Economic Outline

Economic Indicators

In recent years, Burkina Faso has witnessed robust economic growth driven by gold and cotton production. However, the trajectory was disrupted by the coronavirus crisis followed by political and security challenges, which had adverse effects. Despite a slowdown in 2022 (+1.5%), economic growth rebounded to 4.4% in 2023 (IMF), primarily propelled by the agriculture and services sectors. Notably, cotton production, which had suffered from insect infestation in 2022, played a pivotal role in revitalizing the agricultural sector. The resurgence of gold production, constituting 78% of exports in 2021, alongside the reopening of previously closed mines due to security concerns and the government's renewal and allocation of new operating licenses, holds the potential to drive growth to 6.4% in 2024. However, this optimistic economic forecast is contingent upon persistently high levels of political and security instability.

In 2022, the economic recovery was marred by two military coups, justified by its perpetrators by the government's inability to contain the jihadist insurgency. Against the backdrop of political instability, expenditures on defense and security are expected to remain substantial. While the budget deficit is projected to decrease over the forecast horizon, it will remain elevated and surpass the standard set by the WAEMU community, which is 3% of GDP. However, increased tax revenues stemming from stronger economic growth and initiatives aimed at broadening the tax base (Coface) will partially offset this deficit. The Extended Credit Facility (ECF) agreement with the IMF, finalized in June 2023 with a disbursement of USD 305 million spread over 4 years, will support the country's ongoing efforts toward fiscal consolidation. Although considered sustainable, public debt will continue to be vulnerable to political instability, constraining public spending and diminishing support from international donors. Estimated at 61.2% of GDP last year by the IMF, it should remain stable in the medium term.Inflation decelerated significantly in 2023 (from 14.1% in 2022 to 1.4%), thanks to moderating commodity prices and the tight monetary policy implemented by the BCEAO. This trend is expected to persist into 2024, aided by a more favorable agricultural harvest domestically, which should alleviate pressure on food prices, alongside continued adherence to a restrictive monetary policy. Burkina Faso's economy is hindered by its faulty infrastructure, including electrical infrastructure, and vulnerability to the volatility of oil import prices as well as gold and cotton prices. In the medium term, the country will have to modernize its public affairs management, readjust public finances, reform the financial system, and improve the business climate. Burkina Faso is considered to have a high risk of over-indebtedness, as it is extremely dependent on foreign aid.

According to the World Bank, more than 40% of the population still lives below the poverty line. In recent years, the country has made considerable progress in education. Nevertheless, insecurity and terrorism are taking a heavy toll in several regions, negatively affecting the education sector. More than 2 million persons have been internally displaced, and over 3 million people are in a situation of food insecurity. The latest estimates from the World Bank point to a 5.1% unemployment rate; however, the informal sector accounts for a large part of GDP in Burkina Faso, with around 70% of total non-agricultural employment.

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