For 2017, the real GDP growth rate is estimated at 5.5%, up from 4% in 2016. Projections for 2018 and 2019 are also promising, at 6.1% and 6.5% respectively. In 2016-2017, the economic performance was mainly due to the reforms of the Government Action Programme (PAG) 2016-2021, entitled ‘’Revealed Benin‘’ and aimed at increasing public investment spending in infrastructure, agriculture, tourism and basic services. This positive outlook should also be driven by the considerable increase in agricultural production, particularly cotton, estimated at 450,000 tonnes in 2016; the increase in electricity generation capacity; and the economic recovery in Nigeria, on which Benin's trade depends.

Macroeconomic indicators - Trends
The budget deficit is expected to rise from 5.6% of GDP in 2016 to 5.9% in 2017. With the Beninese authorities expressing a desire to better control their spending, the deficit should fall to 4.8% in 2018 and 3.1% in 2019, thanks to a more restrictive fiscal policy from 2017 aimed at achieving the 3% target set by the West African Economic and Monetary Union (WAEMU). In March 2017, the risk of debt distress was upgraded from low to moderate in a debt sustainability analysis by the International Monetary Fund (IMF). Public debt rose from 50.3% of GDP in 2016 to 53.4% in 2017, due to spending under the PAG. The government's efforts to mobilise resources through bond issues and technical and financial partnerships should reduce the debt to 51.46% of GDP by 2019. Thanks to the WAEMU's policy of price stability, a good agricultural season and low oil prices, inflation should remain below the WAEMU's 3% target. The current account deficit deteriorated between 2016 (7.3% of GDP) and 2017 (9.5%), but a slight improvement is expected in 2018 and 2019.

Positive factors
In April 2017, the IMF approved a three-year credit agreement worth US$151.03 million to help Benin implement PAG reforms supporting investment while preserving debt sustainability. These reforms should enable Benin to diversify its economy by improving processing activities in agriculture and agro-industry, and modernising livestock farming, fishing and tourism. The political stability demonstrated by the successful presidential elections in 2016 and the strengthening of the public-private partnership are helping to make the country more attractive to investors. The entry into force of the ECOWAS Common External Tariff (CET) in January 2015 is also an opportunity for Benin to broaden its production base and take advantage of the West African market.

Negative factors
Growth projections are subject to uncertainty due to the effects of climate on agriculture and dependence on the Nigerian economy. During its period of recession, Nigeria introduced trade restrictions that have affected Benin and will constitute an additional uncertainty if they are not lifted. Despite reform efforts, Benin continues to face a lack of infrastructure, problems of economic and financial governance, and difficulties in the private sector. Benin was among the top ten reforming countries in 2015 and 2016, but its ranking of 151st out of 190 countries in the Doing Business 2017 report shows the efforts that still need to be made to improve the business climate. With a poverty rate of 40.1% in 2015, persistent unemployment and a human development index of 0.485, inclusive growth remains a major challenge.

Source: https://www.afdb.org/fileadmin/uploads/afdb/Documents/Generic-Documents/country_notes/Benin_note_pays.pdf