Somalia’s economy expanded by 4.1% in 2024, according to the latest figures released by the Somali National Bureau of Statistics (SNBS). At face value, this continues a trend of modest recovery, following 4.2% growth in 2023 and a return to positive territory after years of instability. But behind the encouraging headline lies a sobering structural reality: Somalia’s economic growth is being driven by consumption, not production.
The country’s nominal GDP rose from $10.96 billion in 2023 to $11.97 billion in 2024, and GDP per capita climbed from $694 to $737. However, the Gross National Disposable Income (GNDI) reached $18.2 billion, powered by strong inflows of remittances and international aid. This difference—over $6 billion—reveals the scale to which external income is underpinning Somalia’s economic performance.
In fact, the economy’s largest component—household consumption—grew by 8.8% in 2024, outpacing GDP growth by more than double. Somalia’s household spending is now 133% of its GDP, an unusually high ratio even among low-income nations, reflecting the country’s heavy reliance on imported goods and external income to fuel demand.
The SNBS report notes that this surge in consumption was “largely financed by overseas remittances and grants.” Remittances are crucial for millions of Somali families and provide a buffer against poverty and shocks. However, this heavy dependence poses questions about sustainability and economic resilience. If external flows were to falter—due to global economic slowdowns, migration policy shifts, or donor fatigue—Somalia’s growth engine could sputter.
Meanwhile, imports of goods and services grew by 28.5%, nearly equaling the entire size of GDP at 99.1%, while exports, although growing by an impressive 42.3%, accounted for only 31.2% of GDP. The result is a widening trade deficit that underscores Somalia’s weak domestic production base.
Even the growth in gross fixed capital formation (investment)—which rose by 21.1%—is concentrated in sectors like urban construction and real estate, often funded by diaspora remittances. While this reflects confidence in urban markets, it raises further concerns about economic diversification. Investment in tradable sectors such as manufacturing, or agribusiness remains limited.
The SNBS data also reveal that government final consumption accounted for only 7.8% of GDP in 2024, despite rising by 16%. The public sector remains underdeveloped, limiting its ability to anchor long-term structural transformation.
The numbers paint a clear picture: Somalia is consuming far more than it produces, and much of what is consumed is imported. The drivers of growth—remittances, aid, and construction—are not inherently harmful, but they are not substitutes for a diversified, export-oriented, and productive economy.
This is the core of Somalia’s economic dilemma. Can the country shift from a consumption-led model to one based on value-added production, domestic industry, and sustainable exports? Can policy steer investment toward sectors that generate jobs, reduce import dependency, and grow tax revenues?
Policymakers face a difficult balancing act. Any disruption in remittance flows or donor support would expose the fragility of the current model. Yet, redirecting resources toward productive sectors requires political will, institutional capacity, and a long-term vision.
Somalia’s economic future cannot rest indefinitely on the generosity of its diaspora or the decisions of external donors. The foundation for inclusive, resilient growth must be built within: through agriculture, fisheries, light manufacturing, and digital innovation—backed by credible institutions and sound public investment.
Growth without production is growth without security. Somalia must confront this truth if it is to achieve the prosperity its people deserve.
