According to the IMF, over the past ten years, Benin's economy has demonstrated consistently high growth rates, on average exceeding 5% per year.
Such rapid development allowed the country in 2020 to move from the category of low-income countries to the number of countries with incomes below the average according to the classification of the level of gross national income (GNI) of The World Bank. Despite the fact that Benin is one of the fastest growing countries in the region, the country remains dependent on foreign trade conditions due to the low degree of economic diversification, which is based on exports of cotton and other agricultural commodities. The main strategic advantage of Benin is its location in the eastern part of the international transport corridor Abidjan-Lagos, passing through a number of densely populated cities of the five States of the Gulf of Guinea. In addition, Benin is an important transit hub for the landlocked countries of the Sahel region, such as Niger and BurkinaFaso. However, to date, the insufficiently developed logistics infrastructure of Benin is a deterrent to the use of existing potential.
Benin's economic growth rate decreased to 3.8% in 2020, but the country managed to avoid a recession and demonstrate a recovery rate of 7.2% in 2021 due to the resumption of trade activity in the country's ports, including as a transit point on the way to Africa's largest economy — Nigeria. In addition, a significant factor that ensured high real GDP growth and sustainability during the pandemic was the rapid increase in cotton production for its subsequent sale.
In 2022, the growth rate of Benin's economy continued to show high indicators at the level of 6.0%. According to the forecast of the IMF and the African Development Bank (AfDB), in 2023 real GDP growth will be 6.0–6.2% and will stabilize at 6.0% in the medium term. However, Oxford Economics forecasts a decline in growth rates to 5.1% in 2023 and to 4.2% in 2024, noting the volatility of Benin's commodity-dependent economy. Stable high rates of development in recent decades have largely become possible due to favorable price conditions in the cotton market, but in mid-2022 there was a decline in the value of the country's main export commodity, which may negatively affect the economic growth of Benin in the medium term.
GDP by PPP per capita of Benin in 2022 amounted to 4.0 thousand US dollars and by 2028, according to IMF forecasts, it will reach 5.5 thousand US dollars, demonstrating an average annual growth rate of 5.0% in 2023-2028.
Due to the significant volumes of its own food production, government measures to support the population (subsidies for food and fuel), as well as the stable exchange rate of the West African franc, the inflation situation in Benin is characterized by a unique stability even by world standards, which distinguishes it from most African states.
According to the IMF, over the past 10 years (from 2013 to 2022), inflation in Benin exceeded 3.0% only in 2020 against the background of the global crisis caused by the COVID-19 pandemic. Moreover, according to the IMF, in 2022 Benin was a country with one of the lowest inflation rates in the world, amounting to 1.5%. Nevertheless, against the background of global food price growth, climate risks, as well as the deterioration of regional security, international experts expect inflation to rise in the short term: in 2023, the IMF forecasts 3.0% (AfDB — 2.8%; Oxford Economics — 2.4%) with further stabilization at about 2.0% in the medium term.
