Country Report Haiti May 2009

Outlook for 2009-10

The government will continue to face a difficult economic and political environment in 2009-10. Alhough weakened by problems in 2008, including mass food riots and an economic slowdown, MrPreval has proved resilient, retaining strong backing from the international community. Mr Preval's governing Lespwa party is feeble, leaving the prime minister, Michele Pierre-Louis, dependent on other major parties. Securing their support and passing legislation will be a challenge as the National Assembly remains fractured and ineffective. As economic conditions deteriorate, there is an increasing risk of social unrest. Prospects for attracting investment will be damaged by the global economic downturn and domestic uncertainty. The US recession will limit growth prospects. In light of declining remittances and stagnant inflows of foreign aid, Haitis GDP will contract by 0.8% in 2009 before growing by 1.8% in 2010. Inflation will fall to an average of 1.2% and 8.2% in 2009 and 2010, respectively. The average exchange rate will weaken to G43.7:US$1 by end-2010. The trade and current-account deficits will remainwide.

The political scene

The governments effectiveness will remain limited, as party discipline is weak and the National Assembly is divided. Elections in April to fill 12 vacant Senate seats were inconclusive and will require a run-off vote in June or July. Additional elections for the Senate and the Chamber of Deputies are due to take place in November, when leftist opposition candidates will aim to take advantage of public discontent. A high profile visit by the US Secretary of State, Hillary Clinton, underscored the commitment of the Obama administration.

Economic policy

The budget was finally approved in April, but spending was cut by 20% owing to constraints on external assistance and the rejection of additional taxes. MrPreval has pledged to invest in infrastructure and public works projects, but this will now be limited. Medium-term policy goals have been put on hold.

The domestic economy

Annual inflation has dropped markedly from its peak of 19.8% in September, to 1% in March. The currency, the gourde, has continued to depreciate moderately. GDP growth for 2007/08 was 1.3%, down from 3.4% in 2006/07.

Foreign trade and payments

According to preliminary government figures, annual export earnings shrank by 8.2% and import growth slowed to 14.5% in the first quarter of 2008/09. Import costs are expected to decline further this year, reducing pressure on the trade deficit, as international prices are down from highs in mid-2008.

This report covers the following industry codes:
SIC Code: 49
NAICS Code: 22