South Sudan Economy - overview

Factbook > Countries > South Sudan > Economy

Economy - overview: Following several decades of civil war with Sudan, industry and infrastructure in landlocked South Sudan are severely underdeveloped and poverty is widespread. Subsistence agriculture provides a living for the vast majority of the population. Property rights are insecure and price signals are weak, because markets are not well organized. After independence, South Sudan's central bank issued a new currency, the South Sudanese Pound, allowing a short grace period for turning in the old currency.

South Sudan has little infrastructure - approximately 200 kilometers of paved roads. Electricity is produced mostly by costly diesel generators, and indoor plumbing and potable water are scarce. South Sudan depends largely on imports of goods, services, and capital - mainly from Uganda, Kenya and Sudan.

Nevertheless, South Sudan does have abundant natural resources. At independence in 2011, South Sudan produced nearly three-fourths of former Sudan's total oil output of nearly a half million barrels per day. The government of South Sudan used to rely on oil for the vast majority of its budget revenues before oil production fell sharply. Oil is exported through a pipeline that runs to refineries and shipping facilities at Port Sudan on the Red Sea. The economy of South Sudan will remain linked to Sudan for some time, given the long lead time and great expense required to build another pipeline, should the government decide to do so. In January 2012, South Sudan suspended production of oil because of its dispute with Sudan over transshipment fees. This suspension lasted 15 months and had a devastating impact on GDP, which declined by 48% in 2012. With the resumption of oil flows the economy rebounded strongly during the second half of calendar year 2013. This occurred in spite of the fact that oil production, at an average level of 222,000 barrels per day, was 40% lower compared with 2011, prior to the shutdown. GDP grew by nearly 30% in 2013. However, the outbreak of conflict on 15 December 2013 combined with a further reduction of oil production and exports, meant that GDP growth fell significantly in 2014 and 2015 as poverty and food insecurity rose. South Sudan holds one of the richest agricultural areas in Africa with fertile soils and abundant water supplies. Currently the region supports 10-20 million head of cattle.

South Sudan is currently burdened by considerable debt because of increased military spending and revenue shortfalls due to low oil prices and decreased production. South Sudan has received more than $4 billion in foreign aid since 2005, largely from the UK, the US, Norway, and the Netherlands. Annual inflation peaked at over 800% in October 2016. The government has relied on borrowing from the central bank to fund budget expenses. The decision in December 2015 by the central bank to abandon a fixed exchange rate and allow the South Sudanese Pound to float has not reduced inflation in the short term. Long-term challenges include diversifying the formal economy, alleviating poverty, maintaining macroeconomic stability, improving tax collection and financial management and improving the business environment.

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

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