Fragility in Sudan brought on by regional conflicts is exacerbated by the loss of most of its oil export potential, the International Monetary Fund said.
Sudan as a united country started producing oil in the 1990s, though the division of Sudan and South Sudan in 2011 left most of the oil fields straddling the new border. The split resulted in a loss of Sudan's oil export revenue, which is down about 80 percent from before South Sudan became a nation.
Oil still plays an essential role in the economy and the International Monetary Fund said policy adjustments in the wake of the birth of South Sudan had reduced inflation and supported recovery to some extent.
"Despite these efforts, however, large macroeconomic imbalances -- triggered by the loss of three-quarters of oil exports -- continue to constrain growth prospects, along with weak policies, internal conflicts, and U.S. sanctions," the IMF said.
South Sudan, meanwhile, is steeped in conflict along rival political lines. A group established to observe peace efforts, the Joint Monitoring and Evaluation Commission, said the economy for the south is a "complete failure." Lingering conflict in the region could bring an end to oil production altogether and thus limit one of the few revenue streams for the war-torn region.
The IMF said the agricultural sector in Sudan helped lift the economy last year, but growth is modest at around 3 percent for the medium term.
"Low commodity export prices, absence of policy buffers, economic sanctions, the withdrawal of foreign correspondent banking relationships, and a weak business environment will continue to constrain economic activity," it said.
Oil companies have shied away from working in the region. Petrodar Operating Co., which has interests in the region, last year laid off its entire exploration and production workforce.