Country Report Cameroon April 2009

Outlook for 2009-10

• The ruling Rassemblement democratique du peuple camerounais (RDPC) is expected to continue to dominate the political scene during 2009-10, although factional divisions will increasingly jeopardise its unity.
• Given the advanced age of the president, Paul Biya, and the reportedly fragile state of his health, his departure from office as a result of sickness cannot be ruled out. In such an event, the ensuing power vacuum could be destabilising.
• The government will struggle to secure foreign investment for infrastructural and agricultural development projects amid the severe global economic slowdown and tight financial markets.
• Given the Economist Intelligence Units forecast for sharply reduced global demand and lower average oil prices in 2009-10, we expect real GDP growth of just 0.2% in 2009 and 1.8% in 2010.
• World prices for food and fuel will drop in 2009, but lower subsidies will offset some of this deflationary pressure, leading to average inflation of 3%. Higher commodity prices will sustain inflation at 3.2% in 2010.
• In line with movements in the trade account and global oil prices, the current account is expected to post a deficit equivalent to 3.8% of GDP in 2009, before narrowing to a deficit of 3.1% of GDP in 2010.

Monthly review

• In March the French president, Nicolas Sarkozy, chose not to include Cameroon in the itinerary of his African tour. The local media have portrayed the omission of Cameroon as an embarrassment for Mr Biya.
• The head of the Roman Catholic Church, Pope Benedict XVI, paid a three-day visit to Cameroon in March. However, the occasion was marred by controversy over the Popes comments about HIV/AIDS.
• In March the regional central bank, Banque des Etats de lAfrique centrale (BEAC), cut its main policy rate, the discount rate, for the second time in four months, from 4.75% to 4.5%, in order to boost bank lending.
• An IMF mission has visited Cameroon to conduct an Article IV consultation. The Fund delegation sounded a warning over the threat posed to Cameroon by the global economic downturn and tight international credit markets.
• Senior executives from an Anglo-Australian mining firm, Rio Tinto, visited Cameroon in April to reassure the authorities that plans to expand the capacity of the local aluminium smelter, Alucam, are ongoing.
• Cameroons largest palm oil producer, Socapalm, has successfully raised CFAfr12bn from private investors through the Douala Stock Exchange (DSX).

This report covers the following industry codes:
SIC Code: 60;10;49;89
NAICS Code: 52;212;11;22;56