Economics & Development

Growth remained robust in 2025, supported by tourism and public investment. Inflation edged up but remains well anchored. Privatization receipts improved the fiscal position markedly. Consolidation should continue, although the 2026 electoral cycle brings uncertainty. Growth is set to soften in 2026, reflecting headwinds from the conflict in the Middle East. Increased price pressures could slow down poverty reduction, though remittances should provide some cushioning.

After an estimated 0.9 percent contraction in 2025, Botswana’s GDP is projected to grow by 2.7 percent in 2026, reflecting a moderate rebound in diamond production. Sustaining growth will require gains in private sector-led diversification and fiscal consolidation. Downside risks stem from delays to domestic reforms and external shocks. Poverty levels, projected at 19.7 percent in 2026 (US$3 line, 2021 PPP), have stagnated over the past decade.

Growth is expected to moderate slightly in 2026 but remain robust in the medium term, with expanded tourism capacity supporting exports, job creation, and poverty reduction. The fiscal deficit is projected to rise to 18.6 percent in 2026, driven by higher capital and current expenditure, then fall to 14.2 percent by 2028 as infrastructure spending decreases. Fiscal, external, and climate risks abound.

Ukraine’s economy remains in a wartime equilibrium, maintaining macroeconomic stability through the effective use of external assistance, but experiencing slowing growth from labor shortages and an energy crisis resulting from infrastructure destruction and a sharp rise in global fuel prices. While Ukraine has secured assurances of US$136.5billion in external supportfor2026–2029, stronger reform momentum is needed to reignite growth and ensure timely disbursements.

Nicaragua’s economy grew by 4.9 percent in 2025, driven by construction, mining, and retail, and is expected to grow by 3.4 percent in 2026, supported by remittances and construction. Poverty is estimated to have fallen below 14 percent in 2025. Public debt declined to 50.7 percent in 2025 and is projected to reach 48.3 percent in 2026, driven by growth and prudent fiscal policies.

Tajikistan’s economy grew 8.4 percent in 2025, fueled by remittances. Growth is projected to ease to 6.5 percent in 2026 due to decreasing remittances and lower non-precious metal exports. The fiscal balance is expected to deteriorate due to substantial capital expenditures, though debt will remain low at 19 percent of GDP. Poverty declined to 14.8 percent and is projected to decline further.

Tonga’s economy recovered modestly in 2023–2024 after contractions in 2021–2022, with GDP growth reaching 1.9 percent in 2024. Inflation remained stable at 2.0 percent, while GDP per capita rose to US$5,322. Fiscal performance stayed broadly balanced, with the overall fiscal balance at 0.4 percent of GDP. Public debt increased to 44.7 percent of GDP, though external public debt declined to 29.9 percent. The current account improved significantly, shifting to a surplus of 5.2 percent of GDP in 2024.

Romania’s growth slowed to 0.7 percent in 2025, reflecting structural weaknesses in productivity and competitiveness, while fiscal consolidation and high inflation eroded welfare, notably for poorer households. The Middle East conflict adds inflationary pressures and clouds growth prospects, raising poverty risks. Amid headwinds, the Government's recovery package aims to support a gradual rebound, contingent on swift implementation and EU funds absorption.

Growth accelerated to 4.2 percent in 2025 as higher remittances and lower inflation supported consumption, but it is expected to slow to 3.7–3.8 percent over 2026–2028 as remittance growth decelerates. Low investment and a segmented, low-productivity labor market result in persistently high poverty. Quality investments in infrastructure and human capital and a stronger rule of law would boost growth and job creation.

Growth is projected to slow to 1.3 percent in 2026 before edging up to 2.3 percent in 2027, as external shocks from the Middle East conflict compound domestic structural constraints. Significantly higher energy prices and disruptions to travel and shipping weigh on soft manufacturing, despite a temporary surge in exports. Downside risks dominate, underscoring the need for structural reforms to lift productivity and create better jobs.

Medium-term growth in the Central Pacific will be driven by sovereign rents from fishing and Nauru's Regional Processing Centre(RPC),redistributed through public spending. With public expenditure near 100 percent of GDP across all three countries, promoting private sector jobs is essential. Governments must also manage risks from thin, concentrated markets and climate change. Global asset price fluctuations could affect fiscal trajectories through each country's sovereign wealth fund.

Non-hydrocarbon growth remained robust in 2025, supported by strong investment and household consumption, while inflation eased as food prices declined. Fiscal and external deficits widened amid relatively low hydrocarbon prices, rising public spending, and investment-driven imports. Advancing diversification, improving the business climate and the efficiency of public enterprises, and strengthening the macroeconomic framework remain critical for growth and job creation.

Economic activity remained resilient in 2025, but pressures intensified from global trade uncertainty, maritime risks, and domestic constraints. GDP growth eased to 6.5 percent from 7.0 percent in 2024, supported by construction, telecommunications, tourism, and Ethiopia-corridor demand. Inflation stayed near zero, supporting household consumption. High public debt constrains fiscal space, and poverty reduction hinges on jobs and climate resilience.

Real output grew 5.6 percent in 2025, supported by both the resource and non-resource sectors. Fiscal consolidation continued, helping to reduce public debt. Yet, many households still face rising prices and hardship. Delivering more inclusive growth and faster poverty reduction will require sustained investments in human capital and connectivity, prudent macroeconomic management, and a more supportive business environment.

Grenada’s economic growth has remained robust, driven by tourism and construction sectors. Despite the post-Beryl reconstruction, the country is expected to continue its downward debt trajectory due to strong revenues and effective disaster risk management. Returning to fiscal rules after 2027 and implementing institutional reforms will be critical for Grenada to sustain growth and make continued progress in poverty reduction.