Country Report Cameroon January 2009

Outlook for 2009-10

• The Economist Intelligence Unit forecasts that the ruling Rassemblement democratique du peuple camerounais (RDPC) will continue to dominate the political scene during 2009-10.
• 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.
• We have revised down our real GDP growth forecast to 1.8% in 2009 (from 2.6% previously) and to 2.3% in 2010 (from 2.7%). Growth will slow on 2008 amid sharply reduced global demand and lower average oil prices in 2009-10.
• 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 3.5%. Higher commodity prices will sustain inflation at 3.6% in 2010.
• In line with movements in the trade account and global oil prices, the current account is forecast to return to deficit, equivalent to 5.2% and 3.4% of GDP in 2009 and 2010 respectively.

Monthly review

• After long delays, in December 2008 MrBiya appointed the 12 members of the independent electoral body, Elections Cameroon (Elecam), which was created in 2006 to ensure transparency and fairness in the conduct of elections.
• The opposition has mounted a legal appeal against the appointments of RDPC loyalists to Elecam, arguing that its impartiality has been compromised.
• The 2009 budget has been passed into law, providing for dramatic increases in priority-sector spending. But we believe that official economic assumptions are overoptimistic and that overall spending will be lower than in 2008.
• In its sixth review of Cameroon's performance under the three-year poverty reduction and growth facility (PRGF) the IMF commended the authorities on their fiscal performance in general.
• On December 18th the regional central bank, Banque des Etats de l'Afrique centrale (BEAC), cut its policy lending rate by 75 basis points to 4.75% in order to boost flagging demand.
• The country's only cement producer, Cimencam, has added a new productionline, increasing its annual production capacity from 1.2m tonnes to 1.8m tonnes.

This report covers the following industry codes:
SIC Code: 1
NAICS Code: 11