(Ecofin Agency) - The IMF reports that the West African Economic and Monetary Union (WAEMU) has shown resilience in the face of both internal and external shocks, with growth estimated at 5.1% in 2023. For the 2024-2025 period, growth is expected to average 6.8%, largely as a result of changes in the oil and gas sector.

The economic growth of WAEMU is projected to average 6.8% in 2024-2025 and stabilize at 6% in the long term, according to estimates by the International Monetary Fund (IMF). The institution revealed these figures following the annual discussions on the common policies of the Union's member countries.

In a statement released on March 19, IMF attributed this positive trend to the start of new hydrocarbon productions. Indeed, several member countries of the Union, notably Senegal, Côte d’Ivoire, and Niger, have announced the commencement of natural gas fields and an oil pipeline.

Moreover, IMF highlighted a forecast of fiscal consolidation aimed at reducing the deficit to 3% of GDP in the majority of member countries by 2025. "The completion of these hydrocarbon projects, together with fiscal consolidation, would lead to a quick narrowing of the current account deficit, and contribute to a gradual rebuilding of external reserves,” the statement read.

These forecasts come at a time when the Union's economic activity has shown a positive trend, supported by strong domestic demand and the continuation of public investments as of the end of November 2023, according to the Central Bank of West African States (BCEAO). Industrial production has increased by 4% year-on-year, with significant increases in retail sales, as well as in merchant and financial services.

Although within the target range of the Bank, overall inflation in the zone continues to rise. It reached a rate of 2.7% in January 2024, up from 2.5% in December 2023, primarily driven by the increase in prices of food, housing, and transport. In response to this situation, the Monetary Policy Committee raised the main interest rate to 3.5% in December 2023.

Despite the IMF's optimistic outlook, ongoing security and political crises in the region continue to pose risks to WAEMU. The institution emphasized the need for the region to adopt prudent economic policies to ensure macroeconomic stability. This includes monetary tightening to rebuild external reserves and the development and adoption of a medium-term plan to manage financial system risks.

Highlighting the resilience of WAEMU to multiple economic shocks, the IMF estimated the region's economic growth at 5.1% in 2023.