Djibouti's economy is based on service activities connected with the country's strategic location and status as a free trade zone in the Horn of Africa.
Two-thirds of inhabitants live in the capital and the remainder of the populace is mostly nomadic herders.
Low amounts of rainfall limit crop production to fruits and vegetables, and requiring most food to be imported.
The government provides services as both a transit port for the region and an international transshipment and refueling centre.
Djibouti has few natural resources and little industry.
All of these factors contribute to its heavy dependence on foreign assistance to help support its balance of payments and to finance development projects.

An unemployment rate of 50 percent continues to be a major problem.
Inflation is not a concern, however, because of the fixed tie of the franc to the US dollar.
Per capita consumption dropped an estimated 35 percent over the last seven years because of recession, civil war, and a high population growth rate.
Faced with a multitude of economic difficulties, the government has fallen in arrears on long-term external debt and has been struggling to meet the stipulations of foreign aid donors.
Djibouti's economy is based on service activities connected with the country's strategic location and status as a free trade zone in the Horn of Africa. Two-thirds of inhabitants live in the capital and the remainder of the populace is mostly nomadic herders. Low amounts of rainfall limit crop production to fruits and vegetables, and requiring most food to be imported. The government provides services as both a transit port for the region and an international transshipment and refueling centre. Djibouti has few natural resources and little industry. All of these factors contribute to its heavy dependence on foreign assistance to help support its balance of payments and to finance development projects.
An unemployment rate of 50 percent continues to be a major problem. Inflation is not a concern, however, because of the fixed tie of the franc to the US dollar. Per capita consumption dropped an estimated 35 percent over the last seven years because of recession, civil war, and a high population growth rate. Faced with a multitude of economic difficulties, the government has fallen in arrears on long-term external debt and has been struggling to meet the stipulations of foreign aid donors.
Economy of Djibouti