major macro economic indicators
|2016||2017||2018 (e)||2019 (f)|
|GDP growth (%)||2.1||0.4||1.2||2.5|
|Inflation (yearly average, %)||2.1||2.7||2.8||2.5|
|Budget balance (% GDP)||-6.6||-3.4||-2.3||-1.4|
|Current account balance (% GDP)||-10.2||-2.8||-1.2||-1.0|
|Public debt (% GDP)||64.2||62.7||58.7||57.0|
(e): Estimate. (f): Forecast.
- 5th oil producer in sub-Saharan Africa; Africa’s 2nd largest producer of wood, hoping to become the world’s leading producer of manganese
- Drive to diversify the economy undertaken as part of the Emerging Gabon Strategic Plan
- Member of the CEMAC
- Economy heavily dependent on the oil sector
- High cost of production factors, linked to inadequate infrastructure (transport and electricity)
- High unemployment and endemic poverty
- Difficult political and social context, pervasive corruption
- Stock of domestic and external arrears not yet cleared
Activity is accelerating very gradually
In 2019, growth is expected to continue to gradually recover from the crisis triggered by the fall in oil prices. In particular, the stabilisation of oil production, combined with better prices, should support activity. Meanwhile, changes to hydrocarbon legislation could help to accelerate private investment flows. The latter, combined with the completion of some projects, should also maintain the momentum of sectors targeted by the Emerging Gabon Strategic Plan, which aims to reduce oil dependence (about 30% of GDP in 2017). The mining (especially manganese) and forestry industries are expected to continue developing and contribute to export growth. In addition, agro-industry, through the fertilizer and palm oil sectors, is also likely to be the target of investment. Demand from the agro-industry and the start of the PPP agricultural programme – GRAINE, which provides for new oil palm plantations and the development of food crops – should support the primary industries. Conversely, while budgetary adjustment efforts continue, the construction sector, which is largely dependent on public investment, is expected to continue to face difficulties. Likewise, budgetary constraints are expected to be a drag on public consumption, but also on private consumption, given the state’s role as an employer. As a result, service growth is expected to remain constrained.
Twin deficits narrow
The budget deficit is expected to decline further in 2019, supported by continued fiscal restraint under the economic recovery plan. Efforts to lower the wage bill and cut government spending should result in a decrease in current expenditure. Capital expenditure, which has fallen sharply in recent years, is expected to rebound due to the revival of on-hold projects. However, the increase in this expenditure should remain contained. While progress is likely to continue to be slow, reforms to improve mobilisation of tax and customs revenue are expected to result in higher non-oil revenues. Changes in oil prices and production could also support budgetary revenues. Budget execution issues, which forced the authorities to pass a supplementary budget in 2018, could nevertheless continue to slow the process of fiscal consolidation. Budgetary slippage in recent years has left the authorities unable to clear external and domestic arrears. External borrowing, budget support, and IMF financing will finance the fiscal deficit.
After rapidly increasing due to large investments, the debt-to-GDP ratio is now on a downward path. Nevertheless, the high proportion of external debt (70% of the total) and debt denominated in foreign currencies (more than 60% of the total) remains a source of vulnerability.
In 2019, the current account deficit is expected to continue to narrow, mainly on higher oil-related export revenues. Non-oil exports, chiefly manganese and wood, are also expected to contribute to the increase in the trade surplus. The services account is expected to remain in deficit, pulled down by business services. The income deficit may grow, reflecting an increase in oil companies’ profit repatriations. Remittances from foreign workers living in Gabon should maintain the small deficit in the transfer account. IMF payments under the ECF programme are expected to continue to finance the current account deficit and contribute to the increase in CEMAC’s foreign exchange reserves.
President Bongo’s convalescence worries the country
Since the tumultuous re-election of President Ali Bongo Ondimba in 2016 and the ensuing violence that shook the country, the sharp political tensions have gradually subsided. In particular, the divided opposition and isolation of the main opponent, Jean Ping, who continues to claim to be president-elect, have worked in the government’s favour. The national dialogue held in 2017 resulted in a constitutional review in January 2018, the seventh since 1991. Although granting some concessions to the opposition, such as the introduction of a second round for presidential and parliamentary elections, the new measures also allowed the President to run for an unlimited number of terms. After two postponements and two years of waiting, legislative elections were finally held in October 2018. Faced with a divided and weakened opposition, especially after Mr Ping’s calls for a boycott, President Bongo’s Gabonese Democratic Party (PDG) won an absolute majority in the first round. The PDG’s success was somewhat tarnished by the low voters’ turnout (just over 40%). Shortly after the legislative elections, the health issues faced by President Ali Bongo Ondimba , which forced him to convalesce in Riyadh and Morocco, rekindled the debate on his succession and revived the opposition’s ambitions. An apparent coup attempt on January 7 2019, although foiled, reflects the disturbance caused by his absence. In this context, cuts to the wage bill and possible civil service job cuts could lead to social unrest.
The business climate remains uncompetitive (169th out of 190 countries in the Doing Business 2019 ranking), mainly due to poor infrastructure, corruption and difficulties in starting a business.
Last update: February 2019