Madagascar: From political crisis to economic decline?

Following weeks of political turmoil, President Marc Ravalomanana resigned on March 17, 2009. The leader of the opposition, Andry Rajoelina, ex-Mayor of Antananarivo, became “President of the Transition Authority” with the support of the army. The transition – increasingly being referred to as a coup by the international community – marks the culmination of a pitched power struggle that began in mid-January 2009, has put development on hold, and taken over 150 lives. Political uncertainty is nonetheless likely to remain until a clear consensus on the way forward emerges among the political forces in the country – and its subsequent recognition by the international community.

The impact of this crisis is difficult to predict, more so that Madagascar is also being affected by the global financial turmoil. Preliminary estimates indicate that the GDP growth rate is likely to be negative in 2009 -- down from a pre-crisis projection of 7.5%, through the combination of two forces: (i) the slowdown of private activities in the industrial and service sectors, and (ii) fiscal adjustment of public spending. The details are provided here.