CFA Franc-Euro Peg Hobbles Cotton Sector

BMI had been cautiously optimistic that the recent Doha round of trade negotiations in Geneva could have produced a workable agreement that would cut agricultural subsidies and improve market access to poorer producers. However, the collapse of talks, together with a strong euro (to which the CFA franc is pegged), could severely hamper the growth potential of Burkina Faso's cotton industry, and serves to underline the necessity of increasing domestic efficiencies and diversifying the country's economic base. We expect GDP growth to come in at around 4.0% this year, significantly lower than the 5.9% average annual growth seen 2003-07.

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