The World Bank’s Liberia Country Economic Memorandum highlights the need for reforms to address the “natural resource trap” and promote economic growth. Key recommendations include enhancing education, restructuring the economy to reduce mining dependence, and fostering private sector growth. With proper implementation, Liberia could attain lower middle-income status by 2040 and increase real per capita GDP by 2050.
On March 11, 2025, the World Bank released its Liberia Country Economic Memorandum, “Escaping the Natural Resource Trap: Pathways to Sustainable Growth and Economic Diversification in Liberia,” which critically assesses the nation’s economic outlook. The report highlights how external shocks have hindered Liberia’s sustainable growth, providing valuable insights to support the implementation of the ARREST Agenda for Inclusive Development (AAID).
Liberia grapples with a “natural resource trap,” where reliance on a narrow, commodity-based economy has resulted in repeated cycles of stagnation. The lack of robust long-term growth drivers—such as human capital and productivity—has limited economic potential. Current projections indicate that a “business-as-usual” approach will only yield modest growth, preventing Liberia from achieving middle-income status by 2030 and significantly reducing poverty. It anticipates that real per capita GDP growth will be slow, with the middle-income threshold of US$1,000 not likely reached until around 2050.
Georgia Wallen, World Bank’s Liberia Country Manager, stated, “Institutional and policy reforms are essential to modernize the public sector and provide Liberia with the institutions needed to lead the transformation.” She emphasized that reforms should focus on improving the business environment, enhancing public services, and increasing the efficiency of infrastructure investments. These changes are crucial for fostering private investment, innovation, and job creation, ultimately improving human capital, especially in education and health.
The report outlines five crucial transformations required for Liberia’s long-term economic development. These transformations include reshaping the macro-economy, reducing dependence on mining, promoting the private sector as a key economic driver, and enacting comprehensive policy reforms to modernize governance.
The analysis indicates that Liberia can significantly improve its economic prospects if ambitious reforms are enacted timely. Such reforms could potentially double annual productivity growth in the non-mining sector. This improvement would involve enhancing education and health outcomes, increasing education duration, and enhancing the efficiency of public services. Moreover, boosting private and public investments to 18 percent and 12 percent of GDP respectively could elevate real GDP growth by around one percentage point, paving the way for Liberia to achieve lower middle-income status by 2040 and raise real per capita GDP to US$2,000 by 2050.
In summary, the World Bank report underscores the urgent need for Liberia to enact significant reforms to promote sustainable economic growth and development. Addressing the “natural resource trap,” modernizing public institutions, and bolstering the private sector are imperative steps. By implementing these reforms, Liberia can enhance productivity and ultimately improve living standards for its citizens, potentially transforming its economic landscape by 2040.
Original Source: www.miragenews.com
