Steady industrial growth coupled with increased spending on infrastructure and modest inflation helped sustain momentum in Côte d’Ivoire’s economy in 2017, balancing out lower returns from the agricultural sector. GDP growth in the country reached 7.6% that year, despite a fall in revenue due to lower cocoa prices and social unrest. In October the IMF said the Ivorian government was on target to reduce its fiscal deficit to 4.5% of GDP in 2017. It added that new measures to ensure debt sustainability and increase revenue mobilisation would help bring the deficit down to 3.75% in 2018 and 3% in 2019. Alongside a strong growth rate, inflation remained muted, with the consumer price index rising by 1.1% over the course of the year, according to the Institut National de la Statistique (INS).
Manufacturing
The robust performance can be attributed in part to a significant rise in manufacturing output, on the back of efforts to diversify the sector and attract more foreign investment in line with the government’s goal of increasing industry’s weight in the economy to 40% of GDP by 2020. Manufacturing production, which accounts for around 65% of industrial GDP, expanded by 8.5% year-on-year (y-o-y) between January and October of 2017, according to the latest data from the INS. Many segments, including food and beverages, furniture and chemicals, all posted strong growth over the period. Overall industrial output expanded at a more moderate rate of 3.5% in that span, due in part to a contraction of oil and gas extraction and associated industries, which fell by 18.7%.
Cocoa Prices
Cocoa continued its downward trend on global futures markets in 2017, starting the year at $2211 per tonne on the ICE Futures US Exchange and ending the year at $1892. Though the International Cocoa Organisation at the end of November 2017 revised down its estimates of global cocoa surplus for 2016/17 from 371,000 tonnes to 335,000 tonnes, the oversupply will continue to weigh on international cocoa prices in 2018. Compounding the dip in prices, Côte d’Ivoire also had to contend with a decline in output in 2017, with heavy rains in October threatening to reduce harvests and crop quality.
Broader Impacts
Lower farm-gate earnings could weaken consumer spending in 2018 if returns from Côte d’Ivoire premier cash crops remain muted. However, increased investments under the government’s National Development Plan (Plan National de Dé veloppement, PND) 2016-20, together with solid growth in the manufacturing sector, could help offset these losses if momentum is sustained. Projects associated with the PND – the government’s strategy to expand the base of the economy, improve educational, health and societal standards, and strengthen the national infrastructure backbone – gained pace in 2017. Ground was broken on a number of infrastructure projects under the plan, including the expansion and upgrade of road links in the commercial capital Abidjan to improve both local traffic and freight connectivity with port facilities, which are also being upgraded. The government likewise accelerated spending on repairs and extensions to roads across the country, which will result in a doubling of the paved road network to 12,000 km by 2025, improving internal transport capacity and strengthening trade links with neighbouring countries.
Digital Services
The year 2017 also saw an acceleration of the state’s e-government project, which targets moving some 400 public services online. Improving online services is set to boost Côte d’Ivoire’s standings in the World Bank’s “Doing Business 2019” report, and support faster and smoother bureaucratic procedures. The country climbed three places to 139th out of 190 economies surveyed in the 2018 iteration. According to the report, the most significant reform implemented that year was the streamlining of the process to obtain construction permits via a one-stop shop. This was preceded by a move to put building regulations online in order to make dealing with construction permits more transparent, part of the e-government initiative.
Read More from OBG
