Benin

Growth remains strong, supported by investment, despite a weaker external environment

After posting its highest growth rate since 1990 in 2025, Benin’s economy is expected to maintain robust in 2026 and 2027. However, a slight slowdown is expected due to the economic repercussions of the conflict in the Middle East, given the country’s heavy dependence on imports of petroleum products and fertilisers. The industrial sector (20% of GDP in 2025) will benefit from continued investment in the Glo-Djigbé Industrial Zone. The zone, which already counts 18 operational facilities and provides more than 25,000 jobs, continues to expand the country’s agri-food and agro-textile processing capacities. Public investment, with private-sector participation, is supporting construction efforts under the 2021-2026 Government Action Plan (PAG II) and its successor. Projects include the upgrading and expansion of the Port of Cotonou, the development of infrastructure (land transportation, electricity, sanitation and information networks) and the launch of the new Sèmè-Kpodji industrial zone. These investments will also support the services sector (50% of GDP), particularly tourism, telecommunications, financial services and trade. The latter will benefit from the consolidation of transit trade activity in view of expected normalised relations with Niger. The primary sector (30% of GDP) is expected to contribute positively to growth. Ambitious production targets have been set for the 2026-2027 agricultural and fisheries season (+20% for cotton, +12% for cashews, and +4% for fishery products). Growth is expected to be supported by increased fertiliser subsidies, the budget for which has risen by 22% to mitigate the impact of higher prices associated with tensions in the Middle East, as well as by sector mechanisation. Nevertheless, persistent insecurity in the north of the country, where the main cotton-producing areas are concentrated, as well as a delay in the full reopening of the border with Niger, could slow growth.

Public consumption is set to remain robust and will be shored up by security and social imperatives. Private consumption will continue to grow, benefiting from generally contained inflation. As a result, the country recorded an average deflation rate of 0.2% in the first half of 2026 on back of falling food prices. However, the trend is expected to reverse in the second half of the year due to rising global oil and food prices. Nevertheless, inflation in 2027 is expected to remain within the 1% to 3% target range set by the Bank of West African States.

Fiscal consolidation and a stable external position

Fiscal policy for 2026 and 2027 will align with the guidelines of the IMF programmes set in February 2026. An extension of the fiscal consolidation trend is also expected. The government is maintaining its 2024-2028 medium-term revenue strategy (SRMT), which aims to generate 0.5% of GDP in additional revenue each year by broadening the tax base by combating informality and smuggling, improving taxpayer compliance and through digitisation. At the same time, it is maintaining VAT and customs duty exemptions on certain equipment to support the private sector. Public spending is directed toward the government’s strategic priorities, namely defence (3% of the budget) amid a deteriorating security situation in the north of the country and sectors of high social importance such as education, health and social programs, which account for more than 40% of spending. In 2026, increased election-related spending and subsidies will lead to a slight overshoot of the 3% of GDP deficit ceiling set by the West African Economic and Monetary Union (WAEMU). The relief on budgetary pressures will be minimal as subsidies will continue in 2027. Public debt, 78% of which is external – 60% is owed to official creditors – will remain below the 70% of GDP threshold set by WAEMU on back of contained deficit and robust growth.

The current account deficit is expected to widen in 2026. Despite growth in agro-industrial exports, the trade deficit is expected to widen due to a sharper rise in imports, driven both by purchases of capital goods and by higher energy and fertiliser costs. The structural deficit in services will persist despite the recovery in transshipment revenues as relations with Niger normalise due to strong demand for services associated with the rollout of infrastructure projects and the development of industrial zones. The surplus in secondary income generated by expatriate remittances and project aid is offsetting the primary income deficit caused by the repatriation of foreign corporate profits and debt interest payments. However, the current account deficit will be manageable thanks to access to external financing in the form of foreign-currency bonds and multilateral loans. On that score, despite the end of IMF programs which have disbursed more than USD 850 million since 2022, large-scale external support is expected to continue, as evidenced by the World Bank’s approval of USD 320 million in concessional financing in June 2026.

Consolidation of power over institutions and growing Islamist terrorism in the north

The 2026 elections maintained the incumbent government’s control over the state. In January, the two ruling parties won all 109 seats in the National Assembly after the opposition was weakened by repression. Although it received 16% of the vote, the main opposition party, the Democrats, failed to win any seats due to the raising of the electoral threshold from 10% to 20%. In April of this year, Romuald Wadagni, the candidate backed by the incumbent president and the National Assembly, became president for a seven-year term after winning 94% of the vote, following a 64% turnout. Last, the incumbent president, Patrice Talon, was appointed head of the Senate in August 2026, thereby consolidating his political influence. Created by the 2025 constitutional amendment, the upper house is composed of three former presidents (including Patrice Talon) and 22 prominent figures appointed by the head of state.

Since 2025, the northern part of the country has faced an escalation in deadly terrorist attacks by jihadist groups based in neighbouring Burkina Faso and Niger. The attacks have been exacerbated by a lack of cooperation between the three countries. The withdrawal in January 2025 of Mali, Burkina Faso and Niger – members of the Alliance of Sahel States (AES) – from the Economic Community of West African States (ECOWAS) has weakened regional cooperation. Benin maintains good relations with the other ECOWAS countries which provided it with military support during the failed coup attempt in December 2025, notably Nigeria. Conversely, relations with AES countries are fraught with tension, particularly owing to its ties with France. That said, relations with Niger have shown signs of improvement since President Wadagni’s inauguration. In June 2026, official negotiations began with a view to reopening the border, which has been closed since July 2023. The outcome of these discussions will need to be approved by the heads of state, and the conditions set by Niamey, particularly regarding transparency concerning the French military presence in Benin, could delay their rollout.

Furthermore, the country has continued ties with the European Union and the US, based on economic and military cooperation agreements and substantial aid. France continues to be a key partner and supported the Beninese government in thwarting the coup attempt in December 2025. Relations with China are characterised by significant Chinese investments in transportation infrastructure and agro-industrial projects. Cooperation is continuing on the local section of the Benin-Niger oil pipeline, operated by a subsidiary of the China National Petroleum Corporation (CNPC).

Last updated:August 2026