Cote d'Ivoire Country Risk Report

Published 29 April 2015 | Quarterly

  • 40 pages
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Cote d'Ivoire Country Risk Report

Core Views:

  • Cote d'Ivoire's economy will continue upon its rapid growth trajectory in 2015, enjoying impressive real growth of 9.4%. This is an upward revision from our previous projection of an 8.6% expansion over the year, thanks to a ramp-up in government spending - which will be supported by the launch of a new eurobond in February 2015 - and recently released quarterly data which shows that this has been translating into strong growth. Bipartisan support will ensure incumbent President Allassane Outtara's victory in October elections, and with it policy continuity.

  • Inflation in the eight UEMOA countries - which include Cote d'Ivoire - will remain sedate through 2015 thanks to benign food price growth and lower oil prices. Robust economic growth will keep the bloc from deflationary territory, however.

  • In 2015, we forecast that Cote d'Ivoire's current account deficit will widen to the equivalent of 5.6% of GDP, from an estimated 4.0% in 2014. To 2019 we forecast that the deficit will average 6.2% annually, compared to an average of just 1.3% over the previous five years. Investment into infrastructure and industry, coupled with declining export revenues, will see the once considerable trade surplus, which had previously offset negative services and income balances, steadily decline.

  • A Ouattara victory is all but assured in Cote d'Ivoire's October 2015 elections, which will mean a continuance of the pro-business reforms enacted under his first administration. This is a net positive for investment, despite the fact that a lack of legitimacy - due to the opposition's failure to properly engage with the electoral process - will give rise to isolated instances of violence.

Major Forecast Changes:

Real GDP growth forecast has been revised up from 8.6% to 9.4% thanks to a ramp-up in government spending.

Key Risks To Outlook:

  • Our broad outlook is dependent on the maintenance of a stable political situation that allows for significant levels of foreign...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Political Fault Lines Will Pose Risk To Security
8
Bipartisan support will ensure incumbent President Alassane Ouattara's victory in October elections, and with it policy continuity
However, although we do not expect a return to civil war in 2015, there are a number of challenges to security
Table: Political Overview
8
Long-Term Political Outlook
9
Post-Conflict Challenges To Linger
9
While the establishment of a cohesive national government has set the stage for an impressive economic recovery in C-te d'Ivoire,
While the establishment of a cohesive national government has set the stage for an impressive economic recovery in C-te d'Ivoire,
the country's political system remains brittle and ethnic tensions are easily inflamed
In our core scenario, BMI predicts that Alassane
Ouattara's government will be only partially successful in addressing the country's political, security, and social challenges and that
Ouattara's government will be only partially successful in addressing the country's political, security, and social challenges and that
tensions will remain high over the coming years
A more stable outcome is possible, though highly unlikely, while we ascribe a 10-20%
probability to a repeat of the 2010-2011 political crisis between now and 2020
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Investment And Private Consumption To Drive Robust Real GDP Growth
14
Despite a moderate downward revision to our 2015 real GDP growth forecast for C-te d'Ivoire, at 8
6% it is still one of the fastestgrowing
economies in Sub-Saharan Africa
Private consumption and gross fixed capital investment will be the major drivers of this
expansion
TABLE: Economic Activit y
14
Fiscal Policy
15
Budget Deficit Will Widen In 2015
15
C-te d'Ivoire's budget deficit will widen to 3
3% of GDP in 2015 as the government drives forward with its infrastructure spending
programme
The deficit is no cause for concern, however, as the expenditure will drive future growth and is well covered by international
donor funds and borrowing
TABLE: Fiscal Polic y
16
Monetary Policy
17
Demand-Pull Factors Will Keep Inflation Positive
17
Inflation in C-te d'Ivoire will trend upwards through the next 12 months
Even so, price growth in the West African country will be among
the lowest in Sub-Saharan Africa, and it will remain well short of the regional central bank's inflation target of 3
TABLE: Monetary Policy
17
Balance Of Payments
18
Current Account Will Widen But Remain Sustainable
18
C-te d'Ivoire's current account deficit will widen in 2015 as it returns to trend level
The deficit narrowed in 2014 thanks to a surge in
cocoa production, but we believe that the effect of this have petered out
TABLE: Curent Acount
19
Chapter 3: 10-Year Forecast
21
The Ivorian Economy To 2024
21
A Bright Decade Ahead, But Fragilities To Persist
21
While growth over the next 10 years is expected to improve on the last decade, political uncertainty continues to exert a downward pull
While growth over the next 10 years is expected to improve on the last decade, political uncertainty continues to exert a downward pull
on the country's potential
In our view, high poverty levels and a frail business environment will represent the main obstacles to growth
over the longer term
TABLE: Long-Term Macroeco nomic Forecasts
21
Chapter 4: Operational Risk
23
SWOT Analysis
23
Operational Risk Index
23
Operational Risk
24
TABLE: Operational Risk
24
Availability Of Labour
26
TABLE: Sub -Sahara n Africa - Availability Of Labour Risk
26
TABLE: Top 10 Source Countries For Migrant Workers
28
Crime Risk
29
TABLE: Sub -Saharan Africa - Crime Risk
30
Chapter 5: BMI Global Assumptions
33
Global Outlook
33
New Era For Oil
33
Table : Global Assumptions
33
Table: Developed States, Real GDP GrowtH, %
34
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
34
Table : Emerging Markets , Real GDP Growth , %
35

The Cote d'Ivoire Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Cote d`Ivoire. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Cote d`Ivoire's economic, political and financial prospects through end-2019, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Cote d`Ivoire's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Cote d`Ivoire's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Cote d`Ivoire, including currency volatility, the commodity price boom and protectionist policies.

The Cote d'Ivoire Country Risk Report by Business Monitor International (BMI) includes three major sections: Economic Outlook, Political Outlook and Operational Risk.

Economic Outlook:

How will the Cote d`Ivoire' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Cote d`Ivoire through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Cote d'Ivoire Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Cote d`Ivoire and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Cote d`Ivoire, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Cote d`Ivoire over the next 5-years?

BMI's Cote d`Ivoire country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Cote d`Ivoire Market - Political Strengths, Weaknesses, Opportunities and Threats facing Cote d`Ivoire.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Cote d`Ivoire's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Cote d`Ivoire’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Cote d`Ivoire's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in Cote d`Ivoire?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Cote d`Ivoire against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:

  • Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
  • Assess your company’s exposure to country specific operational and business risks, using BMI’s insight on the current dangers of operating in the market.
  • Evaluate Cote d`Ivoire’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express