After almost a decade of strong growth, the West African region is facing a triple crisis impacting health, the economy, and security, the International Monetary Fund (IMF) said in a statement on Tuesday.
IMF said for the year 2021, growth in the region is projected at 5.4 percent, mostly driven by a rebound in private consumption and private investment, “reflecting the relaxation of lockdown constraints and the return of foreign direct investment, but the economic outlook remains uncertain.”
It added that a gradual fiscal consolidation is expected to start this year and bring back the regional fiscal deficit toward the 3 percent of GDP regional ceiling by 2023, warning that this could be derailed by new infections.
“After almost a decade of strong growth, the West African Economic and Monetary Union (WAEMU) region is facing severe challenges from a triple crisis impacting health, the economy and security. In part, because of drastic measures taken early on, the Covid-19 virus seems to have spread at a slower pace and with a lower fatality rate in WAEMU countries than on average in Sub-Saharan Africa,” IMF said on Tuesday, just few weeks after its Executive Board concluded the regional consultation with the West African Economic and Monetary Union on February 8, 2021.
It added: “Economic activity decelerated sharply in March-June 2020, particularly in the commerce, construction, transportation and hospitality sectors. But a rebound was observed in the third quarter. Both fiscal and monetary policies were relaxed significantly in 2020 to contain the pandemic and support the economy.
“For 2021, growth is projected at 5.4 percent, mostly driven by a rebound in private consumption and private investment, reflecting the relaxation of lockdown constraints and the return of foreign direct investment. A gradual fiscal consolidation is expected to start this year and bring the aggregate fiscal deficit to 3 percent of GDP by 2023.
“There are however significant downside risks to the outlook, and new virus outbreaks or security shocks could derail the recovery and create additional fiscal pressures.”