The economic growth rate in the West African Economic and Monetary Union (WAEMU) is expected to drop 2.6% in 2020, estimates the Monetary Policy Committee (CPM) of the BCEAO, the central bank of the said zone.
“For the whole of 2020, the forecasts made by the Central Bank [des Etats de l’Afrique de l’Ouest] expect a Union economic growth rate of 2.6%, compared to an initial forecast of 6.6%, ” said the CPM in a statement issued after its second regular meeting.
It reports a “sharp slowdown” in economic activity in the first three months of the current year.
“The Union’s gross domestic product (GDP) increased by 3.3% year-on-year in the first quarter of 2020, after 6.5% a quarter earlier, ” said the Monetary Policy Committee.
He explains that “this deceleration in economic activity is mainly [causée] by the tertiary sector, whose contribution to growth has halved compared to the previous quarter ”. This situation reflects “the first effects of the spread of the coronavirus pandemic, especially in the tourism, hotel, transport and trade sectors.”
According to the CPM, the execution of the budgets of the member states of the UEMOA was strongly impacted by the Covid-19 pandemic, during the first three months of 2020.
“Indeed, governments have initiated response plans that have resulted in lower revenues and higher spending resulting in a worsening budget deficit, ” he said.
He adds “the budget deficit (including grants) would stand at 922.1 billion or 4.5% of GDP at the end of March 2020, against 222.5 billion or 1.1% of GDP the same period of the previous year ”.
The WAEMU CPM nonetheless observes “a slight acceleration in the rate of growth of the money supply year-on-year, in connection with the rebound in net external assets, as well as the increase in domestic claims.”
“The Union’s foreign exchange reserves have strengthened on an annual basis, ensuring 6.3 months of imports of goods and services at the end of March 2020. ”
On the other hand, the average quarterly interest rate for weekly liquidity injection calls for tenders fell from 2.98% in the last quarter of 2019 to 2.69% in the first quarter of 2020.
Since April 2020, it has been 2.50%, linked to the 2.50% fixed rate liquidity injections launched by the Central Bank to combat the harmful effects of the health crisis.
– .
