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Niger Economic Outlook
Macroeconomic performance and outlook
Real GDP growth, averaging 5.6% over 2016–18, was estimated at 6.4% in 2019 due to strong performance by the primary and tertiary sectors. This growth is due to investments in infrastructure, extractives, and services, as well as to structural reforms, especially actions aimed at developing the private sector and strengthening the resilience of agriculture. Inflationary pressures remained contained, with an estimated rate of 1.5% for 2019.
The budget deficit, estimated at 3.2% of GDP in 2019, was a bit higher than the WAEMU target of 3%. The current account deficit, estimated at 14.6% of GDP in 2019, was due to investment-linked imports, persistently low world prices of raw materials (particularly uranium), and the narrow export base. Donors and foreign direct investment have financed most of this deficit. In June 2019, the risk of debt distress was assessed as moderate, with a public debt-to-GDP ratio estimated at 54% of GDP.
Despite progress in education and health, and a reduction in poverty (from 48% in 2011 to 40% in 2016), key human development indicators remain low. The unemployment rate, more pronounced among young people, rose from 13% in 2011 to 17% in 2017.
Tailwinds and headwinds
Growth is projected at 6% in 2020 and 5.5% in 2021. The strengthening of democratic institutions and the government’s strong commitment to attaining its development goals will help the country stay on a high growth track over the next few years. This favorable outlook is tied largely to support from donors and to accelerated foreign direct investment, particularly in such strategic sectors as oil.
Several measures—increasing connectivity, establishing program budgeting, and adopting performance plans for managing taxes and customs—have boosted tax revenues and led to more efficient and effective public spending.
Progress in major infrastructure projects, such as the Kandadji Dam and beginning construction of the pipeline for exporting oil, should support investment and the eventual expansion of oil production and exports.
Growth remains exposed to several risks. The persistence of regional insecurity puts substantial pressure on public finances, resulting in reduced allocations to priority sectors such as education and health. The agricultural sector, which represents more than 40% of GDP and almost 80% of the labor force, remains vulnerable to climate change. High dependence on external finance and low capacity in implementing large projects could lead to macroeconomic slippage. Export revenues are highly vulnerable to volatility in the prices of raw materials. And recent measures by Nigeria—abolishing re-exports from Niger and Benin and depreciating the naira—could become more significant.