Impact of Covid-19 on the Somalian Remittances and the Economy of Somalia
Abstract
The Somalian economy was developing before the Covid-19 (Coronavirus) pandemic, having recovered from the 2016–2017 famines. In line with population growth, the economy increased at an estimated rate of 2.9% in 2019 and was expected to grow by 3.2% in 2020. The economic recovery of Somalia has been stopped by the Covid-19 pandemic. The economy would be impacted by a combination of supply and demand shortages as a result of the crisis, which would have a major negative impact on real GDP growth of Somalia in 2020. Lockdowns have affected imports of capital and food items from Somalia’s business partners (mostly China, the UAE, India, Turkey and Oman), while Saudi Arabia’s export bans and cancellation of the 2020 Hajj have reduced demand for exports (mostly livestock animals); and the global recession, travel restrictions and flight suspensions have decreased the remittance flows into Somalia. Their economy, which is mostly determined by the private sector, is at threat to increasing business risks, disturbances in supply chains, a decline in project capital inflows, decrease in access to financing and shortages of important raw materials.
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