World Bank has updated Liberia’s Economic Development.

The World Bank has released the Sixth Edition of its annual Liberia Economic Update on 29th October, 2025 focusing on Liberia’s recent economic developments, analysing the status of the private sector and a roadmap showcasing how it can be strengthened to deliver productive jobs.

The report highlights the importance of unlocking employment potential which requires enabling firm growth, expanding production capacity, and addressing spatial and sectoral concentration. As currently structured, Liberia’s private sector is unable to generate quality jobs on a large scale, amid a prevalence of informal, micro-sized firms with limited employment capacity.

Liberia’s macroeconomic performance strengthened in 2024, with notable improvements in fiscal consolidation, inflation management, and external rebalancing, although the growth momentum moderated. Real GDP growth slowed to 4.0% from 4.7% in 2023 as industrial output weakened, despite solid contributions from services and agriculture. Inflation declined to 8.3% amid tight monetary policy, broad exchange rate stability, and easing food and fuel prices, although core inflation rose sharply in the second half, signaling persistent underlying pressures.

The poverty is high at 26.4%. The fiscal deficit narrowed significantly, from 7.1% to 2.0% of GDP, driven by higher domestic revenues and deep spending cuts, while public debt declined modestly. The current account deficit halved to 11.2% of GDP, supported by record gold and rubber exports and falling imports. Structural challenges remain, including limited job creation coupled with prevalent informality in the labor market, a weak business environment, a low level of investment, and increased debt service pressures due to rising reliance on non-concessional borrowing.

For the FY period 2025 – 2027, Medium term prospects are cautiously positive, with GDP growth projected to average 5.2%, but sustaining stability will require steadfast implementation of fiscal and structural reforms amid elevated external and domestic risks; although vulnerable to both domestic and external risks. Translating stabilisation into inclusive growth requires confronting Liberia’s employment crisis head-on. Liberia’s job challenge stems from the contrast between a growing labour force and insufficient structural transformation. Unlocking employment potential requires enabling firm growth, expanding production capacity, and addressing spatial and sectoral concentration.

The transformation of Liberia’s employment landscape hinges on a four-pronged strategy. This strategy should be complemented by long-term investments in education and human capital, improved market access for local firms, and targeted incentives for firms that offer wage employment. Aligning industrial and labour policies with spatial development priorities and value-chain potential will also be essential to drive inclusive job creation and reduce regional disparities in employment opportunities.

Understanding poverty in Liberia: Effects of the revised international poverty line –

Accurate and comparable poverty measurement is critical for effective policymaking, requiring timely, high quality household survey data and consistent international benchmarks. The World Bank has recently updated its “dollar-a-day” extreme International Poverty Line (IPL), setting the new threshold at US$ 3.00 per capita per day in 2021 purchasing power parity (PPP) terms. This update reflects methodological improvements and a more accurate threshold for poverty measurement, particularly in regions such as West Africa. The World Bank uses national poverty rates for country dialogue and international rates to track SDG progress and benchmark countries.

Liberia’s latest official poverty estimates date back to 2016, and do not account for the impact of more recent shocks such as the Ebola crisis and the COVID-19 pandemic. In 2016, 33.6% of the

population lived below the IPL, as per the Liberia Household Income and Expenditure Survey (HIES). The revised IPL aligns more closely with national extreme poverty lines equivalent to US$3.92 (2021 PPP) per capita per day, and provides a more accurate picture of extreme poverty. These revised rates reflect a higher threshold for being considered “non-poor”, rather than a deterioration in living standards. Applying the 2021 PPPs to older surveys, such as the 2016 HIES, introduces some uncertainty, as CPI-based adjustments across several years may not fully capture significant economic changes and shocks.

In 2024, about 1 in 3 Liberians were poor, with poverty reduction predicted to continue over the next years. For an updated survey data for official poverty estimates, the World Bank uses a microsimulation approach to project poverty since then. The model reflects sectoral growth rates as well as the loss of purchasing power due to inflation.

However, as inflation eased and economic growth stabilised since 2022, many poor Liberians managed to start escaping poverty. However, still one third of Liberians were poor in 2024, underscoring the need for targeted, context-specific policy responses with a focus on poverty reduction.

The forthcoming HIES, led by Liberia Institute of Statistics and Geo-Information Services (LISGIS), presents a critical opportunity to update poverty data and strengthen monitoring efforts. It will offer deeper insights into post-COVID socio-economic conditions and serve as a baseline for tracking progress under the government’s ARREST Agenda for Inclusive Development (AAID) 2025–2029. Once the new data is available, the microsimulation model will be updated to forecast poverty further into the future.

In these context it is noteworthy that, steady economic growth and easing inflation have helped advance poverty reduction. In 2024, progress on poverty reduction was commensurate with the pace of GDP growth and improvements in purchasing power due to low inflation. The proportion of the population living in extreme poverty (i.e., on less than US$2.15 per person per day in 2017 PPP) declined from 27.5% in 2023 to 26.4% in 2024, but it remains high. Notably, Liberia’s growth in the last three years has been mostly associated with joblessness or underemployment, with 9 out of 10 new jobs created in this period stemming from informal enterprises or from self -employment in low productivity sectors (i.e., services and agriculture). Reducing poverty in the medium term would require reforms to accelerate growth, alongside prudent fiscal and monetary policies and efforts to create more and better jobs.

Although monetary expansion slowed in 2024 as credit growth softened, the financial sector benefited from rising reserves and improved liquidity despite worsening asset quality –

Money supply growth decelerated in 2024 as weaker domestic credit offset a rebound in net foreign

assets within the banking system. Inflation concerns have prompted the CBL to maintain a tight monetary stance, keeping the policy rate well above the inflation rate. Liberia’s broad money supply (M2) grew by 13.7% in 2024, reaching US$ 1.34 billion by the end of December compared to US$1.18 billion and growth rate of 19.0% a year earlier. In contrast with 2023, when M2 growth was driven almost entirely by domestic assets, 2024 witnessed a healthier balance between domestic and external sources. Net Foreign Assets (NFA), which had declined by 25.7% in 2023, soared by 112.1% in 2024, up to US$ 168.0 million.

Meanwhile, Net Domestic Assets (NDA) grew at a slower pace of 6.6%, amid mixed performance from domestic credit components. Credit to the private sector continued to expand in 2024, rising by 8.6% to US$869.3 million, alt at a slower pace than the 34.9% growth recorded in 2023. In contrast, net credit to the government contracted by 2.9% in 2024, following a 21.9% increase in the previous year, reflecting improved fiscal consolidation efforts. Importantly, the composition of net assets improved in favor of external assets, with the NFA-to-M2 ratio rising from 7% at end-2023 to 13% at end-2024, signaling stronger reserve accumulation and an improved external liquidity position. Nonetheless, continued liquidity growth warrants cautious monetary management to mitigate potential inflationary pressures.

The banking sector stabilized further in 2024 amid improved capitalization and resilient liquidity,

although asset quality weakened. The banking sector’s resilience improved, with the regulatory capital-to-risk weighted assets ratio rising to 30.96% by December 2024, up from 29.40% at end-2023. However, asset quality deteriorated, as the ratio of non-performing loans (NPLs) to gross loans increased from 17.68% at end-2023 to 21.54% at end-2024, reflecting challenges in loan performance amid tightening financial conditions.

Profitability remained strong, with return on assets (ROA) improving from 2.35% in 2023 to 3.86

percent in 2024, suggesting efficient earnings generation despite asset quality pressures. Liquidity buffers also strengthened, with the liquid assets-to-total assets ratio improving from 30.74% to 37.78%, and the liquid assets-to-short-term liabilities ratio rising from 47.45% to 59.07% over the same period. Overall, Liberia’s banking sector made progress on capitalization and profitability in 2024, although the uptick in NPLs highlights the need for continued focus on credit risk management.

Suvro Sanyal – Team Maverick