South Sudan Economic Update: Economic Decline, COVID-19, and Conflict have Negative Impact on Food Insecurity and Livelihoods

JUBA: Driven by a decline in both oil and non-oil sectors and several concurrent shocks including COVID-19 (coronavirus), South Sudan’s economic growth is expected to contract by -4.1 percent, according to the latest World Bank economic update for the country.

The South Sudan Economic Update, Pathways to Sustainable Food Security, shows that declining exports and private consumption, as well as the effects of the pandemic, floods, locust invasion and higher subnational conflict intensity have contributed to a dire economic outlook. While the oil sector continues to dominate the economy—accounting for more than one-third of gross domestic product (GDP), 90 percent of central government revenue and more than 95 percent of the country’s exports—the report says recent economic downturn highlight the need to diversify growth and revenue.

“The current economic crisis has provided a great opportunity to reflect on how the country can bounce back better, building on key milestones already achieved as part of the peace process. Diversifying the economy will enable South Sudan to build back an economy that is resilient to shocks and ensure a sustained and inclusive growth,” said Husam Abudagga, World Bank Country Manager for South Sudan. “Investing more on agriculture, for instance, will help to unleash the immense potential of the sector and can be a big step for South Sudan’s path to diversification, while reducing food insecurity,” he added.

According to the report, the pandemic has severely affected South Sudan’s economy, exacerbating already existing vulnerabilities, and resulting in long-term implications for economic growth and development. The report reveals that South Sudan’s food security has been deeply and permanently disrupted by the impacts of war since 2013, yet it is the economic and markets impact of conflict, rather than the violence itself, that have become the most prominent drivers of food insecurity. Pressure on living conditions continues to be exacerbated by displacement, including refugees from neighboring countries and conflict induced internal displacement.

Despite the negative economic indicators, the report anticipates economic recovery as the global economy rebounds to support higher oil prices, commitment to a credible reform process and resilience to climatic shocks and conflict. The report recommends building on key milestones achieved since the peace process to among others, support agricultural investments and fast-track reforms necessary to cushion the economy amidst a double health and economic crisis.

The South Sudan Economic Update is a World Bank knowledge product which aim to provide regular, comprehensive analysis of the South Sudanese economy. The report is intended to encourage constructive dialogue on public policies among the country’s leadership and key stakeholders including development partners, academia, the private sector and civil society.

 

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