The Comoros’s economy has recovered from the shock caused by the COVID-19 pandemic. Real GDP growth is projected to increase from an annual average of 1.2% for 2019 to 2021, to 3.5% in 2022. Inflation is projected to increase from an annual average of 2.0% for 2019 to 2021, to 5.0% in 2022. The elevated inflation is caused by the increase in aggregate demand and sanctions against Russia which have increased the price of crucial imports. In the medium-term period from 2023 to 2025, real GDP growth is projected to increase to an annual average of 3.9%. Meanwhile, inflation is projected to decrease to an average of 1.4% over the medium-term from 2023 to 2025.
The Government of Comoros’s debt has been steadily increasing since 2020. The Comoros’s gross public debt is projected to increase from an annual average of 22.3% of GDP for 2019 to 2021, to 30.4% of GDP in 2022. The increase in public debt is largely due to the Government of Comoros implementing procyclical fiscal expansion as the economy continues recovering from the shock caused by the global lockdown response to the COVID-19 pandemic. The fiscal deficit is projected to widen from an annual average of -2.4% of GDP for 2019 to 2021, to -5.6% of GDP in 2022. This shows the procyclical fiscal stance taken by the government as spending and further borrowing outpace revenue growth. In the medium-term period from 2023 to 2025, the fiscal deficit is projected to narrow to an annual average of -3.9% of GDP. Therefore, public debt is projected to increase to an average of 36.0% of GDP over the medium-term from 2023 to 2025.
The Comoros’s external sector was not negatively affected by the COVID-19 pandemic in 2020 which reduced import demand but the sector has deteriorated due to the rebound in aggregate demand, which has increased import demand. The Comoros’s current account deficit is projected to widen from an annual average of USD -34.3 million (approx. -2.8% of GDP) for 2019 to 2021, to USD -109.0 million (approx. -8.3% of GDP) in 2022. In the medium-term period from 2023 to 2025, the current account deficit is projected to narrow to an annual average of USD -101.7 million (approx. -6.9% of GDP). This illustrates a short-lived improvement in the current account balance due to the impact of the COVID-19 pandemic on aggregate and import demand. Fortunately, as a member of the CFA Franc Zone, the Comoros maintains a fixed exchange rate to the EUR which is guaranteed by the French National Treasury. Therefore, the deterioration in the external sector will not put pressure on the KMF despite the country’s continued reliance on agricultural commodity exports such as spices and essential oils.
The Comoros is scheduled to hold its presidential elections in 2024 and the election campaigning cycle is still a long way ahead. Incumbent President H.E. Azali Assoumani will most likely be vying for a fifth term in office using the 2018 constitutional referendum which changed the presidential term limits. The current political climate remains relatively calm despite pressures for change since the current presidency rotates between each of the Comorian islands. President H.E. Azali Assoumani is likely to face opposition to his re-election which may escalate into public protests or political violence. Nevertheless, President Assoumani will continue his institutional reform agenda focused on the presidency rotation, managing the autonomy of the islands and reintegrating the Maore island in line with the 2019 referendum.