The economy of Djbouti is derived in large part from its strategic location on the Red Sea. Djibouti is mostly barren, with little development in the agricultural and industrial sectors. The country has a harsh climate, a largely unskilled labour force, and limited natural resources. The country’s most important economic asset is its strategic location connecting the Red Sea and the Gulf of Aden. As such, Djibouti’s economy is dominated by the services sector, providing services as both a transit port for the region and as an international transshipment and refuelling centre.

From 1991 to 1994, Djibouti experienced a civil war which had devastating effects on the economy. Since then, the country has benefited from political stability. In recent years, Djibouti has seen significant improvement in macroeconomic stability, with its annual gross domestic product improving at an average of over 3 percent since 2003. This comes after a decade of negative or low growth. This is attributed to fiscal adjustment measures aimed at improving public financing, as well as reforms in port management.

Djibouti (Arabic: جيبوتي‎ Jībūtī, French: Djibouti, Somali: Jabuuti, Afar: Gabuuti), officially the Republic of Djibouti (Arabic: جمهورية جيبوتي‎ Jumhūriyyat Jībūtī, French: République de Djibouti, Afar: Gabuutih Ummuuno, Somali: Jamhuuriyadda Jabuuti), is a country in the Horn of Africa. It is bordered by Eritrea in the north, Ethiopia in the west and south, and Somalia in the southeast. The remainder of the border is formed by the Red Sea and the Gulf of Aden at the east. Djibouti, which had a population of 818,159 at the 2009 census, is one of the least populous countries in Africa.Islam is the largest religion in the country, practiced by 94% of the population. The land was known as Obock and French Somaliland (Côte française des Somalis) in the 19th century; in 1967, it changed its name to Afars and Issas after new treaties with France. The territory was declared an independent nation in 1977 and changed its name to the "Republic of Djibouti" after its principal city. Djibouti joined the United Nations on September 20, 1977. While Djibouti is an independent sovereign state, it maintains deep French relations, and through various military and economic agreements with France, it receives continued security and economic assistance.