In terms of real GDP growth, Cote d'Ivoire is BMI's pick of Sub-Saharan Africa. We forecast an expansion of 9.1% in 2015, followed by a further 9.0% in 2016, as effective management, business reforms, and increased stability encourage strong investment inflows. Our forecast is a moderate downgrade since our last quarterly report, when we projected growth of 9.4% - the figure the Ivorian authorities are currently predicting, according to an IMF report published on June 12. This is due to a more unpredictable political landscape, as an increasingly united opposition has made incumbent President Alassane Outarra's re-election in October 2015 less of a certainty than we had previously believed.
We forecast that Cote d'Ivoire's current account deficit will steadily widen over the next several years, as strong growth in imports and falling cocoa prices will weigh on the trade balance. Even as Cote d'Ivoire's current account shortfall increases, we do not believe that it will be a major cause for concern, given the West African country's attractiveness to investors at present which will ensure an inflow of funds and keep the overall balance in surplus.
We remain convinced that a victory for incumbent President Alassane Ouattara is the most likely outcome of the upcoming October 2015 elections, the first since the 2010 polls that ended in months of violence. The president has overseen over four years of rapid economic growth and increasing stability, and a second term for the president will be a positive for investment in the country, given his reputation as a strong manager and the series of economic reforms that are being implemented under his presidency.
We forecast that Cote d'Ivoire will see low price growth in 2015, predicting an average monthly rate of 1.5% over the year, and a year-end level of 1.8%. This low rate is in common with its fellow UEMOA [ Union Economique et Monetaire Ouest-Africaine] members, where despite strong economic growth, we expect that inflation levels will remain sedate. Lower oil prices and a benign outlook for food - particularly imports of rice - will be key factors behind this, but it is membership of the West African franc currency bloc that is the underlying root for low inflation in the region.
Key Risks To Outlook:
Our broad outlook is dependent on the maintenance of a stable political situation that allows for significant levels of foreign investment and the implementation of the government's reform and development plans. Such stability is not a certainty, however, and for this reason ethnic and political tensions pose the key risk to the country's economic prospects.
At the time of writing there had been no reported cases of Ebola in Cote d'Ivoire but its shared, poorly controlled borders with Guinea and Liberia - two of the three worst affected countries (Sierra Leone being the other) - clearly put it at risk.
The economy's reliance on cocoa exports means that poor weather could seriously damage exports. Conversely, if global cocoa prices push higher than we are currently predicting, this would put upward pressure on our outlook for exports.
|e/f = BMI estimate/forecast. Source: National Sources|
|Nominal GDP, USDbn||28.4||32.0||29.7||32.3|
|Real GDP growth, % y-o-y||9.0||8.4||9.1||9.0|
|Consumer price inflation, % y-o-y, eop||0.4||0.9||1.8||2.6|
|Exchange rate XOF/USD, eop||476.68||542.11||643.10||596.32|
|Budget balance, % of GDP||-2.4||-2.1||-3.4||-3.5|
|Current account balance, % of GDP||0.0||-0.4||-0.6||-2.0|