July 20, 2024

Mali’s economic growth surges amidst global challenges: African development bank reports

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Mali's economic growth surges amidst global challenges: African development bank reports

Mali's economic growth surges amidst global challenges: African development bank reports

On May 30, 2024, in Nairobi, Kenya, the African Development Bank (AfDB) unveiled its 2023 report on “African Economic Outlook,” highlighting significant economic progress in Mali. According to the report, Mali’s economic recovery from the impacts of the Covid-19 pandemic continues, with a growth rate of 4.3% in 2023, up from 3.7% in 2022.
The AfDB attributes this growth to increased cotton production (+49.37%) and gold production (+0.59%), as well as a surge in investment (+41.8 basis points) and household consumption (+0.7 basis points).

The report states, “Inflation decreased from 9.7% in 2022 to 2.2% in 2023, due to the restrictive monetary policy of the Central Bank of West African States, uninterrupted local market supplies, and a 25% customs duty exemption granted by the government in exchange for price caps on sugar.

The budget deficit reduced from 4.9% of GDP in 2022 to 3.8% in 2023, reflecting strong public resource mobilization (98.4% of forecasts) and stringent expenditure control (87.93% execution rate).”

The AfDB also notes an improvement in tax revenue collection, rising from 13.5% of GDP in 2022 to 14.7% in 2023, thanks to fiscal reforms.

However, the current account deficit widened from 8% of GDP in 2022 to 8.7% in 2023, driven by increased imports of machinery and vehicles (+21.1%), chemicals and pharmaceuticals (+15.8%), construction materials (+7.5%), food products (+3.9%), textiles, and leather (+15.1%), coupled with a decline in cotton exports (-33.5%).

Looking ahead, the AfDB forecasts continued economic recovery, with growth projected at 4.7% in 2024 and 5.3% in 2025.

This growth will be fueled by extractive activities, the commencement of lithium production in 2024, the revival of the textile sector, and the development of wheat production and processing.

The restrictive monetary policy is expected to keep inflation on a downward trend, reaching 2% in 2024 and 1.8% in 2025. However, the budget deficit is projected to increase to 4.3% of GDP in 2024 before improving to 3.4% in 2025.

According to the AfDB, the current account deficit is expected to improve to 6.4% of GDP in 2024 and 5.9% in 2025, driven by anticipated increases in cotton exports in 2024 and 2025, gold exports in 2025, and the beginning of lithium exports in 2024.

The pan-African institution also highlighted key risks to these optimistic projections, including the indefinite postponement of the presidential election initially scheduled for February 2024, the energy crisis, Mali’s withdrawal from the Economic Community of West African States, climate shocks, and insecurity.

To mitigate these risks, the AfDB emphasizes the need for continued political and institutional reforms, support for the energy sector, and ongoing efforts to combat terrorism.

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