The IMF has lowered its growth forecast for Madagascar to 3.6% for 2026, well below the government's initial 4.8% target. Geopolitical tensions in the Middle East — pushing up oil, fertiliser and shipping costs — are compounding the country's persistent structural vulnerabilities.
A slowdown confirmed by multiple institutions
The trajectory is unambiguous: after 4.2% growth in 2024 and an estimated 3.9% in 2025, the IMF now projects 3.6% for 2026. The World Bank confirms the trend, with a 3.5–3.7% range conditional on macroeconomic stability and a better business environment.
Inflation adds another layer of concern: the World Bank forecasts 8.3% in 2026, up from 7.1% in 2024. These price pressures erode household purchasing power and raise costs for import-dependent businesses.
External shocks at the root of the revision
The IMF points to geopolitical tensions — particularly in the Middle East — as a key driver of the downgrade. For a heavily import-dependent economy, rising oil prices, fertiliser costs and shipping rates translate directly into a deteriorating trade balance and pressure on foreign exchange reserves.
Structural constraints amplify the impact: chronic energy deficits, low agricultural productivity and climate vulnerability. Madagascar continues to underperform against the Sub-Saharan Africa average, which the IMF projects at 4.3% growth in 2026.
Government priorities
The 2026 Finance Act set ambitious goals: agricultural self-sufficiency, accelerated renewables, road, port and airport investment, and stronger human capital. The Country Cooperation Programme 2026–2030, developed with international partners, outlines a pathway toward progressive industrialisation and formal job creation. Delivering on these ambitions will hinge on the government's ability to mobilise external financing in an increasingly competitive global capital environment.
Why it matters
Madagascar holds some of the Indian Ocean's most significant untapped potential — abundant natural resources, a young population, a strategic location. But the gap between forecasts and outcomes keeps widening. For regional investors, every downward revision is a reminder: institutional and infrastructure fundamentals must be strengthened before that potential converts into sustained growth.
Sources: IMF, World Bank, madagascar-tribune.com, 2424.mg – July 2026