Togo Economic Outlook
The negative impact of the 2017 political crisis and the severe fiscal adjustment necessitated by the reduction in the debt-to-GDP ratio (from 82% in 2016 to a target of 70% in 2019) held back real GDP growth to an estimated 4.7% in 2018. Primary sector growth was an estimated 5.1%, driven by agriculture (5.1%) and fisheries (6.2%). Secondary sector growth was more muted than in 2017, reflecting lower performance in manufacturing. The political situation is also holding back tertiary sector growth, which was an estimated 4.4% in 2018, down from 7.9% in 2017. On the demand side, economic growth was driven by gross fixed capital formation, contributing 3.8% to growth, and final consumption. Stronger domestic demand resulted in negative net exports. After peaking at 9.6% of GDP in 2016, the fiscal deficit settled at 2.1% in 2017 but climbed to an estimated 6.7% in 2018. Inflation was negative in 2017 and remained low at an estimated 0.4% in 2018.
Real GDP growth is projected to be 5.0% in 2019 and 5.3% in 2020, assuming that the political crisis is resolved and public and private investment recovers. Inflation is projected to remain under control at 1.2% in 2019 and 2.0% in 2020. Along with the anticipated recovery in business activity and capital investment, the fiscal deficit is projected to improve to 1.6% of GDP in 2019. The current account deficit is also projected to continue to improve, from an estimated 7.9% of GDP in 2018 to 6.8% in 2019, thanks to strong exports (phosphates, clinker, and cotton).
Tailwinds and headwinds
The government’s key interventions have focused on the agricultural and energy sectors and on public finance. In agriculture, major interventions include developing agro poles and establishing the Agricultural Incentive and Financing Mechanism. In energy, authorities finalized the strategy for universal access to energy by 2025. In public finance, authorities pursued revenue mobilization by strengthening the revenue authority, removing some fiscal exemptions, and streamlining public procurement. A new National Development Plan for 2018–22 was adopted in August 2018.
Togo actively participates in the ongoing regional integration and trade facilitation efforts within the West African Economic and Monetary Union (WAEMU), the Economic Community of West African States (ECOWAS), and the Community of Sahel-Saharan States. It has implemented the WAEMU and ECOWAS Common External Tariff since 1 January 2015. Within ECOWAS, Togo scores high on the regional integration index in environmental protection, regional infrastructure, free movement of people, and financial and macroeconomic integration. The port of Lomé is important infrastructure for regional trade, in particular for transit to neighboring landlocked countries but also some coastal countries: 40% of goods imported through the port are transit goods or destined to be re-exported to other countries in the region. Intra-WAEMU trade accounted for 52% of Togo’s exports in 2016.