By Nuh Mohamed - Reporter
Kenya, 13 May 2026 Somalia’s economic growth slowed to 3% in 2025 from 4% in 2023-2024 hit by lower foreign aid, drought and rising costs the World Bank said.
The revelations were made during the launch of the Eleventh Edition of the Somalia Economic Update 2026, titled Navigating Shocks, Powering Growth. The virtual event on Wednesday was attended by Somali government officials, World Bank economists and energy sector experts.
According to the report reduced humanitarian and security-related assistance, drought impacts on agriculture and higher household costs slowed economic activity and left real GDP per capita broadly stagnant.
The report said inflation rose to 3.7% in 2025 from 3.3% in 2024, driven mainly by increases in food, transport and utility costs.
“Somalia has made important progress in strengthening macroeconomic management and institutions under difficult conditions,” said World Bank Country Manager for Somalia Hideki Matsunaga.
“However, overlapping shocks are slowing growth and putting pressure on jobs and household livelihoods,” he added.
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The report said poverty reduction stalled during 2025 as aid reductions, drought and rising food prices worsened food insecurity and weakened household welfare.
The World Bank said Somalia’s economic outlook had weakened further, projecting growth at 2.8% in 2026 and 3.1% in 2027 due to continued aid cuts, climate variability, global price shocks and limited productive capacity.
Inflation is projected to rise to 6% in 2026 before easing over the medium term as conditions stabilize.The report also highlighted electricity costs as a major economic challenge, noting that Somalia remains heavily dependent on diesel-powered electricity generation.
The World Bank called for broader reforms, including stronger governance, expanded renewable energy investment and modernization of infrastructure to support long-term economic resilience and job creation.