NAIROBI, Feb 9 (Reuters) - Somalia's economy is expected to slow sharply this year as a drought knocks production in farming, although the impact will be partially offset by a boost from construction and telecommunications, the International Monetary Fund said.
In a statement late on Wednesday, the IMF projected the Horn of Africa nation's gross domestic product would expand 2.5 percent this year down from estimated 3.4 percent in 2016.
"The Somali economy is expected to continue to be sustained by donors' grants, remittances, and foreign direct investment, mostly by the Somali diaspora," it said.
"The deceleration in growth mainly reflects the impact of the drought on the agriculture sector, which will be partially offset by activities in the construction, telecommunications, and service sectors."
The IMF expects inflation to reach 2.7 percent this year, up from 1.5 percent in 2016.
Somalia has been in turmoil since 1991, hit by decades of conflict at the hands of clan militias. Over the past several years it has also been plagued by an insurgency by al Qaeda-linked al Shabaab, famine and maritime piracy.
On Wednesday, its parliament elected Mohamed Abdullahi Mohamed as the country's new president. (Reporting by Clement Uwiringiyimana; Editing by George Obulutsa & Shri Navaratnam)