Economic dynamism underpinned by a genuine industrial strategy
Economic growth is expected to exceed 6% in 2023, driven mainly by private consumption, in line with measures to support purchasing power, the multiplication of industrial development plans (agro-industry, chemicals and plastics, building materials, pharmaceuticals, textiles, packaging and refill parts, and automotive), as well as agricultural production, particularly cocoa, for which the government-guaranteed price has been raised for the 2022-2023 season. In 2024, economic activity should remain robust and will be durably underpinned by the boom in industrial activities as well as by moderating inflation, with a projected return to below the regional target of 3%, and by an improvement in global demand. Public investment will remain high, particularly in infrastructure and public facilities, as part of the National Development Plan (NDP, 2021-2025) (extension of the port of Abidjan, construction of a metro in Abidjan, etc.). These NDP projects, along with the reforms of the PEPITE programme (Economic Programme for Business Innovation and Transformation) aimed at improving the business environment and promoting the development of value chains in some fifteen sectors (simplification of the business taxation system, financing for SMEs, creation of new industrial zones, particularly around the processing of cocoa, cashew nuts, rubber and minerals) will support private investment despite tighter financing conditions caused by restrictive monetary policies. The hosting of the African Cup of Nations soccer tournament in early 2024 bolstered the construction sector in 2023 due to major infrastructure needs, and should boost the tourism sector and – indirectly – spending next year. At the same time, the government has launched a new "Sublime Côte d'Ivoire" programme (costing CFAF 3.2 billion) designed to further develop tourism. Foreign trade will benefit from the increase in oil and gas production due to the recent start-up by the Italian group ENI of a major offshore field (the Baleine project). Production started in 2023 and is expected to ramp up in 2024. Côte d'Ivoire's economic growth in 2024 should therefore be much more robust than that of the average sub-Saharan African country.
Slight reduction in twin deficits ahead
Although the public deficit is set to narrow gradually, it will remain above the target of 3% of GDP recommended by the West African Economic and Monetary Union (WAEMU) in 2023 and 2024. In order to mitigate the impact of rising prices on household purchasing power, social spending remained high in 2023. Nevertheless, it is expected to decline in 2024 due to easing inflationary pressures and the government's intention to replace subsidies (mainly on food and fuel) with financial assistance targeted at the most modest income households. However, the numerous public investment plans will continue to fuel spending even though the country is still struggling to mobilise tax resources despite the introduction of new measures. In fact, the tax base is set to expand in line with the new IMF programme, approved last May, which extends over 40 months and is accompanied by a credit of $3.5 billion (of which $495 million was paid out immediately). The programme’s aim among other things is to improve the business environment by cutting red tape, simplifying corporation tax and combatting corruption and informality, which should increase direct taxation. State revenues should therefore rise by 2024, reaching 16% of GDP, a level that nevertheless remains well below the 20% recommended by the WAEMU. External debt (36% of GDP at the end of 2022), in particular multilateral financing (29% of external debt, compared with 52% and 16% respectively represented by commercial and bilateral creditors), will be favoured over domestic debt (21% of GDP), composed essentially of relatively expensive CFA franc securities issued on the regional market. Finally, high growth and the reduction in the deficit should lead to a reduction in the debt burden, the domestic share of which has risen considerably since 2019. Furthermore, as the inflation outlook improves, the regional central bank (BCEAO), following in the footsteps of the European Central Bank, could halt the tightening of its monetary policy in 2024, thereby stabilising interest on the debt which absorbs a significant proportion of public revenue (15%).
The current account has again recorded a significant deficit in 2023, although a reduction is expected for 2024. The commissioning of the new oil and gas field (offshore Baleine) will ease the import bill, while export revenues should increase in connection with the exploitation of new gold mines, which is being encouraged by durably very high global gold prices. Nevertheless, imports are likely to remain high due to high demand for capital goods required for investment. The surplus on the trade balance will be more than offset by the large deficit on services, linked to construction and the hydrocarbon sector, as well as by the deficit on the income account, with the repatriation of income from foreign investors. The current account deficit will be financed more by multilateral debt, which is less costly than issuing Eurobonds, and by the expected resurgence of FDI flows in 2024, mainly to the mining and hydrocarbons sectors at a time when many European countries are looking for alternatives to Russian gas and oil.