View source for Economy of Madagascar

{{Short description|none}}
{{Multiple issues|
{{More citations needed|date=February 2015}}
{{Specific|date=March 2015}}
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{{Infobox economy
| country = Madagascar
| image = Antananarivo_street_2007.jpg
| caption = The capital of Madagascar, [[Antananarivo]]
| currency = [[Malagasy ariary]] (MGA)
| year = [[Calendar year]]
| organs = [[World Trade Organization|WTO]], [[African Union]]
|group           = {{plainlist|
*[[Least developed countries|Least developed]]<ref>{{cite web |url=https://www.imf.org/external/pubs/ft/weo/2019/01/weodata/weoselco.aspx?g=2200&sg=All+countries+%2f+Emerging+market+and+developing+economies |title=World Economic Outlook Database, April 2023 |publisher=[[International Monetary Fund]] |website=IMF.org |access-date=23 May 2023}}</ref>
*Low-income economy<ref>{{cite web |url=https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups |title=World Bank Country and Lending Groups |publisher=[[World Bank]] |website=datahelpdesk.worldbank.org |access-date=29 September 2019}}</ref>}}
| population = {{increase}} 31 million (2025)<ref>[https://www.imf.org/external/datamapper/LP@WEO/MDG?zoom=MDG&highlight=MDG]</ref>
| gdp = {{plainlist|
* {{increase}} $19.38 billion ([[GDP (nominal)|nominal]]; {{abbr|2025|2025 forecast}})<ref name="IMF DataMapper">{{cite web |url=https://www.imf.org/external/datamapper/profile/MDG |title=IMF DataMapper: Madagascar |website=[[International Monetary Fund]] |date=2025 |access-date=20 Oct 2025}}</ref>
* {{increase}} $64.14 billion ([[Purchasing power parity|PPP]]; {{abbr|2025|2025}})<ref name="IMF DataMapper"/> 
}}
| gdp rank = {{plainlist|
* [[List of countries by GDP (nominal)|133rd (nominal; 2025)]]
* [[List of countries by GDP (PPP)|120th (PPP; 2025)]]
}}
| growth = {{plainlist|   
* {{Increase}} 3.8%&nbsp;(2025)<ref name="IMF DataMapper" />
* {{Increase}} 4.3%&nbsp;(2026)<ref name="IMF DataMapper" />
* {{Increase}} 4.9%&nbsp;({{abbr|2027f|2025 forecast}})<ref name="IMF DataMapper" />
* {{Increase}} 4.9%&nbsp;({{abbr|2028f|2025 forecast}})<ref name="IMF DataMapper" />
}}
| per capita = {{plainlist|
* {{increase}} $616 (nominal; {{abbr|2025|2025 forecast}})<ref name="IMF DataMapper"/>
* {{increase}} $2,040 (PPP; {{abbr|2025|2025 forecast}})<ref name="IMF DataMapper"/> 
}}
| per capita rank = {{plainlist|
* [[List of countries by GDP per capita (nominal)|186th (nominal; 2025)]]
* [[List of countries by GDP per capita (PPP)|177th (PPP; 2025)]]
}}
| sectors = services (60.3%),<br> agriculture (23.7%),<br> industry (16%) (2017 est.)
| inflation = 7.8% (2017 est.)
| poverty = <!-- TODO -->
| gini = 42.6 {{color|orange|medium}} (2012)<ref>{{Cite web|url=https://data.worldbank.org/indicator/SI.POV.GINI?locations=MG|title = Gini index (World Bank estimate) - Madagascar &#124; Data}}</ref>
| hdi = {{plainlist|
*{{decrease}} 0.501 {{color|red|low}} (2021)<ref>{{cite web |url=http://hdr.undp.org/en/indicators/137506 |title=Human Development Index (HDI) |publisher=[[Human Development Report|HDRO (Human Development Report Office)]] [[United Nations Development Programme]] |website=hdr.undp.org |access-date=23 November 2022}}</ref> ([[List of countries by Human Development Index|173rd]])
*{{decrease}} 0.367 {{color|red|low}} [[List of countries by inequality-adjusted HDI|IHDI]] (2021)<ref>{{cite web |url=http://hdr.undp.org/en/content/table-3-inequality-adjusted-human-development-index-ihdi |title=Inequality-adjusted Human Development Index (IHDI) |publisher=[[Human Development Report|HDRO (Human Development Report Office)]] [[United Nations Development Programme]] |website=hdr.undp.org |access-date=23 November 2022}}</ref>}}
| labor ={{increase}} 13.40 million (2017 est.) 
| unemployment = {{decreasePositive}} 1.8%<ref>{{Cite web|url=https://www.indexmundi.com/madagascar/unemployment_rate.html|title=Madagascar Unemployment rate - Economy}}</ref>
| industries = [[meat]] processing, [[soap]], [[Brewing|breweries]], tanneries, [[sugar]], textiles, [[glass]]ware, [[cement]], [[automobile]] manufacturing, [[paper]], [[petroleum]], tourism,
| exports = $2.35 billion (2017 est.)<ref name="theodora.com">{{Cite web|url=https://theodora.com/wfbcurrent/madagascar/madagascar_economy.html|title=Madagascar Economy 2020, CIA World Factbook}}</ref>
| export-goods = [[coffee]], [[vanilla]], [[shellfish]], [[sugar]], [[cotton cloth]], [[clothing]], [[chromite]], [[petroleum products]]
| export-partners = {{flag|United States}} 19% <br> {{flag|France}} 18% <br> {{flag|UAE}} 7% <br> {{flag|China}} 6% 
<br> {{flag|Japan}} 6% <br> {{flag|Germany}} 5% <br> {{flag|India}} 5% (2019) (2019 est.)<ref name=CIA2>{{Cite web|url=https://www.cia.gov/the-world-factbook/countries/madagascar/|title=Madagascar Economy 2023, CIA World Factbook|date=3 April 2024 }}</ref>
| imports = $3.235 billion (2017 est.)<ref name="theodora.com" />
| import-goods = capital goods,  consumer goods, food
| import-partners = {{flag|China}} 24% <br> {{flag|France}} 11% <br> {{flag|UAE}} 9% <br> {{flag|India}} 7% <br> {{flag|South Africa}} 5% (2019 est.) <ref name=CIA2/>
| debt = USD $3.914 billion (2017 est.)
| revenue = USD $1.292 billion
| expenses = USD $1.725 billion
| aid = ''recipient'': $838 million (1997)
}}
[[File:GDP per capita development of Madagascar.svg|thumb|Change in per capita GDP of Madagascar, 1950–2018. Figures are inflation-adjusted to 2011 International dollars.]]
The '''economy of [[Madagascar]]''' is US$19.38 billion by [[gross domestic product]] as of 2025, being a market economy and is supported by an [[agriculture|agricultural]] industry and emerging [[tourism]], [[textile]] and [[mining]] industries. Malagasy agriculture produces tropical staple crops such as [[rice]] and [[cassava]], as well as cash crops such as [[vanilla]] and [[coffee]].

Madagascar's status as a developing nation exempts Malagasy exports from customs protocol in some areas, notably the [[United States]] and the [[European Union]]. These exemptions have supported the growth of the Malagasy textile industry. Despite natural resources and developing industries, the [[2009 Malagasy political crisis]]—considered by the international community to be an illegal coup<ref name="afp">{{cite news|title='SADC does not, cannot recognise Rajoelina'|work = [[Independent Online]]|agency = [[Agence France-Presse]]|date = 19 March 2009|url = http://www.iol.co.za/index.php?set_id=1&click_id=68&art_id=nw20090319182620216C686115}}</ref>—deterred foreign investments in Madagascar and caused the Malagasy economy to decline.<ref name="IMF4">{{cite web|author1=Republic of Madagascar|title=Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding|url=http://www.imf.org/external/np/loi/2014/mdg/060314.pdf#page=4|website=International Monetary Fund|access-date=25 February 2015|page=4|date=3 June 2014}}</ref> Foreign investments have resumed following the resumption of elections in early 2014.{{citation needed|date=February 2015}} Madagascar is a [[Least developed countries|least developed country]] according to [[United Nations]].

== History ==
Over the years, successive French colonial and independence-era governments have sought to modernize Madagascar's economy.<ref name=":0">{{cite encyclopedia|title=Indian Ocean: five island countries|publisher=[[Federal Research Division]], [[Library of Congress]]|location=Washington, D.C.|url=https://www.loc.gov/item/95016570/|last=Schraeder|first=Peter J.|date=1995|editor-last=Metz|editor-first=Helen Chapin|editor-link=Helen Chapin Metz |edition=3rd|pages=55–57|isbn=0-8444-0857-3|oclc=32508646|postscript=. {{PD-notice}}|entry=Madagascar: Government Policy and Intervention}}</ref> The first modern land use projects were established by French settlers or Creole immigrants from the Mascarene Islands in the nineteenth and twentieth centuries.<ref name=":0" /> They introduced cash crops such as coffee, sugarcane, vanilla, cloves, and sisal for export.<ref name=":0" /> They also built small-scale mines to exploit the island's graphite, chromite, and uranium resources.<ref name=":0" /> To facilitate the processing and marketing of these commodities, the immigrants established a number of financial and commercial enterprises and built a small, modern railroad system.<ref name=":0" /> They then brought some Malagasy into this modern sector of the economy, either as wage laborers and sharecroppers on the foreign-owned plantations, or as low-level employees in the civil service or business enterprises. The foreign owners and managers, however, retained almost all of the benefits from these operations.<ref name=":0" />

After independence the [[Philibert Tsiranana]] regime did little to change the French domination of the modern sector of the economy, despite increasing outrage at this continued economic dependence.<ref name=":0" /> This anger, together with growing concern over an unequal distribution of wealth that left the southern and western parts of the island in relative poverty, caused the ouster of Tsiranana in 1972 and a shift in economic policy.<ref name=":0" /> The new military regime led by [[Gabriel Ramanantsoa]] cut most ties with France and began to Malagachize the economy. Slow progress toward this goal, however, helped to precipitate the end of the Ramanantsoa regime in mid-1975.<ref name=":0" /> Only with the rise of [[Didier Ratsiraka]] to the presidency later that year did the takeover of formerly French-dominated enterprises begin in earnest.<ref name=":0" />

Ratsiraka's policy of "revolution from above" went beyond confiscating or buying out foreign firms and turning them over to Malagasy ownership; he intended to socialize the economy by nationalizing major enterprises.<ref name=":0" /> The state acquired majority or minority ownership in nearly all large financial, transportation, marketing, mining, and manufacturing enterprises.<ref name=":0" /> Firms left under private control were required to buy and sell at state-controlled prices, and the state closely monitored the repatriation of profits.<ref name=":0" /> In the rural sector, Ratsiraka aimed to establish local farming cooperatives.<ref name=":0" /> Almost as important as this institutional reform was the regime's intention, announced in an economic plan for the 1978-80 period, to increase dramatically the level of government capital investment in all sectors of the economy in order to improve the availability of goods and services to all.<ref name=":0" />

By the start of the 1980s, however, Ratsiraka's attempt to fashion viable socialist institutions and to stimulate the economy through increased investment had failed to improve economic production and welfare.<ref name=":0" /> Economic growth throughout the 1970s had not kept pace with the expanding population.<ref name=":0" /> Despite the availability of significant agricultural and mineral resources, the economy was less productive than at the start of the decade when the average per capita income was already among the lowest in the world.<ref name=":0" /> The only apparent effect of the enhanced level of investment, which reached all-time highs in the 1978-80 period, was to put the country deeply in debt to foreign creditors and, therefore, pave the way for a series of structural adjustment agreements signed with the IMF and the World Bank during the 1980s and the early 1990s.<ref name=":0" /> Such agreements were necessary because as a 1993 World Bank study pointed out, between 1971 and 1991 the per capita income of Malagasy dropped 40 percent.<ref name=":0" />

Eventually admitting that adoption of the socialist model of economic centralization and state control was a mistake, the Ratsiraka regime in 1980 initiated a return to a more classic liberal economic model that the [[Albert Zafy]] regime wholeheartedly adopted following its inauguration in 1993.<ref name=":0" /> The post-1980 Ratsiraka and Zafy regimes have overseen the privatization of parastatals, the disbanding of agricultural marketing boards, the ratification of more liberal investment codes favoring foreign investment, the privatization of the banking industry, diversification of traditional, primary-product exports, and greater investment in food production.<ref name=":0" /> The Zafy regime has made reinvigoration of the Malagasy economy its number-one priority.<ref name=":0" />

As of 1994, the majority of Malagasy continued to earn their livelihoods in ways fundamentally unchanged from those of their ancestors — small-scale farms supporting traditional irrigated rice cultivation, dryland farming of cassava and other foods, zebu cattle herding, or the raising of cash crops.<ref name=":0" />

On April 2, 2025, [[Donald Trump|Donald J. Trump]] declared [[Tariffs in the second Trump administration|"reciprocal tariffs"]] of 47% on Madagascar.<ref name=":1">{{Cite web |last=Thomas |first=David |date=2025-04-03 |title=Trump slaps tariffs on Africa as he hails 'Liberation Day' |url=https://african.business/2025/04/trade-investment/trump-slaps-tariffs-on-africa-as-he-hails-liberation-day |access-date=2025-04-08 |website=African Business |language=en-GB}}</ref> Madagascar produces around 80% of the world's vanilla, and such export was put at risk by Trump's new policy towards Madagascar exporters.<ref name=":2">{{Cite web |last=Maguire |first=Mairead |date=2025-04-04 |title=What Trump's order means for vanilla prices, after Madagascar gets hit with 47% tariff |url=https://www.thejournal.ie/trump-tariffs-vanilla-prices-6669160-Apr2025/ |access-date=2025-04-08 |website=TheJournal.ie |language=en}}</ref>

==Agriculture==

{{Main|Agriculture of Madagascar}}
Madagascar produced, in 2018:

* 4 million tons of [[rice]];
* 3.1 million tons of [[sugarcane]];
* 2.5 million tons of [[cassava]];
* 1 million tons of [[sweet potato]];
* 388 thousand tons of [[vegetable]];
* 383 thousand tons of [[banana]];
* 300 thousand tons of [[mango]] (including [[mangosteen]] and [[guava]]);
* 257 thousand tons of [[potato]];
* 230 thousand tons of [[taro]];
* 215 thousand tons of [[maize]];
* 93 thousand tons of [[pineapple]];
* 86 thousand tons of [[beans]];
* 83 thousand tons of [[Orange (fruit)|orange]];
* 73 thousand tons of [[coconut]];

In addition to smaller productions of other agricultural products, like [[coffee]] (57 thousand tons), [[clove]] (23 thousand tons), [[Cocoa bean|cocoa]] (11 thousand tons), [[cashew]] (7 thousand tons) and [[vanilla]] (3 thousand tons).<ref>[http://www.fao.org/faostat/en/#data/QC/ Madagascar production in 2018, by FAO]</ref>

Agriculture, including [[fishing]] and [[forestry]], is Madagascar's largest industry and employs 82% of its labor force.<ref name=CIA>{{cite web|author1=United States of America|title=The World Factbook|url=https://www.cia.gov/the-world-factbook/countries/madagascar/|website=Central Intelligence Agency|access-date=2 March 2015}}</ref> Madagascar's varied climate, ranging from [[tropical]] along the coasts, moderate in the highlands and [[arid]] in the south, allows for the cultivation of tropical crops such as [[rice]], [[cassava]], [[beans]] and [[bananas]].<ref name=CIA/> In 2011, agricultural products—especially [[cloves]], [[vanilla]], [[cacao bean|cacao]], [[sugar]], [[black pepper|pepper]], and [[coffee]]—accounted for Madagascar's top twelve exports by value.<ref name=FAOexports>{{cite web|author1=United Nations|title=Commodities by Country|url=http://faostat.fao.org/desktopdefault.aspx?pageid=342&lang=en&country=129|website=FAOSTAT|publisher=Food and Agriculture Organization of the United Nations|access-date=26 February 2015|archive-date=16 February 2016|archive-url=https://web.archive.org/web/20160216065124/http://faostat.fao.org/desktopdefault.aspx?pageid=342&lang=en&country=129|url-status=dead}}</ref> Madagascar produces the largest vanilla harvest in the world and Malagasy vanilla accounts for 80-85% of the global vanilla market.<ref name=FAOvanilla>{{cite news|author1=The Economist|title=Why there is a worldwide shortage of vanilla|url=https://www.economist.com/the-economist-explains/2018/03/28/why-there-is-a-worldwide-shortage-of-vanilla|newspaper=The Economist|access-date=26 November 2020|page=1|date=18 March 2018}}</ref> Madagascar's vanilla market in the US was put at risk in April 2025 following [[Donald Trump|Donald J. Trump]]'s declaration of [[Tariffs in the second Trump administration|"reciprocal tariffs"]] amounting to 47%.<ref name=":1" /><ref name=":2" /><!-- CINNAMON -->

===Fishing===
The fishing industry is present with 66 industrial fishing vessels. Fees & taxes for fishing licences are estimated at 3.6 billion Ariary (US$80 million) for 2023.<ref>[https://www.madagascar-tribune.com/3-6-milliards-d-ariary-de-redevances-attendues.html Madagascar-tribune.com 3.6 milliard d'ariary de Redevance]</ref>

==Textiles==
Exports from Madagascar's [[Export Processing Zone]]s, located around  [[Antananarivo]] and [[Antsirabe]], account for the majority of [[garment]] exports<ref>{{Cite web|url=https://www.export.gov/apex/article2?id=Madagascar-apparel|title=export.gov|website=www.export.gov|language=en|access-date=2018-06-26|archive-date=2020-07-30|archive-url=https://web.archive.org/web/20200730220133/https://www.export.gov/apex/article2?id=Madagascar-apparel|url-status=dead}}</ref> and are largely exempt from customs restrictions in the United States under the [[African Growth and Opportunity Act]] (AGOA)<ref name=AGOA>{{cite web|author1=United States of America|title=AGOA Eligibility|url=http://trade.gov/agoa/eligibility/index.asp|website=International Trade Administration|access-date=28 February 2015}}</ref> and in the European Union under the [[Everything but Arms]] (EBA) agreement.<ref name=EBA>{{cite web|author1=European Union|title=Everything But Arms (EBA) – Who benefits?|url=http://trade.ec.europa.eu/doclib/docs/2013/april/tradoc_150983.pdf|website=European Commission: Trade|date=30 April 2013|access-date=28 February 2015|archive-date=20 December 2018|archive-url=https://web.archive.org/web/20181220041051/http://trade.ec.europa.eu/doclib/docs/2013/april/tradoc_150983.pdf|url-status=dead}}</ref> <!-- 2009 COUP -->

==Mining==
{{main|Mining industry of Madagascar}}
A small but growing part of the economy is based on mining of [[ilmenite]], with investments emerging in recent years, particularly near [[Tulear]] and [[Tôlanaro|Fort Dauphin]].<ref>[http://www.mbendi.co.za/indy/ming/hvym/af/md/p0005.htm Madagascar&nbsp;– Mining: Heavy Minerals Mining] {{Webarchive|url=https://web.archive.org/web/20080331071739/http://www.mbendi.co.za/indy/ming/hvym/af/md/p0005.htm |date=2008-03-31 }}. Mbendi.co.za. Retrieved on 2012-05-28.</ref> Mining corporation [[Rio Tinto (corporation)|Rio Tinto]] started production at its Fort Dauphin [[Mandena]] mine in January 2009,<ref>[http://www.riotinto.com/media/18435_media_releases_17009.asp Media releases&nbsp;– Rio Tinto starts ilmenite production in Madagascar] {{webarchive|url=https://web.archive.org/web/20110930162116/http://www.riotinto.com/media/18435_media_releases_17009.asp |date=2011-09-30 }}. Rio Tinto. Retrieved on 2012-05-28.</ref> following several years of preparation. The mining project is highly controversial, with [[Friends of the Earth]] and other environmental organizations filing reports to detail their concerns about the mine's effect on the environment and local communities.<ref>[http://www.foe.co.uk/resource/press_releases/rio_tintos_madagascar_mini_22102007.html Rio Tinto's Madagascar mining project]. Foe.co.uk. Retrieved on 2012-05-28.</ref> Gemstone mining is also an important part of Madagascar's economy.

Several major projects are underway in the mining and [[Petroleum|oil]] and [[Natural gas|gas]] sectors that, if successful, will give a significant boost. In the mining sector, these include the development of coal at [[Sakoa]] and nickel near [[Tamatave]]. The [[Ambatovy mine]] (nickel & cobalt - Sherrit International 40%, Sumitomo 27.5%, Korea Resources 27.5%, [[SNC-Lavalin]] 5%) is a huge operation and has cost US$4.76 million to date <ref>{{cite web |url=http://www.sherritt.com/doc08/files/presentations/2010-12-17AmbatovyUpdateRelease.pdf |title=Sherritt Provides Update on the Ambatovy Project |access-date=2011-02-01 |url-status=dead |archive-url=https://web.archive.org/web/20110716055146/http://www.sherritt.com/doc08/files/presentations/2010-12-17AmbatovyUpdateRelease.pdf |archive-date=July 16, 2011 }}. sherritt.com (2010-12-17)</ref> and is due to start production in 2011. In oil, [[Madagascar Oil]] is developing the massive [[Onshore (hydrocarbons)|onshore]] [[Heavy crude oil|heavy oil]] [[oil field|field]] at [[Tsimiroro]] and [[Tar sands|ultra heavy oil]] field at [[Bemolanga]].
[[Image:City Centre Toliara 2007.jpg|thumb|[[Tulear]]]]

==Investment climate==
{{Overly detailed|date=March 2015|section=yes}}

[[Image:Appl0405.loselesslycropped.jpg|thumb|left|upright|Former President [[Marc Ravalomanana]] of Madagascar]]

Following the 2002 political crisis, the government attempted to set a new course and build confidence, in coordination with [[international financial institution]]s and donors. Madagascar developed a recovery plan in collaboration with the private sector and donors and presented it at a "Friends of Madagascar" conference organized by the [[World Bank]] in [[Paris]] in July 2002.{{citation needed|date=December 2024}}  Donor countries demonstrated their confidence in the new government by pledging $1 billion in assistance over five years. The Malagasy Government identified road infrastructure as its principal priority and underlined its commitment to public-private partnership by establishing a joint public-private sector steering committee.{{citation needed|date=December 2024}}

The Madagascar-U.S. Business Council was formed as a collaboration between the United States Agency for International Development ([[USAID]]) and Malagasian artisan producers in Madagascar in 2002.<ref name="un.org">[https://www.un.org/esa/coordination/Alliance/documents/website/Handicrafts%20Table%20of%20Contents,%20Introduction.doc "Made in Madagascar: Exporting Handicrafts to the U.S. Market: a Project with the UN Public-Private Alliance for Rural Development; Final Report"], A Project with the UN Public-Private Alliance for Rural Development.</ref> The U.S.-Madagascar Business Council was formed in the United States in May 2003, and the two organisations continue to explore ways to work for the benefit of both groups.{{citation needed|date=December 2024}}

The government of former President [[Marc Ravalomanana]] was aggressively seeking foreign investment and had planned to tackle many of the obstacles to such investment, including combating corruption, reforming land-ownership laws, encouraging study of American and European business techniques, and active pursuit of foreign investors. {{citation needed|date=December 2024}}President Ravalomanana rose to prominence through his agro-foods [[TIKO]] company, and is known for attempting to apply many of the lessons learned in the world of business to running the government.{{citation needed|date=December 2024}} Prior to [[Madagascar#Ravalomanana's resignation|Ravalomanana's resignation]], concerns had arisen about the conflict of interest between his policies and the activities of his firms. Most notable among them the preferential treatment for rice imports initiated by the government in late 2004 when responding to a production shortfall in the country.{{citation needed|date=December 2024}}

Madagascar's appeal to investors stems from its competitive, trainable work force. More than 200 investors, particularly garment manufacturers, were organized under the country's [[export processing zone]] (EPZ) system since it was established in 1989.{{citation needed|date=December 2024}} The absence of quota limits on textile imports to the European market under the [[Lomé Convention]] helped stimulate this growth.{{citation needed|date=December 2024}}

[[Image:Port Toamasina Madagascar.jpg|thumb|Port [[Toamasina]]]]

Growth in output in 1992–97 averaged less than the growth rate of the population. Growth has been taken away by a decline in world coffee demand, and the erratic commitment of the government to [[economic reform]].<ref>FAO Statistic Yearbook 2010&nbsp;– Resources</ref><ref>The World Bank. Madagascar at a glance, 2/25/11</ref><!--FIND WEB LINKS-->
During a period of solid growth from 1997 to 2001, poverty levels remained stubbornly high, especially in rural areas. A six-month political crisis triggered by a dispute over the outcome of the presidential elections held in December 2001 virtually halted economic activity in much of the country in the first half of 2002. [[Real GDP]] dropped 12.7% in 2002, inflows of [[foreign direct investment|foreign investment]] dropped sharply, and the crisis tarnished Madagascar's budding reputation as an AGOA standout and a promising place to invest. After the crisis, the economy rebounded with GDP growth of over 10% in 2003.{{citation needed|date=December 2024}} [[Currency depreciation]] and rising [[inflation]] in 2004 hampered economic performance, but growth for the year reached 5.3%, with inflation reaching around 25% at the end of the year.{{citation needed|date=December 2024}} In 2005, inflation was brought under control by tight monetary policy of raising the ''Taux Directeur'' (central bank rate) to 16% and tightening reserve requirements for banks. Thus growth was expected to reach around 6.5% in 2005.{{citation needed|date=December 2024}}

During Ravalomanana's presidency, the government adopted a series of business laws and regulations, including the commercial companies law<ref>{{Cite web|url=http://mg.mofcom.gov.cn/article/policy/201909/20190902897214.shtml|title=Loi n° 2003-036 sur les sociétés commerciales|website=mofcom.gov.cn|access-date=2019-11-30}}</ref> (2003), labor law<ref>{{Cite web|url=http://mg.mofcom.gov.cn/article/policy/201909/20190902897224.shtml|title=Loi n° 2003-044 portant Code du travail|website=mofcom.gov.cn|access-date=2019-11-30}}</ref> (2003), regulations on the application of commercial companies law<ref>{{Cite web|url=http://mg.mofcom.gov.cn/article/policy/201909/20190902897221.shtml|title=Décret n° 2004-453 fixant les modalités d'application de la Loi sur les sociétés commerciales|website=mofcom.gov.cn|access-date=2019-11-30}}</ref> (2004), public procurement law<ref>{{Cite web|url=http://mg.mofcom.gov.cn/article/policy/201909/20190902899025.shtml|title=Loi n° 2004-009 portant Code des marchés publics|website=mofcom.gov.cn|access-date=2019-11-30}}</ref> (2004), competition law<ref>{{Cite web|url=http://mg.mofcom.gov.cn/article/policy/201909/20190902898996.shtml|title=Loi n° 2005-020 sur la concurrence|website=mofcom.gov.cn|access-date=2019-11-30}}</ref> (2005), foreign exchange law<ref>{{Cite web|url=http://mg.mofcom.gov.cn/article/policy/201909/20190902897223.shtml|title=Loi n° 2006-008 portant Code des changes|website=mofcom.gov.cn|access-date=2019-11-30}}</ref> (2006), investment law<ref>{{Cite web|url=http://mg.mofcom.gov.cn/article/policy/201909/20190902897216.shtml|title=Loi n° 2007-036 sur les investissements à Madagascar|website=mofcom.gov.cn|access-date=2019-11-30}}</ref> (2007), and free zones and free enterprises law<ref>{{Cite web|url=http://mg.mofcom.gov.cn/article/policy/201909/20190902897217.shtml|title=Loi n° 2007-037 sur les zones et entreprises franches à Madagascar|website=mofcom.gov.cn|access-date=2019-11-30}}</ref> (2007).

==Food security, vulnerability and risk management==
{{Main|Food security in Madagascar}}
[[Image:Antananarivo Street.JPG|thumb|Vibrant [[Antananarivo]] is the political and economic capital of Madagascar]]

Despite a wealth of abundant and diverse natural resources, Madagascar is one of the world's poorest countries. Madagascar holds great potential for agricultural development, mainly due to the large variety of soil types and climatic diversity. Nevertheless, [[natural hazards]] ([[cyclones]], [[drought]], [[locust]] invasions) combined with old-fashioned farming practices limit production.

The standard of living of the Malagasy population has been declining dramatically over the past 25 years. The country has gone from being a net exporter of agricultural products in the 1960s to a net importer since 1971. Inappropriate traditional agricultural methods cause soil to erode and soil quality to decline, and the basis of survival for Madagascar's people is under serious threat.<ref>Deutsche Gesellschaft für Internationale Zusammenarbeit web site</ref>

==Energy==
{{Expand section|date=September 2022}}
[[File:Madagascar PVOUT Photovoltaic-power-potential-map GlobalSolarAtlas World-Bank-Esmap-Solargis.png|thumb|Madagascar has high [[photovoltaic power]] potential.]]
As of 2018, only 15% of the population of Madagascar has access to electricity.<ref>{{Cite web|title=The Force of the Sun: Madagascar Embarks on Renewable Energy Production|url=https://www.worldbank.org/en/news/feature/2018/10/10/the-force-of-the-sun-madagascar-embarks-on-renewable-energy-production|access-date=2021-07-29|website=World Bank|language=en}}</ref> By 2023, this has increased to 34%.<ref>{{Cite web|title=Madagascar Set to Expand Access to Renewable Energy and Digital Services thanks to $400 Million Credit|url=https://www.worldbank.org/en/news/press-release/2023/04/07/madagascar-afe-set-to-expand-access-to-renewable-energy-and-digital-services-thanks-to-400-million-credit|access-date=2024-07-22|website=World Bank|language=en}}</ref> Madagascar has a technically feasible hydropower potential of about 180,000 GWh. Less than 1% has been developed so far, with 162 MW of installed hydro capacity producing 61% of the country's electricity.<ref>{{Cite web|title=ANDRITZ HYDRO country overview|url=https://www.andritz.com/hydro-en/hydronews/hydropower-africa/madagascar|access-date=2024-07-22|website=Andritz Hydro|language=en}}</ref> The country has enormous potential for exploiting solar power, but general infrastructure is still lacking.{{citation needed|date=December 2024}}

==Poverty reduction==
{{Unreferenced section|date=December 2024}}
[[Image:Marktdag.jpg|thumb|left|Local market vendors.]]In 2000, Madagascar embarked on the preparation of a [[Poverty Reduction Strategy Paper]] (PRSP) under the [[Heavily indebted poor countries]] (HIPC) Initiative. The boards of the IMF and of the [[World Bank]] concurred in December 2000 that the country was eligible under the HIPC Initiative, and Madagascar reached the decision point for [[debt relief]]. On March 1, 2001, the IMF Board granted the country $103 million for 2001–03 under the Poverty Reduction and Growth Facility (PRGR). Resources were intended for improving access to health, education, rural roads, water, and direct support to communities. In addition, on March 7, 2001, the [[Paris Club]] approved a debt cancellation of $161 million. On February 28, 2001, the [[African Development Bank]] (ADB) approved under the HIPC a debt cancellation of $71.46 million and granted in June 2001 an additional credit of $20 million to fight against [[AIDS]] and [[poverty]].

Partly as a result of these credits but also as a result of previous reforms, average GDP growth exceeded the population growth rate of 2.8% in 1997 (3.5%), 1998 (3.9%), 1999 (4.7%) and 2000 (4.8%).

In October 2004, the boards of the IMF and the [[World Bank]] determined that Madagascar had reached the completion point under the enhanced HIPC Initiative.

==Child labour==
{{excerpt|Child labour in Africa|Madagascar}}

==Facts and figures==
=== Main indicators ===
The following table shows the main economic indicators in 1980–2023.<ref>{{Cite web |title=World Economic Outlook Databank |url=https://www.imf.org/en/Publications/WEO/weo-database/2023/October/weo-report?c=662,&s=NGDP_RPCH,NGDPD,PPPGDP,PPPPC,PCPIPCH,GGXWDG_NGDP,&sy=1980&ey=2028&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1 |website=IMF}}</ref>
{| class="wikitable" style="text-align: center;"
!Year
!GDP<br><small>(in billion US$ PPP)</small>
!GDP per capita<br><small>(in US$ PPP)</small>
!GDP<br> <small>(in billion US$ nominal)</small>
!GDP growth (real)
!Inflation (in Percent)
!Government debt <br>(in % of GDP)
|-
|1980
|8.867
|1,021.7
|5.202
|0.788
|18.278
|n/a
|-
|1981
|8.755
|982.4
|4.759
| −9.800
|30.457
|n/a
|-
|1982
|9.119
|996.6
|4.785
| −1.900
|31.907
|n/a
|-
|1983
|9.562
|1,017.7
|4.686
|0.900
|19.469
|n/a
|-
|1984
|10.081
|1,045.0
|3.906
|1.760
|9.720
|n/a
|-
|1985
|10.520
|1,062.0
|3.803
|1.156
|10.566
|n/a
|-
|1986
|10.942
|1,075.8
|4.348
|1.960
|14.492
|n/a
|-
|1987
|11.345
|1,086.2
|3.213
|1.175
|15.461
|n/a
|-
|1988
|12.145
|1,132.5
|3.189
|3.407
|26.338
|n/a
|-
|1989
|13.135
|1,192.9
|3.176
|4.075
|9.017
|n/a
|-
|1990
|14.053
|1,243.0
|3.931
|3.129
|11.859
|92.701
|-
|1991
|13.612
|1,172.6
|3.255
| −6.306
|8.540
|113.835
|-
|1992
|14.087
|1,181.8
|3.715
|1.181
|14.567
|110.875
|-
|1993
|14.724
|1,203.0
|4.063
|2.100
|9.990
|105.192
|-
|1994
|15.032
|1,192.3
|3.522
| −0.042
|38.992
|95.963
|-
|1995
|15.605
|1,201.6
|3.838
|1.679
|49.036
|95.837
|-
|1996
|16.233
|1,213.4
|4.932
|2.154
|19.761
|98.716
|-
|1997
|17.123
|1,242.5
|4.263
|3.693
|4.492
|89.740
|-
|1998
|17.994
|1,267.5
|4.402
|3.917
|6.210
|108.460
|-
|1999
|19.105
|1,306.5
|4.278
|4.699
|7.189
|104.115
|-
|2000
|20.408
|1,354.9
|4.629
|4.457
|11.570
|90.212
|-
|2001
|22.116
|1,425.4
|5.438
|5.980
|7.917
|82.144
|-
|2002
|19.674
|1,230.9
|5.352
| −12.408
|16.499
|86.693
|-
|2003
|22.025
|1,337.7
|6.372
|9.785
| −1.704
|85.862
|-
|2004
|23.805
|1,403.6
|5.065
|5.257
|13.956
|81.896
|-
|2005
|25.719
|1,472.1
|5.859
|4.756
|18.364
|74.366
|-
|2006
|27.944
|1,552.8
|6.396
|5.399
|10.766
|32.226
|-
|2007
|30.338
|1,636.6
|8.525
|5.711
|10.288
|28.210
|-
|2008
|32.996
|1,727.9
|10.725
|6.713
|9.297
|31.010
|-
|2009
|31.886
|1,621.0
|9.617
| −3.979
|8.954
|34.857
|-
|2010
|32.469
|1,602.4
|9.983
|0.619
|9.247
|32.341
|-
|2011
|33.667
|1,613.0
|11.552
|1.578
|9.483
|29.947
|-
|2012
|34.211
|1,591.2
|11.579
|3.011
|5.714
|30.435
|-
|2013
|35.257
|1,591.9
|12.424
|2.300
|5.826
|36.243
|-
|2014
|36.702
|1,608.7
|12.523
|3.339
|6.080
|37.848
|-
|2015
|37.486
|1,595.1
|11.323
|3.132
|7.404
|44.062
|-
|2016
|39.997
|1,652.2
|11.849
|3.993
|6.056
|40.281
|-
|2017
|40.515
|1,624.7
|13.176
|3.933
|8.590
|40.130
|-
|2018
|42.814
|1,667.6
|13.760
|3.194
|8.598
|42.896
|-
|2019
|45.504
|1,715.5
|14.105
|4.411
|5.623
|41.253
|-
|2020
|42.808
|1,565.8
|13.051
| −7.138
|4.188
|52.198
|-
|2021
|47.298
|1,678.5
|14.555
|5.740
|5.819
|52.029
|-
|2022
|52.636
|1,817.4
|15.149
|4.000
|8.157
|55.129
|-
|2023
|56.754
|1,906.6
|15.763
|4.000
|10.500
|54.026
|}

=== Other data ===

'''Household income or consumption by percentage share:'''
<br>''lowest 10%:''
2.3%
<br>''highest 10%:''
34.9% (1993)

'''Industrial production growth rate:'''
5% (1999 est.)

'''Electricity&nbsp;– production:'''
1.35 billion kWh (2009 est.)

'''Electricity&nbsp;– production by source:'''
<br>''fossil fuel:''
69.5%
<br>''hydro:''
30.5%
<br>''nuclear:''
0%
<br>''other:''
0% (2009)

'''Electricity&nbsp;– consumption:'''
1.256 billion kWh (2009 est.)

'''Electricity&nbsp;– exports:'''
0 kWh (2010)

'''Electricity&nbsp;– imports:'''
0 kWh (2010)

'''Exchange rates:'''
Malagasy ariary (MGA) per US dollar -
2,195 (2012 est.)
2,025.1 (2011 est.)
2,090 (2010 est.)
1,956.2 (2009)
1,654.78 (2008)

==See also==
*[[Economy of Africa]]
*[[Illegal logging in Madagascar]]
*[[Tourism in Madagascar]]
* [[United Nations Economic Commission for Africa]]
*[[List of companies of Madagascar]]

==References==
{{Reflist}}

==Notes==
{{Notelist}}

==Bibliography==
* [http://www.fao.org/economic/ess/ess-publications/ess-yearbook/en/ FAO Statistic Yearbook 2010&nbsp;– Resources]
* [https://web.archive.org/web/20140502012459/http://devdata.worldbank.org/AAG/mdg_aag.pdf The World Bank. Madagascar at a glance, 2/25/11], PDF

==External links==
{{Commons category}}
* [https://web.archive.org/web/20060927091407/http://www.mbendi.co.za/land/af/md/p0005.htm MBendi Madagascar overview]
* [http://www.trademap.org/open_access/Index.aspx?proceed=true&reporter=450 Madagascar latest trade data on ITC Trade Map]
* [https://web.archive.org/web/20211214202024/https://www.wildmadagascar.org/overview/FAQs/why_is_Madagascar_poor.html Why is Madagascar so poor?]
{{Madagascar topics}}{{Africa topic|Economy of}}
{{World Trade Organization}}

The population below the poverty line is 50 percent.{{citation needed|date=March 2024}}

{{DEFAULTSORT:Economy Of Madagascar}}
[[Category:Economy of Madagascar| ]]
[[Category:World Trade Organization member economies|Madagascar]]
[[Category:African Union member economies|Madagascar]]