Benin has made substantial progress overthe past decade in reinforcing macroeconomic stability,which has laid the foundation for modest but acceleratinggrowth. After averaging less than 3.7 percent from2007-2011, GDP growth rose to 5.4 percent in 2012 andreached 5.6 percent in 2013. Growth is expected to remainstrong at 5.5 percent in 2014. Benin s enhanced growthperformance has been supported by ongoing efficiencyimprovements at the Port of Cotonou, a vital regional tradehub, which have boosted traffic and cut marginal shippingcosts. These developments have been complemented by strongercotton and non-cotton agricultural production, which havebeen bolstered by favorable weather conditions andrelatively effective management of recent cotton campaigns.The weak connectivity between macroeconomic growth andpoverty reduction arises largely from the very modest growthof per capita income. In addition, the highly informalnature of the economy, low and declining productivity,particularly in agriculture, and a lack of economicdiversification all contribute to the persistence of povertyin Benin. Agricultural growth has been driven by theexpansion of cultivated land rather than by increasedproductivity. Similarly, the increasing size of the nationallabor force has made a far larger contribution to GDP thanhave increases in labor productivity. Growth in the formal,salaried labor market remains constrained, and few highproductivity/high wage jobs are being created.Strengthening the links between growth and poverty reductionwill require boosting productivity, enhancing the businessand investment climate, and promoting formalization. In thiscontext, the Benin Economic Update is designed to providetimely analysis of recent developments and contribute to theongoing dialogue on sound macroeconomic management andeffective poverty reduction.
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