World Bank says Somalia’s growth slowed to 3 percent in 2025 as aid cuts and drought raise risks to jobs and livelihoods

The World Bank has released the eleventh edition of the Somalia Economic Update, finding that economic growth moderated to an estimated 3 percent in 2025 from about 4 percent in 2023 and 2024 as declining foreign aid, drought conditions, and rising living costs weighed on demand and left real GDP per capita broadly stagnant. The report says the slowdown has increased pressure on jobs and household livelihoods, while poverty reduction stalled as lower aid, drought, and higher food prices worsened food insecurity and household welfare. Consumer price inflation rose to 3.7 percent in 2025 from 3.3 percent in 2024, driven mainly by food, utilities, and transport costs. The outlook has weakened, with real GDP growth projected at 2.8 percent in 2026 and 3.1 percent in 2027, constrained by continued aid reductions, climate variability, global price shocks, and limited productive capacity. Inflation is projected to increase to 6 percent in 2026 before easing over the medium term. A special focus of the update is electricity access: 71 percent of households report access, but only 21 percent receive more than eight hours of supply per day. With generation nearly entirely diesel-based, oil price shocks feed quickly into domestic inflation, production costs, and household welfare. The report points to stronger sector governance and regulation, scalable renewable energy investment, and modernization of transmission and distribution infrastructure as priorities to reduce costs and vulnerability to fuel price shocks.