World Bank: Somalia GDP Growth Slows to 3% in 2025; 2.8% Forecast for 2026; Aid Cuts, Drought, Piracy Named as Key Risks

The World Bank released the Eleventh Edition of its Somalia Economic Update on May 13, 2026, titled 'Somalia's Growth Continues, But Shocks and Aid Cuts Intensify Risks to Jobs and Livelihoods.' The report found that Somalia's real GDP growth moderated to an estimated 3 percent in 2025, down from approximately 4 percent in 2023–24, as declining foreign aid, drought conditions, and rising living costs weighed on demand and left real GDP per capita broadly stagnant. Poverty reduction stalled in 2025, with reduced aid, drought, and food price increases worsening household welfare. The report projects real GDP growth of 2.8 percent in 2026 and 3.1 percent in 2027, constrained by continued aid reductions, climate variability, global price shocks, and limited productive capacity. Consumer price inflation reached 3.7 percent in 2025 (up from 3.3% in 2024) and is projected to rise to 6 percent in 2026, driven by food, utilities, and transport costs — the latter heavily impacted by the Iran war-related shipping disruption and the Somali piracy resurgence. The report specifically identified USAID cuts and declining bilateral aid as structural shocks, compounding the humanitarian response plan funding gap (86.6% unfunded as of May 2026). The release comes on the same day as the collapse of Halane compound political talks between the FGS and the opposition, underscoring the compound economic-political-security crisis Somalia faces as President Mohamud's constitutional deadline approaches in two days.