OUAGADOUGOU, Burkina Faso, June 15, 2023-/African Media Agency(AMA)/ According to the latest Report on the economic situation in Burkina Fasoeconomic growth has slowed to 2.5% in 2022 with the highest inflation in the West African Economic and Monetary Union (UEMOA), and which is exacerbating food insecurity.
After a strong economic recovery of 6.9% in 2021, GDP growth decelerated in 2022 to 2.5% (corresponding to a contraction in GDP per capita of 0.1%) mainly due to a drop in mining activity by 13.7%, following mine closures. Average inflation reached 14.1% while food prices increased by 23.4% on average over the year.
This report is part of the series of periodic publications of the World Bank Group, highlighting recent economic trends, analyzing the short and medium term economic prospects, and devoting a special chapter to issues relevant to the country’s development. . The April 2023 edition focused on building financial resilience to climate shocks. The report also highlights findings specific to Burkina Faso from the Regional Climate and Development Report (CCDR) of the G5 Sahel countries.
“Burkina Faso continues to show resilience despite the security and humanitarian crises facing the country. Added to these various crises is the country’s vulnerability to climate change,” emphasizes Maimouna Mbow Fam, Resident Representative of the World Bank in Burkina Faso. “Faced with these concomitant vulnerabilities, Burkina Faso’s medium-term prospects strongly depend on improving financial resilience to shocks of all kinds, including climatic ones. »
The Report notes that weak growth in 2022 (especially in the agricultural sector) and high inflation have led to an increase in the poverty rate, estimated at 5.9 percentage points and that an additional 1.5 million people have fallen into extreme poverty. Significantly, the drop in income of poor households, which depend mainly on agriculture, is explained in particular by the poor harvest in 2021 and the disruption of the growing season in 2022.
“In a context of persistent insecurity, vulnerability of the economy to climatic shocks and a narrow budgetary room for manoeuvre, we propose short-term solutions in terms of fiscal and social policies to strengthen the national system of social protection, fight against food insecurity, and preserve debt sustainability” suggest Daniel Pajank and Kodzovi Abalo, lead economists for Burkina Faso at the World Bank and co-authors of the report.
The authors also advocate policy options to better manage the financial impacts of disasters. Thus, according to the Report, the government could consider combining risk financing instruments. Two complementary options are available: (i) a retention approach, in which the government assumes disaster losses using budgetary resources; and (ii) a transfer approach, in which the government transfers potential future losses to the insurance market for a premium.
Notes of optimism are to be noted with a rebound in growth expected to 4.3% in 2023, driven mainly by private and public consumption, with public spending remaining high. In the medium term, private investment should recover and accelerate, while the primary and tertiary sectors will remain the main drivers of growth.
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Source : African Media Agency (AMA)