The economy of Madagascar

Madagascar is a farming country; 3 households out of 4 practice an agricultural activity. Different subsistence crops are produced in each area, depending on the climate: rice, cassava and maize,... In addition, the island is also known for the production of many export crops such as vanilla, coffee and clove. Shrimping and tourism are also an important source of foreign currencies for the country.

However, the farming activity on which the Malagasy depend mainly is quite rudimentary and the cultivated surface area as well as the farm yield is still low. Its rate in the Gross Domestic Product is still negligible: approximately 26% in 2005.

Industries are still underdeveloped in the country except the free-zone enterprises. In 2001, 308 free-zone enterprises were recorded, employing 110 000 people, that is 1/4 of the manufacturing sector labour.

2002 was a bad year for Madagascar's economy because the post-electoral crisis paralysed all economic activities: closing down of many firms, job losses, energy supply problems, decrease of international tourist number (61,674 in 2002, 170,208 in 2001) ... The economic growth rate has reached its lowest level (-12.7%) since the independence.

After the 2002 crisis, the resumption of the economy including the free-zone manufacturing production started from the end of the same year and continued in 2003. In 2003, the free-zone enterprises manufacturing production recorded a 77% sharp increase. The same is true of the other sectors such as tourism, international tourism number also increased to 139,230 in 2003. The GNP reached 9.8% in 2003, 5.3% in 2004 and 5.1 in 2005.

In Octobre 2004, Madagascar met all the conditions required to reach the "completion point" and a significant part of its debts were written off.

In spite of the resumption, the Malagasy economy suffered from the explosion in prices of oil barrel which was worsened by a strong depreciation of the Ariary hence a galloping inflation since 2004: 13,8 % in 2004 and 18,4 % in 2005.

In addition to the economic recovery plan in the Poverty Reduction Strategy Paper (PRSP), Madagascar has many assets which should promote the fast economic development of the country inter alia:

• a very vast territory,
• a favorable climat,
• a mainly endemic fauna/flora,
• an enormous potential in farming and fishing,
• abounding mining resources in its subsoil,
• a young population,
• strong and preserved cultural values.