High growth over the last decade has helped Benin reduce poverty, but gains need to be sustained. Benin – a small open economy in West Africa – achieved lower middle-income status in 2020 thanks to above-average growth over the last decade. The poverty incidence (share of population under the national poverty line) has declined steadily – from 47 percent in 2010 to 38.5 percent in 2018/19. But it remains high and gaps in human capital and infrastructure create significant financing needs, challenging the growth momentum required to achieve the country’s Vision 2060 goal of reaching upper-middle income status. Worsening climate change impacts will make it harder to improve living standards equitably and sustainably. Despite having amongst the lowest greenhouse gas (GHG) emissions globally – at only 0.05 percent of global emissions – Benin is one of the most vulnerable countries to climate change, ranking 152 out of 181 countries for extreme climate vulnerability.While its GHG emissions are expected to increase with development, Benin’s main challenge is its vulnerability to climatic shocks. Future dry and wet periods are likely to become more extreme, with more droughts and a higher risk of floods.Under a 2.7°C global warming scenario (i.e., business as usual), by 2070 98 percent of Benin’s territory is expected to be exposed to extreme temperatures – one of the most exposed countries by percentage of landmass worldwide. Natural wealth has also declined in recent decades, with deforestation amplifying the negative effects of climate change.