Ivory Coast to grow at 7.5%
Ivory Coast can look forward to a period of extended economic growth in 2012-13 as long as President Alassane Ouattara's government capitalises on renewed political stability to pursue long-term structural reforms, a Reuters poll of analysts showed.
Following a four-month civil war last year that saw the economy contract 4.7 percent, aid-assisted reconstruction and growing investor confidence have fueled a general recovery across most sectors that will push 2012 growth to 7.5 percent, according to a median of eight analyst forecasts.
While growth is expected to slip to 5.8 percent in 2013, it will likely stabilise at levels higher than in the past decade.
“If you look at their history, it is still an increase. The big question is whether this high growth can be sustained. And our view is yes,” said Standard Bank analyst Samir Gadio.
“Economic activity is not only rebounding, it's changing structurally. Foreign investment is expected to increase in coming years. Infrastructure spending is increasing. And that's likely to be sustained,” he said.
Neighbouring countries Cameroon and Senegal are expected to grow a more modest 4.5 percent and 3.8 percent respectively this year as they struggle with their own infrastructure problems.
Inflation in the former French colony is expected to drop slightly from three percent in 2012 to 2.5 percent next year, analysts said.
Ivory Coast, once a beacon of stability and still the economic powerhouse of the West Africa franc zone, was helped back on its feet last year with aid equivalent to five percent of GDP. It has embarked on an ambitious public works programme geared towards renewing long-neglected infrastructure.
A third bridge over the lagoon in the commercial capital Abidjan will be built by France's Bouygues for 227 million euros ($299 million). The Ministry of Mines and Energy has announced plans to spend $500 million by 2015 to boost power output.
“This economic dynamic will continue in 2013. We're expecting strong economic activity from projects with a high labour potential such as roads, bridges and the installation of new industrial facilities,” said Christophe Kouassi from Ivory Coast's National Statistics Institute.
Ouattara has also launched long overdue reforms of the cocoa and energy sectors that should allow the world's top producer of the main ingredient in chocolate to secure an IMF-backed deal on debt relief by the end of June.
Once a debt deal is finalised, Ivory Coast has promised to clear arrears and resume payments on its defaulted Eurobond , which could fuel interest in Ivorian debt.
Despite the sunny outlook, analysts said much still depends on the government's ability to clean up high-level corruption and definitively resolve lingering issues of security sector reform and national reconciliation that could threaten stability further down the road.
“Many challenges remain, especially in terms of political stability and public finances; however, we believe the country is on the right track in terms of political normalisation, as well as financial rehabilitation,” Standard Chartered analyst Victor Lopes wrote. - Reuters