Togo scales down growth forecast due to Russia-Ukraine conflict

Economy

Monday, 04 July 2022 17:33

Togo scales down growth forecast due to Russia-Ukraine conflict

(Togo First) - Due to the war in Ukraine, Togo scaled down its growth forecasts for the year. From 6.1% the figure was reduced to 5.9% by the ministry of finance.

Sani Yaya, who heads this ministry, disclosed the information last Friday, at the National Credit Council of Togo (CNC), a meeting that gathered the country's bank and finance actors.

"As you know, since the end of February, the world has been shaken by geopolitical tensions induced by the Russia-Ukraine conflict. This has disrupted post-Covid-19 recovery plans," Yaya said. "This conflict is directly affecting economies through trade and indirectly through its impact on rising energy prices and imported food products," he added.

While new projections, at the national level, confirm an improvement in economic activity, they highlight a slight decrease of 20 base points (0.2%) which explains the forecast revision.

The government is more optimistic than the African Development Bank (AfDB) which expects Togo to record a growth of 5.8% in 2022. However, both parties agree on the decrease of about 20 base points (AfDB initially issued a forecast of 6.2%).

Some good news

Not everything is bad. Indeed, Sani Yaya revealed last Friday that bank lending has risen sharply since the beginning of the year. It grew by 39% YoY to CFA270 billion in Q1 2022.

Over the same period, decentralized finance systems loaned CFA50 billion to economic operators, up by 37% compared to Q1 2021.

Another good news is the sustained improvement of lending by banks and microfinance institutions in the first quarter of this year. The gross deterioration rate of the credit portfolio of banks (the ratio between gross outstanding loans and total loans), has decreased by 5 percentage points, from 16% in Q1 2021 to 11% in Q1 2022. A positive trend that Togo First had already noted.

Ayi Renaud Dossavi

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