(Ecofin Agency) - The civil war that broke out in neighboring Sudan in April 2023 crippled one of the main pipelines transporting most of South Sudan’s oil, depriving the country of crucial government revenue. Expected to be back in operation by late March or early April, the pipeline’s reopening could finally give Juba a path toward recovery.

South Sudan’s economy is expected to grow by 17% in 2025 after shrinking by 24.5% last year, thanks to the recovery of oil production and exports. These had been severely impacted by the rupture of a key pipeline in February 2024, according to a report by Fitch Solutions published on January 31.

The report, titled "South Sudan to Exit Recession in 2025 as Oil Output Begins to Recover," highlights that one of the two pipelines transporting South Sudan’s oil to Port Sudan on the Red Sea was damaged about a year ago. The rupture was caused by the ongoing conflict between Sudanese generals Abdel Fattah al-Burhan and Mohamed Hamdan Dagalo in neighboring Sudan.

Since oil accounts for about 90% of South Sudan’s exports, the shutdown of the Petrodar pipeline made the country’s economic crisis even worse. Inflation soared, and the local currency collapsed against the U.S. dollar.

The South Sudanese government says the pipeline has now been repaired, and oil exports are expected to resume by late March or early April. In preparation, Juba announced on January 7 that it was restarting oil production.

Fitch Solutions explained that since oil makes up almost all of South Sudan’s exports and government revenue, the gradual recovery of oil flows through the Petrodar pipeline will drive economic growth in 2025.

When South Sudan gained independence from Sudan in 2011 after decades of civil war, it inherited more than three-quarters of Sudan’s oil reserves. However, the country’s economy suffered immensely due to another civil war from 2013 to 2018. It has remained heavily dependent on oil, with little economic diversification.

Oil exports plummeted after the Petrodar pipeline was damaged, disrupting the transport of 110,000 barrels per day. As a result, export volumes dropped from 186,000 barrels per day in January 2024 to just 58,000 barrels per day by December. The government now aims to ramp up production to 90,000 barrels per day in the first half of 2025.

Fitch Solutions, a subsidiary of Fitch Ratings specializing in financial data analysis, notes that the gradual recovery of oil exports should lead to higher government spending, increased household consumption, and a strengthening of the South Sudanese pound against the U.S. dollar. Inflation, which stood at 115% at the end of 2024, is expected to drop to 30% year-over-year by late 2025.

However, South Sudan’s economic outlook remains uncertain. The country relies on pipelines that run through Sudan, where ongoing fighting and fuel shortages continue to threaten oil exports.