Country Report Haiti November 2008

Outlook for 2009-10

The government of the president, Rene Preval, will struggle to revive confidence following protests in April 2008 and the ouster of the prime minister, Jacques-Edouard Alexis. The governing Lespwa party has been weakened, and this will leave the new prime minister, Michele Pierre-Louis, dependent on other major parties. With inflation still high and around 800,000 people left homeless after two hurricanes hit the country in August and September, there is a risk of renewed social unrest and the economic policy framework set under the three-year poverty reduction and growth facility (PRGF) agreed with the IMF in 2006 will be questioned. Efforts to generate growth and jobs will continue, but prospects for attracting investment will be damaged by the global financial crisis and domestic uncertainty. The severe downturn in the US will limit growth prospects, as it will hurt exports and remittances. Haitis annual average GDP growth rate will be just 1.7% in 2009-10. Inflation will average 12.6% and 8.9% in 2009 and 2010 respectively. The average exchange rate will weaken to G46.4:US$1 in 2010. The trade and current-account deficits will remain wide, but a balance of payments crisis is unlikely given donor support.

The political scene

Legislators ratified Ms Pierre-Louis as prime minister in July, but her policy programme and cabinet were approved by presidential decree instead of by the National Assembly. The need to react quickly to the humanitarian crisis caused by the hurricanes has so far limited political dissent. The terms of ten senators expired on May 9th 2008, but no date for elections has been set.

Economic policy

The government has pursued orthodox fiscal and monetary policies, but these have lost credibility owing to high inflation and weak job creation. Subsidies introduced in April have been retained on basic foods, but lifted on petrol products to ease the fiscal burden. Mr Preval has pledged to invest in public works projects and to expand credit for small businesses and farmers, but his other medium-term policy goals have been put on hold by recent events.

The domestic economy

Annual inflation surged to 18.9% in September (from 10% at end-2007) on the back of high food prices. The gourde has continued to depreciate, reaching G40.3:US$1 at end-October. Industrial output has contracted so far in 2007/08.

Foreign trade and payments

The trade deficit widened by 60% year on year in October-June, mainly as a result of massive increases in the cost of oil and food imports. Manufactured goods exports shrank by 15% in this period.

This report covers the following industry codes:
SIC Code: 60;37;47;49;1
NAICS Code: 52;336;48;22;11