Even though a large majority of poorhouseholds are engaged in agriculture, per capitaproductivity and real levels of sectoral growth remain lowin Madagascar. Approximately 80 percent of the populationare engaged in agriculture, which provides the main sourceof income for households, albeit at subsistence levels.Cultivation practices are based on extensificationstrategies with implications for Madagascar’s fragilenatural resource base, rather than improving theproductivity of existing farms and land use.To ensureMadagascar’s growth prospects more inclusively benefit theentire population it will be crucial to improve theproductivity of the agriculture sector. The first part ofthe this economic update has the World Bank’s assessment ofrecent economic developments and the outlook over the shortto medium term in Madagascar. The second part of this updatefocuses on Agriculture and Rural Development.