Somalia's economy demonstrated robust performance in 2024, achieving a growth rate of 4.0 percent. This growth was driven by improved agricultural performance, increased private consumption bolstered by remittances, and declining commodity prices. However, the World Bank's 2025 Somalia Economic Update suggests that while the economic outlook remains positive, growth is expected to decelerate in 2025 due to uncertainties surrounding foreign aid.
Kristina Svensson, World Bank Country Manager for Somalia, emphasized the importance of building strong economic institutions to support sustained growth. She stated, "It is important for Somalia to continue building its economic institutions, capable of navigating the complexities of its socio-economic landscape and supporting sustained and long-term growth."
In 2024, Somalia benefited from declining global commodity prices which eased inflationary pressures. The annual average inflation rate dropped below 6 percent. The Federal Government of Somalia reported a small fiscal surplus due to prudent expenditure management and improved revenue collection. However, reliance on external financing persists.
Reforms under the Heavily Indebted Poor Countries (HIPC) Initiative have supported sustained growth but at a modest pace due to ongoing fragility. Declining foreign aid in 2025 and uncertainty about future aid levels have dampened the growth outlook. Real GDP growth is projected to remain between 3 and 4 percent over the medium term.
Svensson highlighted that "Somalia needs to double its efforts to strengthen its domestic revenue mobilization and lay the foundations for a more resilient and self-sufficient state." Sustained reform efforts are crucial for promoting economic resilience and job creation with an emphasis on sustainable public finances and private sector development.
The report outlines sectors such as digital technology, agribusiness, fisheries, energy, and manufacturing as areas expected to experience significant economic growth according to Somalia’s National Transformation Plan (NTP) 2025-29 and Centennial Vision 2060.
Abdoulaye Ouedraogo, World Bank Country Economist for Somalia noted that "recent revenue mobilization efforts show promising results," but acknowledged that "domestic revenue to GDP ratio remains one of the lowest in the world." The report recommends expanding the tax base through measures like implementing Income Tax Law across the Federation and aligning customs legislation with East African Community protocols.
The Somalia Economic Update evaluates key economic developments and policies in Somalia while assessing risks and opportunities for medium-term growth. It focuses particularly on policies for domestic revenue mobilization.