The Comoros’ exports have had a slower growth since the recovery from the shock caused by the COVID-19 pandemic. The country’s total merchandise exports had a slower growth since the recovery to USD 33.0 million in 2021. The Comoros has a concentrated export profile and earnings from spices have begun recovering despite being below the medium-term average at USD 17.8 million (approx. 54.0% of total exports) in 2021. Other top exports from the Comoros include essential oils and marine vessels. These exports contributed USD 11.8 million (approx. 35.7% of total exports). The Comoros’ export earnings from essential oils have begun recovering despite being below the medium-term average at USD 7.3 million in 2021; and earnings from marine vessels have continued increasing to USD 4.5 million in the same period. The Comoros’ trade deficit continued widening beyond the historical medium-term average of USD -244.4 million for 2018 to 2020, to USD -335.2 million in 2021.
Total merchandise export earnings have begun recovering despite being below the medium-term average which ameliorated the relieved pressure caused by net FDI inflows (foreign capital being invested domestically). The Comoros’ FDI inflows decreased to USD 4.1 million in 2021. However, the Comoros’ FDI stock has been seemingly unaffected by COVID-19 and continued increasing from an annual average of USD 129.3 million for 2018 to 2020 to USD 141.7 million in 2021. This bodes well for the Comoros as a country of islands aiming to attract more foreign investment to develop and diversify their economy away from the reliance on spice exports. This signifies the many economic opportunities across various sectors, including those that have traditionally attracted foreign capital in the economy.
Remittances receipts have grown significantly over the period. Personal remittances received have been seemingly unaffected by COVID-19 and continued increasing from an annual average of USD 189.5 million for 2018 to 2020 to USD 243.3 million in 2021. Personal remittance payments to foreign nationals have had a seemingly delayed impact of COVID-19 and begun decreasing from an annual average of USD 3.5 million for 2018 to 2020, to USD 3.0 million in 2021. The Comoros has had net remittance inflows (net remittance receipts from the diaspora) which increased to USD 240.3 million in 2021. This has affected the current account balance and strength of the KMF over the period.
The KMF has continued appreciating. In nominal terms, the KMF appreciated by an annual average of 1.6% against the USD for 2018 to 2020. The KMF appreciated by 4.7% to an annual average of KMF 416.0 per USD in 2021. The appreciation of the KMF reflects the relative depreciation of the USD since the Comoros is a part of the CFA Franc Zone which have a fixed exchange rate with the EUR that is guaranteed by the French National Treasury. The Comoros’s current account deficit narrowed below the historical medium-term average. In 2022, the Comoros’s current account deficit continued widening beyond the historical medium-term average. In particular, the Comoros has benefited from the slightly improved climatic conditions and the recent depreciation of the US against the EUR and other major currencies. This is also reflected in the projections for Comoros’s current account balance.
In 2023, the Comoros’ current account deficit narrowed despite being wider than the historical medium-term average at -USD 117.0 million (approx. -9.1% of GDP). In the medium-term from 2024 to 2026, the Comoros’ current account deficit is project to narrow below the historical medium-term average, to an annual average of -USD 89.7 million (approx. -6.2% of GDP). This illustrates a prolonged improvement in the current account balance due to the depreciation of the USD and improved export earnings. Nevertheless, the global economy remains highly uncertain despite the relatively stable projections for the Comoros in 2023. Things could change in the medium-term due to the expected changes in geopolitical tensions and erratic adverse impacts of climate change. Therefore, Comorian authorities will have to invest in climate change adaption and resilience given the dependence of the economy agricultural produce for exports.
The issue of developing and diversifying the Comorian economy remains an elusive obstacle for the country. The Comoros still has a significant potential to grow its exports from essential oils and marine vessels. These represent the highest growth potential towards diversifying the Comoros’ economy and export earnings. Apart from this, Comoros should also deepen its integration in the SADC region and increase its intra-regional trade. This will provide an opportunity for the Comoros’ exports to compete against goods and services of comparable quality from the SADC region. Moreover, the Comoros can offset the risks with its traditional export markets by increasing its dependence on the SADC region for its exports.