Madagascar is classified by the World Bank as one of the world’s twelve poorest countries. Per capita GDP fell during the 1980s and 1990s, but in the period 2003–09, a slight upturn in the economy was noticeable. From Andy Rajoelina’s coup takeover of power in 2009 until he surrendered power to the popularly elected president-elect Rajaonarimampianina in 2014, the country was frozen out by the outside world and the economy deteriorated further. After 2014, the country’s economy has slowly recovered, mainly thanks to prospects for renewed financial support from the World Bank and the International Monetary Fund.
The economy is strongly oriented towards agriculture and forestry, but during the 00s, the country’s largest export income came from the textile industry.
The downturn in the economy during the late 1900s is due to natural disasters and the introduction of a planned economy. On several occasions during the 1990s, the government initiated structural adjustment programs, which included a significant liberalization of the economy, introduction of economic free trade zones and increased producer prices in agriculture.
and widespread corruption have meant that these have not yet produced a lasting effect. The country has also, on a number of occasions, received portions of its extensive foreign debt written off.
Since the mid-1970s, agricultural growth has not been able to keep pace with population growth. For export crops, quotation rules and low world market prices have posed problems, which has led to an investment in quality rather than an increase in yield. The most important food crop is rice, but even though rice constitutes about 70 percent of total agricultural production, large quantities must be imported. Other important food crops are cassava and bananas. The dominant export crops are coffee, vanilla and cloves; Also of importance are cotton, sugar, cocoa, peanuts, tobacco and sisal. Cyclones and large grasshopper swarms have hit agriculture hard in recent years. Only 10 percent of the arable land is cultivated. Large areas are used instead for livestock farming, but traditionally, animal husbandry is less focused on meat and milk production and more on owning many animals. An agreement to lease 1.3 million hectares of agricultural land to South Korean company Daewoo Logistics led to the fall of President Ravalomanana; his successor Raoelina terminated the agreement.
Forestry and forest products are important for the local industry and for the country’s energy supply. However, a lack of control of felling and the absence of replanting programs has led to a sharp reduction in forest area. The illegal logging has increased since 2009.
From a supply point of view, small-scale fishing has long been important. However, a more industrialized, export-oriented fishery has slowly developed and, above all, seafood is an important export commodity. License fishing of fishing fleets from Japan and Europe is significant. The total catch in 2009 amounted to approximately 145,000 tonnes
Madagascar has large deposits of several minerals, but because these are often located in remote areas, the extraction has been expensive and difficult. The most important mineral from a commercial point of view is chromite and graphite, which are exported. The largest chrome deposit is found at Andriamena, but mining also occurs at Befandriana. Madagascar also has large sapphire deposits but due to illegal mining, extensive exports were halted in 2008. Other minerals found in the country are mica, gold, ilmenite (titanium iron), nickel, cobalt, coal and bauxite.
In order to reduce the cost of oil imports, Madagascar has invested in the expansion of water energy. In total, there are seven water energy plants in the country, which account for more than 2/3 of the electricity demand. The largest facility is at Andekaleka; it mainly supplies electricity to the capital Antananarivo and the mining facilities in Andriamena. Of Madagascar’s total energy needs, however, about 85 percent is covered by firewood and charcoal.
The industrial sector has little significance for the country’s economy. However, during the 1990s, the textile industry accounted for the country’s largest export revenue. Most industries are located in the highlands or in the area around the port city of Toamasina. The food industry accounts for about 50 percent of the industry’s production value. Other industries include the brewery, cement industry and soap manufacturing.
According to Countryaah, Madagascar has for a long time had a chronic trade deficit. During the 1990s, the deficit averaged about 8 percent of GDP, in 2003 the figure was as low as 3.2 percent, but during the 1990s, the deficit increased sharply and has been at 20-30 percent in recent years. The most important export goods are coffee, vanilla, shrimp, sugar and textiles. In 2009, however, Madagascar was excluded from the AGOA agreement, which gives African countries the right to duty-free exports of certain goods to the United States. Imports are dominated by capital goods, oil, machinery and food. The most important trading partners are France, the USA and China.