Economic Analysis - Textile Sector Investment Offers Long-Term Growth Potential - 24 JULY 2017

BMI View: Government efforts to incentivise investment into Madagascar ' s textile sector will offer long-term tailwinds to growth. While the economy will remain vulnerable to climate change and structurally lower commodity prices will temper gains in the large extractive sector , gains in manufacturing sector activity suggest stronger growth in the decade ahead than behind.

Madagascar's textile sector looks poised for a continued recovery in the coming years. Following the restoration of its privileges under the African Growth and Opportunities Act (AGOA) in 2014, the government has been aggressively pursuing investment into the sector in recent years, not least announcing plans for a special economic zone for textile manufacturing in 2016. More recently, Madagascar's entry into the African-Export Import Bank (Afreximbank) and the Asian Infrastructure Investment Bank will further support the sector's development, offering easier access to project finance and advisory support on local content requirements. We believe gains will be slow in coming, and stress that the island nation will remain vulnerable to exogenous shocks and changing climactic conditions. However, rising investment into manufacturing and steady production growth will offer an increasingly steady source of growth over the long-term.

Textile Manufacturing On The Rebound

Apparel Exports Slowly Revising
Madagascar - Exports, USD '000 (LHS) and % Total (RHS)
Source: ITC Trademap, BMI

This article is part of our Emerging Markets Monitor coverage. To access this article subscribe now or sign up for free trial