CdI Economic Outlook
Annual GDP growth was stable at 6.4% in Q3 2022. This was despite weaker industrial output growth in Q3 than in Q2, amid softer expansions in the manufacturing and extractive sectors. Moreover, retail growth in Q3 slowed to its lowest rate in 2022, as inflation hit the highest level since 2011. Turning to Q4, momentum should have softened: Average business confidence declined from the Q3 average. Moreover, industrial activity contracted in November, driven by lower output in manufacturing and hydrocarbons extraction. That said, inflation started to soften at the tail-end of the quarter, boding well for private spending. In other news, in January the government announced new investment in cocoa-processing plants, aiming to boost domestic processing by about 50% from October 2023. This should support export earnings ahead.
Harmonized inflation decreased to 5.1% in December from 5.7% in November. The print was mainly driven by softer increases in food and housing prices. This year, prices should cool further on fiscal consolidation efforts and tight monetary policy. The CFA-euro peg should also help to contain price pressures. Commodity price swings remain a risk.