Madagascar, officially the Republic of Madagascar, and previously known as the Malagasy Republic, is an island country in the Indian Ocean, approximately 400 kilometres off the coast of East Africa across the Mozambique Channel. At 592,800 square kilometres Madagascar is the world’s second-largest island country.

If the pandemic subsides during the first half of 2021, the outlook is favorable for a return to growth, with real GDP projected to grow 3.5% in 2021 and 4.5% in 2022. But the impact of the crisis will continue to be felt in public finances in 2021. The financing needed for economic recovery was estimated at $820 million in 2021, resulting in a budget deficit of 4.6% of GDP in 2021, which would narrow to 3.8% in 2022. On the demand side, the recovery should be supported by a rebound in both public and private investment and a resumption of exports—nickel, cobalt, and vanilla—as the global economy and international trade recover. However, the current account deficit is expected to remain high at 5% of GDP in 2021 and 4.5% in 2022. Job losses estimated at 27% in the formal sector are expected to gradually decline in 2021 as the economy recovers. The main risks to the outlook are a new wave of COVID–19 infections and weather shocks, such as drought, cyclones, and floods.

Reasons to invest in Madagascar:

  • Abundant natural resources (gemstones, industrial and decorative stones, oil, and rare metals for mining activities; a big and fertile land with a favourable climate)
  • Low cost of local inputs and labour
  • The strategic location between Asia and Africa
  • Improving business environment
  • Political stability since 2009
  • Developing tourism sector
  • Public debt mainly on concessional terms
  • Incentives to export-driven companies with export processing zone status

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