According to the CIA and the Central Bank of Somalia, despite experiencing civil unrest, Somalia has maintained a healthy informal economy, based mainly on livestock, remittance/money transfer companies and telecommunications. Due to a dearth of formal government statistics and the recent civil war, it is difficult to gauge the size or growth of the economy. For 1994, the CIA estimated the GDP at $3.3 billion. In 2001, it was estimated to be $4.1 billion. By 2009, the CIA estimated that the GDP had grown to $5.731 billion, with a projected real growth rate of 2.6%. According to a 2007 British Chambers of Commerce report, the private sector also grew, particularly in the service sector. Unlike the pre-civil war period when most services and the industrial sector were government-run, there has been substantial, albeit unmeasured, private investment in commercial activities; this has been largely financed by the Somali diaspora, and includes trade and marketing, money transfer services, transportation, communications, fishery equipment, airlines, telecommunications, education, health, construction and hotels.Libertarian economist Peter T. Leeson attributes this increased economic activity to the Somali customary law (referred to as Xeer), which he suggests provides a stable environment to conduct business in.

Somalia ( /soʊˈmɑːliə/ soh-MAH-lee-ə; Somali: Soomaaliya; Arabic: الصومال‎ aṣ-Ṣūmāl), officially the Somali Republic (Somali: Jamhuuriyadda Soomaaliya, Arabic: جمهورية الصومال‎ Jumhūriyyat aṣ-Ṣūmāl) and formerly known as the Somali Democratic Republic under Socialist rule, is a country located in the Horn of Africa. Since the outbreak of the Somali Civil War in 1991 there has been no central government control over most of the country's territory. The internationally recognized Transitional Federal Government controls only a small part of the country. Somalia has been characterized as a failed state and is one of the poorest and most violent states in the world.

Somalia lies in the easternmost part of Africa. It is bordered by Djibouti to the northwest, Kenya to the southwest, the Gulf of Aden with Yemen to the north, the Indian Ocean to the east, and Ethiopia to the west. It has the longest coastline on the continent, and its terrain consists mainly of plateaus, plains and highlands. Hot conditions prevail year-round, along with periodic monsoon winds and irregular rainfall.