Ivory coast

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Eco Emerging

Côte d'Ivoire: Resilience being put to the test
07/11/2023 • By Stéphane ALBY

The Ivorian economy seems to have weathered well the various external shocks since 2020. Growth has remained robust and inflation relatively under control. However, the measures put in place by the authorities to protect the population and the continuation of major public infrastructure projects have significantly widened the budget deficit, while financing conditions have deteriorated. In order to reduce pressure on public finances and external accounts, the authorities have called on the IMF. They have embarked on a fiscal consolidation programme that could prove difficult to complete.

Eco Emerging

Well positioned to recover
04/15/2021 • By Stéphane ALBY

So far, the economy has posted a fairly good resilience to the pandemic shock. Although economic growth slowed sharply in 2020, it nonetheless remained in positive territory. Above all, the economy is expected to rebound strongly this year, buoyed by domestic demand and easing political tensions after a busy electoral calendar. The country’s debt situation is also not as alarming compared to the other African countries. Even so, the sharp deterioration in public finances in 2020 calls for fiscal consolidation, which could prove to be difficult without a sustainable increase in fiscal revenue. This could weigh on the growth prospects of an economy that is increasingly dependent on public investment. 

Ivory Coast (Côte d’Ivoire) is the largest economy of the West African and Monetary Union (WAEMU), accounting for one third of the region’s GDP. The country has been recovering from more than a decade of political instability, which culminated in the post-electoral crisis in late 2010 - early 2011. During this period, economic growth was almost nil and social indicators deteriorated. Since President Ouattara took office in April 2011, and his re-election in 2015, the situation has improved markedly. Real GDP growth has hovered around 8-10%, supported by the recovery in domestic demand and sound macroeconomic policies. Even in 2017 when the country was hit by a major domestic shock and the sharp drop in world cocoa prices, economic growth remained strong.

Future growth potential remains strong. Ivory Coast is the world’s leading producer of cocoa (40% of production), has large untapped mining and probably hydrocarbon resources, and a relatively diversified industrial base by regional standards. In terms of infrastructure, there is also a clear roadmap, which should ensure large-scale investment in the coming years. That’s being said, a deepening of reforms will be necessary to maintain high level of economic growth and make it more inclusive. If solid macroeconomic fundamentals and massive assistance from donors will help to cushion the shock of the Covid-19 pandemic, real GDP growth is expected to be at less than 2%, which is below the demographic growth.

As a WAEMU member, Ivory Coast enjoys a solid buffer against balance of payment shocks as the French treasury guarantees the full convertibility of the CFA Franc against the euro at a fixed rate. This also helps to anchor macro stability, with inflation rarely exceeding 3%. Reforms of the CFA Franc are ongoing but the fundamentals of the currency arrangement remain and the project of an enlarged monetary union with other West African countries is a long-term possibility. Furthermore, comfortable FX reserves pooled at the regional central bank, the BCEAO, continue to support the stability of the peg.