TRADE RELATION BETWEEN G7 COUNTRIES WITH SOMALIA: TREND, CHALLENGES AND GOVERNMENT INITIATIVES.

Abstract

The study discussed the trade relations of G7 countries with Somalia, and also the prospects and challenges of trade between Somalia and G7 countries. It has found that Somalia is a growing country in the Horn of Africa, although it has many internal challenges. Somalia has a trade deficit with G7 countries. Japan. France, and Italy are the major importer of Somali goods and services in the G7 group. Their major importing goods from Somalia are scrap metal, charcoal, fish, skins, bananas, and livestock. The United States, Italy, and France are the major exporting countries of the G7 group to Somalia. Accordingly, the Trade Intensity Index, Somalia has strong trade relations with Japan, France, and Germany, while it has weak trade relations with the United States, Italy and the United Kingdom. The Trade Complementarity Index of G7 countries to Somalia is higher. So, the export profile of G7 countries are more in line with the import profile from Somalia. Export Diversification Index shows that Somalia exports diverse products to G7 countries. Somalia has the potential to increase livestock exports by finding new markets. Somalia has abundant land for agriculture and food production. However, the nation faces many challenges, including climate change, conflict, and economic instability. Ongoing conflict has severely impacted agricultural production and livestock exports. Therefore, the Government of Somalia should implement import-substitute policies for reducing dependence on import goods, and allow the private sector for production of goods for minimizing trade deficits.