The World Bank says Liberia’s vulnerability to external shocks has influenced its sustainable growth and development negatively.
By Stephen G. Fellajuah
Monrovia, Liberia, March 13, 2025—The World Bank (WB) launches the Liberia Country Economic Memorandum, titled “Escaping the Natural Resource Trap: Pathways to Sustainable Growth and Economic Diversification in Liberia.”
The report, launched Tuesday, March 11, 2025, provides an in-depth analysis of Liberia’s economic outlook and examines how the country’s vulnerability to external shocks has influenced its sustainable growth and development.
Its insight can help inform the strong delivery of the Government of Liberia’s ARREST Agenda for Inclusive Development (AAID).
Liberia is currently grappling with a “natural resource trap” where a heavy reliance on commodities has led to repeated cycles of stagnation and recovery. This has left the country susceptible to external shocks due to weak drivers of long-term prosperity, such as limited human capital, inadequate wealth accumulation, and low productivity. As a result, Liberia’s economic growth potential has been undermined, restricting its progress.
The study reveals that a “business as usual” scenario would yield modest growth, insufficient to achieve middle-income status by 2030 and substantially reduce poverty. Real per capita GDP will grow modestly, and Liberia will not reach the middle-income threshold of US$1,000 until around 2050.
“Institutional and policy reforms are essential to modernize the public sector and provide Liberia with the institutions needed to lead the transformation”, said Georgia Wallen, World Bank Liberia Country Manager.
She emphasizes that these reforms, aligned with the ambitions of the ARREST Agenda for Inclusive Development (AAID), would require a systematic overhaul of the business climate to foster private investment, innovation, and job creation while also improving the quality and efficiency of public services, particularly in education and health.
The report suggests that Liberia should undergo five transformations to create necessary conditions for long-term development that can foster economic expansion, employment creation, and poverty alleviation for Liberians.
These transformations involve fundamentally reshaping Liberia’s macro-economy, shifting away from over-reliance on the mining sector towards activities better aligned with labor demands and employment needs of an expanding urban population; transforming from a state-centric mindset to recognizing the private sector as the primary driver of economic expansion and job creation; and implementing deep-seated policy and institutional reforms to modernize the public sector.
However, the report highlights Liberia’s potential for better performance and outcomes over the medium to long term, provided ambitious and credible reforms are implemented now to transform the economy, modernize the public sector, and improve governance.
A high-ambition reform program could double annual productivity growth here in the non-mining sector.
These reforms involve improvement in education and health metrics by extending the expected years of schooling from 4 to 10 years, enhancing education quality, reducing stunting, and increasing adult survival rates.
It also entails efficiency of public services. Additionally, reforms that support increases in private and public investments, reaching 18 percent and 12 percent of GDP, respectively, could drive real GDP growth up by approximately one percentage point. As a result, Liberia could attain lower middle-income status before 2040, create jobs, and real per capita GDP potentially reaching US$2,000 by 2050.
Meanwhile, during the launch of the World Bank’s Liberia Country Economic Memorandum on Tuesday at Cape Hotel in Monrovia, Deputy Finance Minister for Economic Management Dephue Zuo acknowledged existing economic gaps and assured that the government is working to bridge them by fostering creativity and innovation.
“Efforts are being made to improve the education system to better align with the job market and reduce poverty through skills development”, Minister Zuo says.
Additionally, Deputy Governor for Economic Policy at the central Bank of Liberia, Dr. Musa Dukuly, reveals ongoing discussions on leveraging gold to build Liberia’s reserves. He emphasizes the potential of adapting best practices from neighboring countries to maximize returns and strengthen Liberia’s economy.
“This is an opportunity for us to strategize and benefit from the expertise of the International Monetary Fund (IMF) and the World Bank to create more sustainable and inclusive growth,” he notes.
World Bank Country Manager Georgia Wallen reaffirms the institution’s commitment to supporting Liberia’s strategic shift through a new country partnership aimed at ensuring a sustainable and inclusive economic future for the nation. Editing by Jonathan Browne
