The Ivoirien economy will continue to fire on all cylinders in 2016, as strong macroeconomic fundamentals and a reduction in political risk following the 2015 presidential elections encourage inward investment, and we forecast a real GDP expansion of 9.6%.
We maintain our view that Cote d'Ivoire's budget deficit will remain wide in 2016 and 2017 as the government invests in a series of key infrastructure projects, before beginning to decrease from 2018 onwards. With the eurobond issuance we had previously anticipated looking less likely, we believe that Cote d'Ivoire will make use of concessional and semi-concessional lending in order to fund its plans.
Cote d'Ivoire's current account deficit will enjoy a recovery from 2017 onwards following its sharp deterioration in 2016. This will be driven by a recovery in its key commodity exports of cocoa and oil, albeit weighed down by falling tourism receipts and high growth in capital imports.
The Banque Centrale des Etats de l'Afrique de l'Ouest will hold rates firm over the next 18 months as the West African franc's peg to the euro and benign external pressure keep price growth low. The stable environment will encourage ongoing investment into the eight countries of the Union Economique et Monetaire Ouest Africaine.
Policy formation in Cote d'Ivoire will slow in President Alassane Ouattara's second term as attentions turn to who will succeed him in 2020. The risk of conflict will rise as the elections near, and the country scores lower on our long-term political risk scores than on the short-term.
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.
The economy's reliance on cocoa exports means that poor weather could seriously damage exports.
|e/f = BMI estimate/forecast. Source: National Sources|
|Real GDP growth, % y-o-y||8.5||10.3||9.6||9.1|
|Nominal GDP, USDbn||34.3||32.5||35.0||40.4|
|Consumer price inflation, % y-o-y, eop||0.9||1.3||2.5||2.8|
|Exchange rate XOF/USD, eop||540.28||602.51||596.32||570.40|
|Budget balance, % of GDP||-1.9||-3.4||-3.3||-3.3|
|Current account balance, % of GDP||-0.4||-1.7||-4.0||-3.4|
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