Foreign relations of Burkina Faso has good relations with the European Union

Economic Overview

Economic growth held steady at 6% in 2018, despite a challenging national security context and an increase in international oil prices. Economic activity was driven by the services sector, particularly telecommunications, financial services, and the organization of international events such as the International Arts and Handicrafts Trade Show (SIAO) and the Tour du Faso. Economic growth was also supported by continuing dynamism in the mining sector and the rebound in agricultural production. The inflation rate was estimated at 2% in 2018, against 0.4 percent in 2017. This increase was due primarily to the rise in the prices of alcoholic beverages, housing, and hydrocarbons.

The public deficit fell more than 3 percentage points of GDP between 2017 and 2018 and was projected to reach 4.7% of GDP in 2018, against 7.8% in 2017. Prolonged strikes in the public sector, including in the Ministry of Economy, had a negative impact on tax collection. However, an increase in external grants (4.1% of GDP) helped mitigate the adverse effect of social movements on public revenue. 

The current account deficit fell to 8.1% of GDP in 2018, compared to 9.7% in 2017, owing to a slight reduction of the trade balance deficit as a percentage of GDP, triggered by the effect of fiscal adjustments targeting imports. Moreover, a rise in official current transfers helped lower the current account deficit.

The economic outlook remains favorable in the medium term, with GDP growth projected to stabilize around 6% over the period 2019-21. The economy is expected to be supported by the services, mining, and agricultural sectors. Inflation is projected to remain below 3% in line with the West African Economic and Monetary Union (WAEMU) convergence criteria.

The current account deficit is projected to hold steady around 7.5% of GDP during the period 2019-21 as the increase in exports is expected to help reduce the trade deficit. The budget deficit (including grants) is expected to converge to 3% of GDP and hold steady at this rate in the medium term, in accordance with the public deficit limit established by WAEMU.

This outlook is, however, subject to major internal and external risks. On the external front, the country is vulnerable to the volatility of gold and cotton prices and the rise of international oil prices. On the domestic front, the terrorist threat and social movements, including public sector strikes, can have a negative impact on investments and economic growth.