, is mainly driven by the monetization of the fiscal deficit, which narrowed from 7.7% of GDP in 2018 to 5.7% in 2019 but is projected at 9.9% in 2020 and 10.9% in 2021.

The exchange rate averaged 47.1 Sudanese pounds per dollar in September 2019, compared with 45.1 in 2018. The current account deficit improved to 7.8% of GDP in 2019 from 13.6% in 2018. As the world’s largest producer of gum arabic, Sudan will continue to depend on agriculture (32% of GDP in 2019) to boost its exports, generate foreign exchange, and reduce the current account deficit.

Sudan is in debt distress, reducing its capacity to mobilize domestic resources or to borrow from international markets. By September 2019, outstanding public and publicly guaranteed external debt was estimated at about $60 billion, up from $53.6 billion in 2016 and $56 billion in 2018. Extreme poverty fell from 29.6% of the population in 2010 to 25.2% in 2015, as inequality declined more in rural areas than in urban ones.

With its new government coalition, Sudan presents underexploited opportunities that can reinvigorate economic growth. About 63% of Sudan’s land is agricultural, and only 15-20% of it is under cultivation, offering huge private investment opportunities. Large-scale irrigated agriculture has the potential to create employment and increase national income and foreign exchange earnings. Nonfood agroindustry can accelerate growth by developing value chains that diversify the economy to compensate for loss of oil revenues. The government should undertake structural reforms to facilitate the movement of labor from subsistence agriculture to industry and services to accelerate labor-absorbing growth and reduce unemployment.

Institutional weaknesses, unemployment that has remained at 14-15% for more than two decades (with 25% youth unemployment), external debt, climate change, and low labor and capital productivity are among the key domestic challenges. Political instability has also affected growth, with hardening economic conditions, such as the rising cost of bread and fuel and the shortages of cash.

Headwinds also include low productivity growth in manufacturing and agriculture due to inadequate infrastructure, power shortages, and an unfavorable macroeconomic environment. The private sector is constrained by limited access to finance, a low-skilled labor force, and an inadequate legal and regulatory framework. The October 2017 lifting of US trade and economic sanctions was seen as advancing the dialogue on political sanctions and debt relief.

Last updated: April 2020