MOGADISHU, May 13 (Xinhua) -- Somalia's gross domestic product (GDP) growth slowed to an estimated 3 percent in 2025, down from about 4 percent in 2023 and 2024, the World Bank said on Wednesday.
According to its 11th edition of the Somalia Economic Update, the economic slowdown reflects reduced humanitarian and security-related assistance, drought impacts on agriculture and livelihoods, and higher costs that constrained household spending.
Hideki Matsunaga, World Bank country manager for Somalia, said the country has made important progress in strengthening its macroeconomic institutions and management despite facing harsh conditions.
"However, overlapping shocks are slowing growth and putting pressure on jobs and household livelihoods, underscoring the importance of addressing key structural constraints, particularly in expanding access to reliable, affordable, and sustainable electricity," Matsunaga said.
It said inflationary pressures accelerated, with consumer price inflation reaching 3.7 percent in 2025, up from 3.3 percent in 2024, driven mainly by food, utilities, and transport costs.
The report said future poverty reduction is likely to remain stalled and highly vulnerable to unpredictable rainfall, fluctuating aid, and sudden price shocks.
The report projected real GDP growth at 2.8 percent in 2026 and 3.1 percent in 2027, constrained by continued aid reductions, climate variability, global price shocks, and limited productive capacity.
The bank projected inflation to rise to 6 percent in 2026 before easing over the medium term as external shocks dissipate and domestic conditions stabilize.
It added that recent global oil price shocks and the worsening economic outlook require immediate cost relief for households and businesses through a swift transition to renewable energy.
The report urged stronger energy governance, scalable investments in renewable energy, and modernization of the power grid, saying such measures would lower costs, cushion against fuel shocks, and protect livelihoods. ■
