As the year 2025 unfolds, we are looking ahead to understand the business trends for 2026. This article provides a clear view of where Madagascar’s economy has been and where it is heading. By looking at the trends from the last few years, we can better understand the opportunities waiting in 2026.
After a period of recovery following the global shocks of previous years, the nation is now entering a phase of strategic acceleration. With major infrastructure projects nearing key milestones and a global surge in demand for essential resources, the island is positioning itself as a resilient hub for forward-thinking investment.
This article highlights the core sectors and emerging shifts that will define the Malagasy market in the coming year.
Tl;dr: In 2026, Madagascar’s economy is projected to accelerate with 4.2% growth. While infrastructure and political risks remain, the year presents a high-value window for “first-mover” investors who prioritize energy independence and digital integration
Madagascar’s Economic Journey (2020 – 2025)
To understand the future, we can look at the data as of mid-February and October 2025. The chart below tracks how different parts of the economy (farming, services, and industry) have contributed to the country’s total wealth (GDP) over the last five years.
In the diagram below, the sky-blue bars represent agriculture, the deep blue bars show services, the red bars indicate industry, and the grey areas cover taxes. The red line moving across the top tracks the overall growth of the economy.
GDP growth (%) and contribution to GDP growth
Source: World Bank, February 2025
The year 2020 was a period of “rupture” for the nation. Because of the global pandemic, the economy shrank by a massive 7.1%, which was the biggest drop the country had seen in nearly twenty years.
This collapse happened because tourism completely stopped and factories could not ship their goods abroad. While the farming sector stayed somewhat stable, it was simply too small to make up for the huge losses in the cities and industrial zones.
Between 2021 and 2024, the country entered a phase of recovery and stabilization. There was a quick “bounce back” in 2021 with growth hitting 4.7%, which then leveled off to a steady average of 4.2% over the next few years. During this time, mining and digital services became the main engines of the economy.
However, even though the total economy was growing, the average person didn’t feel much richer. Because the population grows so fast, about 2.4% every year, the actual growth per person was only about 1.7%. This means the economy was growing, but it wasn’t yet fast enough to create all the jobs the country needs.
By October 2025, the economy faced a new kind of “stress test” known as the JIRAMA crisis. Deep problems with the national water and electricity company led to nationwide power cuts and protests. These events caused a major change in the government in October and slowed economic growth down to 3.8%.
Even with these heavy challenges, the economy did not crash. Key businesses, especially in mining and large-scale farming, showed a special kind of toughness by keeping their operations running despite the political and energy troubles in the capital.
Madagascar’s Economic Growth Projection for 2026
As we enter 2026, the outlook is one of “steady acceleration.” Experts believe the economy will grow by an average of 4.2% over the next two years. There are two big reasons for this optimism.
First, the high prices of daily goods (inflation) are expected to finally come down as the country produces more rice and global oil prices stay stable. Second, the government is putting a lot of money into big building projects that will help businesses grow.
One of the most significant projects planned for 2026 is the ongoing construction of the new highway connecting the capital, Antananarivo, to the main port of Toamasina, at a time when domestic freight transport remains slow and expensive.
This new road will act as a “multiplier,” meaning it will make everything from shipping vanilla to delivering construction materials much faster and cheaper.
Madagascar: Key Growth Sectors for 2026
The mining and industrial sectors are expected to lead the way in 2026. Madagascar sits on a goldmine of “critical minerals” like nickel and cobalt, which the whole world needs for electric car batteries.
These mining projects are mostly very resilient because they often operate like their own little islands, with their own power and security, meaning they aren’t easily bothered by local politics. As mining sites are developing, they will bring in a lot of foreign money and create new industrial jobs.
The services sector, particularly technology and banking, is another huge area for growth. More than half the population now uses mobile phones, and many are using them to pay bills and save money for the first time. This “digital revolution” is moving much faster than the traditional economy.
At the same time, tourism is starting to wake up again. After the quiet months of 2025, especially during the last quarter, international travelers are returning to find Madagascar’s unique wildlife, and investors can build new eco-friendly hotels to meet this demand.
Farming and agribusiness remain the backbone of the country’s stability. While many farmers still work on small plots, there is a big move toward “AgriConnect” projects that link these farmers to global markets for vanilla, cloves, and cocoa.
By improving the way these goods are processed and packaged inside Madagascar, the country can keep more of the profit. Because the world always has a high demand for these specific flavors, this sector is historically one of the safest bets for long-term investors.
Risk & Resilience
Investing in 2026 requires a smart approach to risk. The biggest challenge remains the “utility risk”.
A continued unreliability of the national power grid is planned, despite energy and water being designated as priorities in the 2026 Finance Bill. To stay resilient, the most successful companies in 2026 are not waiting for the government to fix the wires; they are building their own solar and wind power systems. By becoming energy-independent, these businesses protect themselves from future protests or power failures.
There is also a “wait-and-see” mood because of the current transitional government. With new elections expected in 2027, some investors are moving slowly. However, history shows that Madagascar’s core economy usually stays on track even when leadership changes.
Those who spend 2026 positioning themselves, especially near the new highway or in the tech sector, will likely have a huge “first-mover” advantage when the country fully stabilizes.
Key Takeaways
- Economic Growth: Projected 4.2% GDP increase as inflation cools.
- Mining: Massive opportunities in nickel and cobalt for EV batteries.
- Digital: Rapid expansion in mobile banking and tech services.
- Energy: Leading firms are pivoting to private solar power for stability.
- Agribusiness: Shift toward local processing for vanilla and cocoa exports.
Conclusion
As Madagascar paves its way toward a more industrial and digitally integrated future, the window for strategic entry has never been more promising. While the “wait-and-see” mood of a transitional government may deter some, the structural foundations suggest that the core economy is resilient and ready for expansion.
If you are looking to start a business in the country in 2026, Madagascar Invest takes the stress out of a company setup in Madagascar. We handle the paperwork, business address, local director, bank account and more, ensuring you are positioned to capitalize on the Big Island’s next economic chapter. Contact our specialist team to secure your first-mover advantage in this emerging market.
