Economy - overview: Liberia is a low income country that relies heavily on foreign assistance and remittances from the diaspora. It is richly endowed with water, mineral resources, forests, and a climate favorable to agriculture. Its principal exports are iron ore, rubber, diamonds, and gold. Palm oil and cocoa are emerging as new export products. The government has attempted to revive raw timber extraction and is encouraging oil exploration.
In the 1990s and early 2000s, civil war and government mismanagement destroyed much of Liberia's economy, especially infrastructure in and around the capital. Much of the conflict was fueled by control over Liberia’s natural resources. With the conclusion of fighting and the installation of a democratically elected government in 2006, businesses that had fled the country began to return. The country achieved high growth during 2010-13 due to favorable world prices for its commodities. However, during the 2014-2015 Ebola crisis, the economy declined and many foreign-owned businesses departed, taking capital and expertise with them. The epidemic forced the government to divert scarce resources to combat the spread of the virus, reducing funds available for needed public investment. The cost of addressing the Ebola epidemic coincided with decreased economic activity reducing government revenue, although higher donor support significantly offset this loss. During the same period, global commodities prices for key exports fell and have yet to recover to pre-Ebola levels.
In 2017, gold is expected to be a key driver of growth, as a new mining project begins its first full year of production, and iron ore exports are also expected to improve as Arcelor Mittal opens new mines at Mount Gangra. The completion of the rehabilitation of the Mount Coffee Hydroelectric Dam in 2017 will increase electricity production to support ongoing and future economic activity, although electricity tariffs remain high relative to other countries in the region and transmission infrastructure is limited. Scheduled presidential and legislative elections in October 2017 will generate election-related spending pressures. Revitalizing the economy in the future will depend on economic diversification, increasing investment and trade, higher global commodity prices, sustained foreign aid and remittances, development of infrastructure and institutions, combating corruption, and maintaining political stability and security.
Definition: This entry briefly describes the type of economy, including the degree of market orientation, the level of economic development, the most important natural resources, and the unique areas of specialization. It also characterizes major economic events and policy changes in the most recent 12 months and may include a statement about one or two key future macroeconomic trends.
Source: CIA World Factbook - This page was last updated on July 9, 2017