Economic Outline

Economic Indicators

Burkina Faso is a low-income Sahel country with scarce natural resources, relying on agriculture and gold mining. In recent years, it witnessed robust economic growth driven by gold and cotton production. However, the trajectory was disrupted by the coronavirus crisis followed by political and security challenges (including the 2022 coup, which led to a significant decline in international development funding and private sector investment) that had adverse effects. On January 28, 2024, Burkina Faso, Mali, and Niger announced their withdrawal from ECOWAS, effective in January 2025. They remain in WAEMU and, on July 6, 2024, signed the Treaty forming the Confederation of Sahel States. These developments have increased political uncertainty. Meanwhile, Burkina Faso's transitional government under President Traoré was extended for five years from July 2, 2024. After growing 3% in 2023, GDP expanded an estimated 3.7% in 2024 thanks to a higher-than-average cereal crop and a recovery in the industrial sector. If security remains unchanged and ECOWAS withdrawal is orderly, limiting trade impacts outside WAEMU, growth could stabilise at around 4.0% in 2025-26 (World Bank).

Fiscal performance remains solid, driven by strong revenue collection, with the deficit expected to improve from 6.5% of GDP in 2023 to 5% in 2024. Meanwhile, the financial sector weakened due to lower capital adequacy and rising non-performing loans. The fiscal deficit was mainly funded through domestic borrowing from the regional market, where rising interest rates pushed public debt from 55.9% in 2023 to 57.4% in 2024. Despite fiscal consolidation efforts, the WAEMU 3% GDP deficit ceiling is unlikely to be met in the next 2-3 years, with public debt expected to rise until 2026 (World Bank). After dropping to 0.7% in 2023, inflation surged to an estimated 3.4% in 2024, driven by food price spikes due to security issues, supply constraints, and irregular rainfall. Regional inflation is expected to align with the WAEMU target by 2025. Burkina Faso's economy is hindered by its faulty infrastructure, including electrical infrastructure, and vulnerability to the volatility of oil import prices as well as gold and cotton prices. In the medium term, the country will have to modernize its public affairs management, readjust public finances, reform the financial system, and improve the business climate. Burkina Faso is considered to have a high risk of over-indebtedness, as it is extremely dependent on foreign aid.

According to the World Bank, after rising in 2021-22 due to food price inflation, extreme poverty remains above 26%. Urban poverty slightly declined in 2024, driven by industry and services growth. The humanitarian situation remains critical, with over 2 million displaced and 2.7 million (11.9% of the population) facing severe food insecurity from June to August 2024. The latest estimates from the World Bank point to a 4.2% unemployment rate; however, the informal sector accounts for a large part of GDP in Burkina Faso, with around 70% of total non-agricultural employment.

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