Population 16.345 million
GDP 9.603 US$ billion
@rating
country
Business climate
assessment
| 2010 | 2011 | 2012(e) | 2013(f) | |
|---|---|---|---|---|
|
GDP growth (%)
|
5.8 |
2.7 |
-1.5 |
3 |
|
Inflation (yearly average) (%)
|
1.3 |
3.1 |
5.9 |
5 |
|
Budget balance (% GDP) *
|
-5.5 |
-7.5 |
-4 |
-3.7 |
|
Current account balance (% GDP)
|
-12.6 |
-7.4 |
-5.4 |
-4.8 |
|
Public debt (% GDP)
|
29.5 |
30.6 |
29.2 |
27 |
|
(e) Estimate (f) Forecast * Grants excluded
|
||||
STRENGTHS
- Important mining reserves (African continent’s third gold producer)
- Debt cancellation under HIPC and MDRI initiatives
- Generally prudent pursuit of macroeconomic policies
WEAKNESSES
- Heavy dependence on gold
- Economy vulnerable to energy and food shocks
- geographic isolation
- High demographic growth and rural poverty
- Worsening security and political situation
Risk assessment
Recession is expected to give way to recovery in 2013
Economic and financial disruptions following the March 2012 coup resulted in a real GDP decline in 2012, with the economy already in difficulty because of the poor 2011-2012 harvest. The public and private sectors have suffered material damages. The seizure of control of the north of the country by rebels disrupted agricultural production and trade relations. Tourism has declined. Trade, hotel and restaurant sectors have been seriously affected. The suspension of budget and project aid from donors has led to a contraction in the construction and public works sector. By contrast, the gold mining sector, situated in the south and west of the country, continued to support economic activity. In 2013, gold production is expected to benefit from the high level of world prices and the start of operations in new mines. Other mining projects, among them the development of iron ore deposits, are expected to reach maturity. Oil exploration, on the other hand, located in the north of the country, has been interrupted. Finally, the 2012-13 harvest is looking favourable, which is expected to herald a recovery of the agricultural sector, which represents over a third of GDP. In this context, growth is likely to rebound slightly. In the medium term, gold deposits are expected to run out gradually and their gold content to diminish. But, in addition to iron ore, prospects are promising as far as bauxite, phosphate and manganese mining is concerned. Inflationary pressures, triggered in 2012 by the poor harvest and the disruption of trade relations, are expected to ease slightly in 2013.
A weak economy but better fiscal and trade results
The macroeconomic results remain dependent on the evolution of agricultural production and world prices. Growth remains limited by the inadequacy of investment, itself linked to governance problems and the country’s geographic isolation. The country still faces major development challenges. However, the public and external accounts are improving. The authorities followed a prudent budgetary policy in 2012, making up for the loss of revenues by reducing both investment spending and subsidies on oil and gas products. The 2013 budget shows a lack of finance, which the government hopes to cover through the renewal of budgetary aid from foreign donors. Failing this, an equivalent amount of spending will be frozen. An IMF mission came to a preliminary agreement with the authorities in November 2012 for support in the framework of a Rapid Credit Facility. This will replace the December 2011 Extended Credit Facility. Let us remember, moreover, that the country benefitted in 2006 from debt cancellations under the MDRI, which enabled it to reduce the risk of over-indebtedness to a moderate level. The current account deficit is declining. Considering the increase in the quantities mined and the high gold price, exports, focused on this raw material (75% of the total), are expected to continue growing. Foreign sales are also expected to benefit from the start of iron ore exports. However, cotton sales are likely to be hit by falling prices. Imports will no doubt grow more slowly than exports due to the relative weakness of domestic demand and the easing of prices of imported commodities. The improvement in the current account balance will nevertheless be curbed by the collapse of tourism and the weakness of remittances from workers abroad.
Serious deterioration of the security and political situation
The security and political situation worsened sharply in 2012 with the coup in March and the seizure of control of the northern half of the country by Tuareg MNLA rebels and armed jihadist groups (AQIM, Ansar Eddine, Mujao). The latter have imposed a stranglehold on this territory since April 2012 to the detriment of the MNLA, responsible for triggering the conflict in January 2012. Moreover, after lengthy negotiations, the junta agreed to a partial withdrawal and a handover of power to a transitional president, who has little room to manoeuvre. The forced resignation of the Prime Minister in December 2012 only underlined the political confusion. In October 2012, the President had requested intervention by an international force coordinated by the ECOWAS with western support. The failure of the West African mediation and the advance of jihadists beyond the front line, towards Bamako, forced France to take military action in January 2013 without waiting for the deployment of West African states troops. However, this intervention is not without risks (bogging down of the conflict, rising regional instability) and will have to be accompanied by the launching of a new national political project.
