South Sudan’s inflation rate is officially the highest in the world.
Headline inflation in May came in at about 295% year-over-year, up from April’s 266% YoY, according to the South Sudan National Bureau of Statistics.
And in light of the South Sudanese pound’s sell-off and ongoing drought, inflation is likely to hover in the triple digits through the end of 2016.
The combination of soaring “inflation and sluggish crude production will see the South Sudanese economy contract for a second year in 2016,” a BMI Research team said in a report.
“While the country will return to positive growth in 2017, structural obstacles, including continued political uncertainty and poor infrastructure, will undermine a rapid economic turn-around,” they added.
- Trading Economics
South Sudan gained independence from Sudan in the summer of 2011. But the fledgling nation sank into a civil war in 2013 amid a power struggle between President Salva Kiir and his then-deputy Riek Machar.
The ensuing conflict resulted in thousands killed and the displacement of over 2.2 million people, according to statistics from BBC.
An internationally mediated peace agreement was signed in August, followed with the formation of a unity government in the spring. Butwhile this all represents a step in the right direction to restoring peace, it won’t be a quick fix for any of the long-term structural issues.
“Indeed, while the recent formation of a unity government represents a crucial step toward addressing the chaotic political environment, it is unlikely to fully address the challenging security environment in the country, keeping investors cautious and weighing on crude production,” the BMI team said.
“Violence persists, with sporadic reports of continued fighting between the SPLM-IO affiliated militia groups,” which are the antigovernment forces, “and the government army,” the team added. “Moreover, the potential for a re-ignition of tensions between the two sides remains high. This suggests that any new investment into the country – either into the oil or non-oil sector – will be gradual.”