Sierra Leone emerged from 10 years of civil conflict in 2001 with a strong post-war economic recovery and a high annual average real GDP growth rate of 13.9 per cent between 2001 and 2005. Despite the impact of the global financial crisis on the domestic economy, an annual average real GDP growth rate of 5.5 per cent was recorded during the 2006-2010 period. Notwithstanding the growth performance, GDP per capita is still low at about USD 300 and poverty remains widespread. Other macroeconomic indicators were negatively affected by the global financial crisis. Exports declined significantly in 2008 and 2009. This decline, coupled with the depreciation of the real effective exchange rate and increases in imports, contributed to deteriorating terms of trade.
The current account deficit, even including official transfers, remains in the high teens and the inflation rate remains in the double-digit range. Inflationary pressures have been ascribed to high fuel and food prices on the back of a depreciating exchange rate. These factors, coupled with the pressure to raise public sector wages, pose the main risks to the inflation outlook. While prudent macroeconomic policies in the run-up to the financial crisis softened the initial negative impact of these developments, the macroeconomic policy framework, coupled with the structure of the economy, does not yet have the policy space and capacity to implement counter-cyclical policy measures to curb the adverse impact of external shocks.