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Côte d’Ivoire benefits from strong economic growth and increasing investment
ABIJDAN, Cote d’Ivoire, Capital Markets in Africa — Côte d’Ivoire’s (B1 positive) very high economic growth prospects, on the back of institutional reforms, support the government’s strong budget revenue performance, says Moody’s Investors Service in a report published on 31st August 2015.
“While weak institutional strength poses a key challenge for Côte d’Ivoire, we expect reforms and public infrastructure investment to underpin high economic growth in 2015-16,” says Aurelien Mali, Senior Analytical Advisor — Africa at Moody’s. The rating agency forecasts Côte d’Ivoire’s GDP growth at 8.1% in 2015 and 9.0% over the next 12-18 months.
As a major exporter in the region, Côte d’Ivoire is subject to commodity price volatility, especially in cocoa, but Moody’s notes that increased diversification supports the economy. Private investment in the energy sector has increased, although agriculture remains the largest component of the country’s economy.
“While public infrastructure investment has caused the government’s expenditure to trend upwards, fiscal deficits have remained under control between 2012 and 2014. Public finance risks have reduced, as illustrated by moderate budget deficits, 2.2% of GDP in 2014” says Mali.
Moody’s notes that budget revenues have remained relatively strong at around 20% of GDP, keeping up with the high nominal GDP growth seen the last four year. It also expects that the government’s debt burden will likely remain moderate, at around 40% of GDP over the next few years.
In addition, Côte d’Ivoire benefits from relative political stability following successful presidential elections in 2011. The rating agency expects successful presidential elections in October to provide another five-year mandate to further reduce those risks.
However, there remains an exposure to event risk, following years of political unrest prior to 2011, when a civil war was quelled only by international intervention, says Moody’s.
Source: Moody’s Investors Service