Unlike many other Sub-Saharan African countries, Senegal has a history of political and institutional stability, having not been affected by coups or tribal conflicts since independence in 1960. The country scores particularly high in the political stability ranking of BusinessMonitor International, equal to 74 on a scale in which 100 indicates maximum political stability, whereas the region has an average score of 55,5. The security situation in the country is relatively good (74 on the scale from 1 to 100) even if the threat of sectarian terrorism has grown in neighboring countries (Mali, Burkina Faso and Ivory Coast). The fear of possible terrorist actions is however penalizing tourism also in Senegal.
In 2015, Senegal had a GDP of $14 billion (as a term of comparison equal to that of the Autonomous Province of Trento), with a population of 15 million inhabitants and an area of 197712 kM2, about two thirds of that of Italy. The per capita income (913 dollars nominal, 2456 at the PPP) places Senegal in the group of low-income countries in the classification of the World Bank, without forgetting that it is in the lower part of the ranking for thehuman development indicator HDI, with regard to life expectancy, level of education and per capita income. About a fifth of the country's territory is arable, a quarter is used for grazing and over 40% is covered by forest: the agriculture and fisheries sector contributes less than 15% of GDP, but employs about two-thirds of the working population. Half of agricultural production concerns cereals (millet, sorghum, and corn) and cassava for the livelihood of the population, the rest commercial crops such as oilseeds, vegetables, fruit and sugar cane. Livestock contributes about a third of agricultural GDP and concerns small ruminants, cattle and poultry. The country is relatively poor in mineral resources. However, large deposits of gas and oil have recently been discovered by British and American companies in the waters of the Atlantic Ocean that bathe the coasts of Senegal and Mauritania, but the exploitation of these wells has not yet begun. The manufacturing sector, which accounts for just over 10% of the GDP, is focused on the transformation of primary products (food transformation, chemical processes connected to phosphates and refining). The tourist movement has had a notable development in recent years: according to data provided by World Trade & Tourism Council the sector directly and indirectly contributed 11% of GDP in 2015 despite the drop in arrivals (down to around 800 units from a peak of 1,2 million in 2013) due to fears of terrorist attacks. Senegal has a large trade deficit, averaging 18% of GDP over the past 10 years. The main imports are made up of food products, hydrocarbons, machinery and plants and semi-finished products. Food products contribute to over 40% of exports, followed by minerals (gold and phosphates) and petroleum refining products, where the EU represents the country's main trading partner (33,8% of total trade in 2015) followed by China (8,5%).
Senegalese GDP growth accelerated to 6,5% in 2015, the highest rate since 2003. This pace was also maintained in the first half of 2016, when real GDP increased by 6,3%. On the supply side, the boost to GDP came mainly from agricultural production (+12,9%), which benefited from favorable climatic conditions, from construction (+12,7% thanks above all to public works), from some manufacturing (such as chemicals, + 32%) and some services (transport + 12,9%). Furthermore, in the first half of 2016, economic activity benefited from the sharp increase in phosphate mining, resulting in a 37,6% jump in extraction activity and double-digit growth in chemical production (+17%) and transport services (+19% driven above all by maritime and passenger rail traffic). On the demand side, in 2015 exports (+16,8%) and investments (+7,4%) provided the greatest boost to GDP. However, in the period 2006-2015 Senegal's average annual GDP growth, equal to 3,9%, was lower than that of Sub-Saharan Africa (5,3%). However, the relative weakness of the economy is determined by lack of infrastructure, difficulty in accessing some production factors (water and electricity on all), vulnerability of agricultural production to climatic factors, underdevelopment of some services essential (especially financial ones), lack of dynamism of the private sector, low efficiency of the public administration and high deficit of the current account of the Balance of Payments. The relatively low growth of the economy combined with the high population growth rate (close to 3%) make Senegal one of the countries with the highest poverty rate in Sub-Saharan Africa. Since 2015, the GDP trend has accelerated significantly and is expected to maintain a sustained pace also in the coming years, where the IMF expects an average growth of 6,8% in the five-year period 2016-2020 thanks to the interventions indicated in the Emerging Senegal Plan (EPS) for the modernization of the country: reforms are envisaged in the functioning of the public administration, the establishment of a tax and legal system, investments indicated in an action plan which for the five-year period 2014-2018 envisages interventions for 1,6 billion, funded just over 40% by state funds and the remainder by public-private partnerships and donations. These investments mainly concern transport infrastructure, public utilities (access to water and electricity), education and health. The contribution of external financing envisaged in the Plan should be favored by the IMF's supervision of the policies pursued by the Government of Senegal envisaged by the Policy Support Instrument (PSI) Program. This IMF instrument is specific for those countries that do not need or do not seek financial support from the Fund in order not to submit to constraints deemed too stringent, but at the same time ask for the approval of this international body of their policies as a guarantee for foreign lenders both institutional and private.
For the two-year period 2016-2017, the IMF in the WEO forecast report of last October forecasts growth rates of 6,6% and 6,8% respectively for Senegal, among the highest in Sub-Saharan Africa and clearly higher than the average rate of expansion recorded by the country in the last decade, while Sub-Saharan Africa as a whole is expected to grow at much lower rates (1,4% this year, 2,8% next) mainly due to the slowdown in commodity exporting countries, such as Angola, Nigeria and South Africa. Looking ahead, the economy is expected to be supported by the infrastructure investments already mentioned. These include the highway between the capital Dakar and the country's second city Touba, the restoration of the railway line linking Dakar to Mali and the Diamniado technology park. In the intentions of the Government this new city, which will be equipped with an airport and a university, will become the technological hub of West Africa. The absence of infrastructure for the storage and transport of hydrocarbons and the current unfavorable market situation lead to the belief that the exploitation of gas and oil reserves discovered in the Atlantic Ocean will have an impact on the economy only in the long term. As already mentioned, a more immediate benefit to economic activity and foreign investments should instead come from the reforms envisaged in the aforementioned EPS.
The monetary policy of Senegal and seven other markets that are part of the UEMOA, the West African Economic and Monetary Union (Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali Niger and Togo), is managed by the Central Bank of West African States (BCEAO). The reference rate has been set at 3,5% since September 2013 and real rates are broadly positive. The annual rate of inflation, after having risen to 1,5% at the beginning of 2016, following the elimination of fuel subsidies, slowed down in the following months until it turned negative (-0,4%) in October . The currency of Senegal is the CFA franc which has a fixed parity against the euro (655,9 FCFA : 1 Euro), whose convertibility is guaranteed by the Central Bank of France. The UMEOA countries participate in a common reserve fund to support the currency which at least 65% is deposited with the Central Bank of France.
In 2015 the public deficit was reduced to 4,8% of GDP, from 5% the previous year, in line with the target agreed with the IMF under the PSI Programme. During the same period public debt rose to 56,8% and is expected to further increase in 2016, before starting a downward phase that should bring it to 50% of GDP by 2021. Senegal's public debt to GDP ratio is among the highest in the group of markets belonging to the CFA monetary zone, which had an average debt ratio of 2015% of GDP in 40,9. The Balance of Payments records a high current deficit (on average equal to 9% of GDP in the last 10 years) mainly due to the commercial part (average deficit equal to 18% of GDP in the last 10 years), while the transfer account is largely in surplus thanks to remittances from migrant workers (on average equal to 10% of GDP). The Financial Account reports a structural surplus fueled mainly by productive investments (on average equal to 2% of GDP), foreign portfolio investments and foreign financing of a bilateral and multilateral nature. In 2015 the current deficit fell from 1,36 billion (8,9% of GDP) to 0,85 billion (7,6% of GDP) following the reduction of the trade deficit (from 18,3% to 16% of GDP) determined by the leap in exports (+13% thanks to phosphates, cement and some agricultural products) and by the decline in the energy deficit.
Senegal benefited from the Heavily Indebted Poor Countries (HIPC) program which led to the total cancellation of the debt with the IMF, World Bank and African Fund for Development, making it possible to bring the ratio down from almost 80% of GDP in 2000 to 20,7% in 2006. In the following years, foreign debt started to rise again, reaching 40,2% of GDP (5,5 billion USD) in 2015. Of this debt, $0,3 billion matured in 2016 and another $0,3 billion will mature this year. At the end of 2015, Senegal had foreign exchange reserves of 1,86 billion, which fell to 1,84 billion in May 2016. The reserves cover 3,8 months of imports while exceeding the estimated external financial requirement of 1,3 (0,33 bn maturing debt, 1 bn current deficit expected). Senegal has issued three Eurobonds (in 2009, 2011 and 2014, the latter with a rate of 8,75%) for 1,5 billion. Here then is that rating agencies consider currency-denominated sovereign debt a highly speculative investment (B+ rating for S&P and B1 rating for Moody's).
