Even before South Sudan became independent in July of this year, (North) Sudan was suffering from high inflation and other economic woes. Inflation rates began to climb in the winter of 2010-2011 (.pdf, see figure 6), driven in part by rising costs for staple foods. The loss of the South (which produced around 75% of the unified Sudan’s oil) compounded Sudan’s economic problems, and inflation has remained high (around 20%), though it fell slightly in October. Continued violence and uncertainty in border areas and in Darfur has no doubt added to economic volatility.
In July, the government in Khartoum announced austerity measures and launched a three-year economic recovery program. Now Khartoum is taking at least three more steps to address the economic crisis:
- Boosting oil production from the current level of around 117,000 barrels per day to 180,000 bpd in 2012.
- Upping its food exports.
- Maintaining and deepening its relationship with China.
Khartoum’s political problems, especially the issues connected to its relations with the newly independent South, are central concerns for the government. But the economic crisis has huge domestic importance, and the course of Sudan’s internal politics in 2012 could be strongly affected by the success or failure of the measures listed above.