Djibouti’s economy is based on service activities connected with the country’s strategic location as a deepwater port on the Red Sea. Djibouti has experienced rapid and sustained growth over the years with GDP increasing at a CAGR of 8.6% (2011-17) to US$2.0 BN in 2017.
Djibouti’s foreign exchange reserves are c.US$540 MM (2017). Inflation is expected to average around 2% in 2018 from 0.6% in 2017. Current Account Deficit of 14.8% of GDP expected in 2018, reflecting improvement from previous highs of over 30% of GDP.
Continuous strengthening of growth above 7% is expected in 2019-2020, with re-export capacity and pick-up in Ethiopian trade transit.
In addition, with recent leadership change in Ethiopia, the Ethiopian economy is expected to become more open, which would stimulate trade-transit in Djiboutian ports, even after considering the potential emergence of other ports in the Horn of Africa region.
The current account deficit will decline to 11.2% of GDP by 2022, with the expected pick-up in logistics services exports and activity in the new export processing free-zone.
In the near term, services export and other services such as commerce, telecommunication, tourism activities and fisheries, light manufacturing and transport, are expected to support growth of the economy.