Affiliated organization: The World Bank
Type of publication: Background Report
Date of publication: October 2019
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Economic Overview
After slowing in 2017, a reflection of political tensions and a sharp fiscal contraction, Togo’s economic growth picked up in 2018 to 4.9% (2.3% per capita). This recovery was driven largely by the rebound in public investment and robust growth in the services sector. Growth was mainly driven by the recovery in industrial production and the fairly strong performance of the transport and telecommunications sectors. Increased public investment and private consumption also contributed to this solid performance.
Inflation in Togo returned to positive territory in July 2018 and maintained an upward trend, rising to 2% by end-2018 and underpinned by stronger domestic demand and higher international oil prices. A rebound in capital goods’ imports and a reduction in exports increased the current transactions deficit from 2% of GDP in 2017 to 5% in 2018.
Inflation in Togo returned to positive territory in July 2018 and maintained an upward trend, rising to 2% by end-2018 and underpinned by stronger domestic demand and higher international oil prices.
Foreign direct investment financed over 40% of external financing needs, with long-term loans covering the rest. Following an IMF-extended credit facility, approved in May 2017 to restore fiscal sustainability while protecting social sectors, the government initiated a fiscal consolidation program that reduced the public debt-to-GDP ratio from a peak of 81.6% in 2016 to 75.9% in 2018. The fiscal deficit narrowed from 9% of GDP in 2016 to 0.8% in 2018, which is below the convergence criterion of the West African Economic and Monetary Union (WAEMU).
Development Challenges
The national poverty rate declined by just over 6 percentage points from 61.7% to 55.1% between 2006 and 2015. Despite this progress, poverty remains widespread, especially in rural areas where 69% of households were living below the poverty line in 2015. Female-headed households experience higher rates of poverty than male-headed households—57.5% against 55%. Vulnerability is higher among women because they have fewer economic opportunities and are underrepresented at high levels of decision making.
The key development challenges identified by the government in its five-year National Development Plan (2018–2022) are as follows:
- developing sectors with strong growth potential, including agribusiness;
- strengthening economic infrastructure;
- strengthening basic social services in health, water, and power;
- promoting financial inclusion, gender equity, and social and environmental protection; and
- promoting more balanced, participatory, and sustainable development.
The main priorities of the new government are based on three pillars:
- strengthen governance;
- foster sustainable and inclusive growth;
- strengthen social development and inclusion mechanisms.