Madagascar Must Continue Structural Reforms
The African Development Bank (AfDB) anticipates a gradual improvement in Madagascar’s macroeconomic situation during 2026 and 2027.
However, despite upwardly trending indicators, the pan-African financial institution believes that the Malagasy economy continues to face significant structural weaknesses. These analyses are included in its 2026 African Economic Outlook Report, published at its Annual Meetings held in Brazzaville.
According to the AfDB, the economy of the Big Island is expected to show more favorable momentum during the period under review. Economic growth is expected to accelerate, accompanied by a slowdown in inflation and a gradual reduction of the budget and external deficits. The institution thus forecasts real gross domestic product (GDP) growth from 3% in 2026 to 4.5% in 2027, representing an increase of 1.5 percentage points. This trend reflects a gradual recovery in economic activity and strengthened growth prospects.
In terms of prices, however, inflation is expected to remain high at 9% in 2026, close to the double-digit threshold. A significant improvement is anticipated the following year, with the rate falling to 6.5%. By remaining below 10%, Madagascar maintains a performance considered average on a continental scale.
Public finances are also expected to show positive developments, although they remain in deficit. The AfDB projects a reduction in the budget deficit, from 4.4% of GDP to 3.8%. This level still places the country in the average performance category according to the institution’s criteria.
The main concern, however, remains the current account deficit. The African Development Bank (AfDB) estimates that Madagascar will continue to experience a significant imbalance in its external trade, with a deficit of 7.5% of GDP. Even though an improvement is expected in 2027, with a decrease to 6%, this level remains above the 5% warning threshold, reflecting a persistent dependence on external factors and a structurally fragile trade balance.
