Haiti: Risk Assessment
Due to the current political unrest in Haiti, the information on these pages may not reflect current conditions in the country.
Country Risk Rating
Business Climate Rating
- Development and reconstruction programs established with international donors
- Membership in regional organizations (Association of Caribbean States, Organization of American States, CARICOM, CARIFORUM)
- The country received roughly USD 224 million in August 2021 from the IMF Special Drawing Right (SDR) allocation (roughly 1.5% of GDP)
- Highly vulnerable to natural disasters, including hurricanes and earthquakes
- Low level of development and extreme poverty (HDI ranking of 170 out of 189), deep inequality with poor social policy
- Dependent on expatriate remittances, international donations and the United States
- Lack of infrastructure, particularly energy infrastructure (70% of the population does not have access to electricity)
- Poor governance and low-quality business environment, large informal sector
- Fiscal cost of unreported imports from Dominican Republic
- Political instability and insecurity
Mild economic expansion amid rising violence and political uncertainty
The economy is expected to rebound slightly in 2022, following the three-year recession (2019-2021). Tourism (accounting for roughly 9% of GDP before the crisis) is likely to recover somewhat due to the poor progress in terms of COVID-19 vaccination locally and the rising criminality across the country. Moreover, while higher remittances from expatriates in the U.S. support local households, consumption growth should still be hampered by weak income fundamentals and persistent inflation induced by the monetary financing of the fiscal deficit and a chronic shortage of essential items. However, the investment could increase moderately, thanks to some reconstruction work following the August 2021 7.2 magnitude earthquake. The damages and economic losses have been estimated at USD 1.5 billion (about 10% of GDP). Furthermore, the textile industry (the country´s largest export sector) should expand in 2022, thanks to vivid U.S. demand and preferential access to their market. Nonetheless, fuel shortages, port security issues, and frequent power flicker-outs limit the possible gains. Finally, in September 2021, the World Bank approved a donation of USD 75 million from the International Development Association for the Jobs in the Private Sector and Economic Transformation Project in Haiti. The aim is to improve the demand for labor by supporting micro, small, and medium enterprises. Downside risks to activity are related to a poor vaccination campaign and the bleak political environment.
The fiscal deficit is relatively stable, and current account should return to a surplus
The challenges imposed by COVID-19 and the August 2021 earthquake further aggravated the fiscal situation in 2020 and 2021 because of higher social and health expenditures amid lower tax revenues. Moreover, the rise in international oil prices during 2021 also pressured fuel subsidy costs. Haiti has counted on the IMF´s debt service payment relief and grants to deal with these challenges while relying on monetary financing and local commercial banks. Still, the country received roughly USD 224 million in August 2021 from the IMF Special Drawing Right (SDR) allocation. In 2022, the fiscal deficit should remain relatively stable without a bright economic recovery and the elevated social expenditure needs.
Regarding the external accounts, the country has to deal with a chronic trade deficit (roughly 34% of GDP in 2019), as under-diversified domestic production induces sizeable imports. In 2022, exports related to textile and traditional goods such as coffee, cocoa, and mangoes were likely to expand, primarily due to a weak comparison base since rural areas were hard-hit by the 2021 earthquake. Meanwhile, imports should recede somewhat, primarily due to lower annual average international oil prices (fuels account for 18% of total imports). Finally, the current account deficit should switch to a surplus, supported by vital migrant remittances (roughly 21% of GDP in 2020) and grants (estimated by the IMF at 1.9% of GDP in 2020).
The murder of president Jovenel Moïse turned the political scene even bleaker
On 7 July 2021, President Jovenel Moïse was shot dead at his home, deepening the long-lasting political crisis in the country. According to the police, a group of mostly foreign mercenaries - 26 Colombians and two Haitian Americans - carried out the assassination. However, the attack´s intellectual authors and their motive remains unclear. Following the murder, then prime minister Claude Joseph took office but was replaced by Henry Ariel days later. The latter had been announced as the new prime minister two days before the attack. It is important to note that, in early September 2021, a chief prosecutor was fired hours after asking the judge responsible for investigating Moïse’s murder to charge Ariel as a suspect. Regarding elections, Ariel initially announced presidential and legislative votes in November 2021. Nonetheless, he canceled them in late September 2021 after he dismissed all nine members of the country’s electoral council. Due to the lack of elections, the Haitian Parliament has had no deputies since January 2020, and only 10 of the 30 senators are still in office (Moïse had ruled by decree). The new election should occur after a referendum expected to take place in the first months of 2022 constitutional reform. This would encompass creating a unicameral legislative and eliminating the prime minister position for a vice-president. Meanwhile, since Moïse´s death and the August 2021 earthquake, armed gangs have gained territory nationwide. In October 2021, 17 North American Christian missionaries and their families were kidnapped in the capital Port-au-Prince. Finally, with the country´s humanitarian situation worsening, migration has sharply increased. In September 2021, the U.S. deported around 7,000 Haitians who had attempted to enter the country through Mexico.