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Country Report Equatorial Guinea 1st Quarter 2013

  • Publication Date:January 2013
  • Publisher:EIU
  • Product Type: Report

Country Report Equatorial Guinea 1st Quarter 2013

Outlook for 2013-17

  • The major threat to political stability in 2013-17 is the risk of the elderly president, Teodoro Obiang Nguema Mbasogo, leaving office suddenly, owing to either ill health or a coup, which could create a destabilising power contest.
  • The difficult business environment, which constrains private-sector investment, is expected to persist; in particular, corruption among officials will remain rampant.
  • The Economist Intelligence Unit expects the fiscal account to remain in surplus, underpinned by rising hydrocarbons output; oil and gas receipts form the bulk of government revenue.
  • Decelerating growth in investment and oil output means that GDP growth will slow to 6.5% in 2013. Growth will remain robust in 2014, before slowing further in 2015-17 as hydrocarbons production begins to level off.
  • Despite robust growth boosting demand and thus generating inflationary pressures, subdued global commodity prices will help to reduce average annual inflation to 5.7% in 2013-17.
  • The current-account deficit is forecast to narrow from 1.2% of GDP in 2013 to 0.8% in 2014 on the back of rising oil output, before widening in 2015-17 as service imports and profit repatriation by oil firms grow.

Review

  • A series of arrests targeting human rights and opposition activists raised fears of a clampdown on political freedom ahead of the country's legislative election, expected to be held during the first half of 2013.
  • The government presented a near-balanced budget for 2013 to parliament. It envisages a 16% cut in spending, but the country's budgets tend to be conservative and a poor indicator of actual spending.
  • The fiscal account is expected to remain in surplus in 2013 on the back of higher oil revenue, although poor fiscal discipline will continue to pose risks.
  • A new 120-mw hydropower plant was inaugurated in mainland Equatorial Guinea as part of the regime's economic diversification policy. If consumption levels are to rise, transmission networks will need to be extended.
  • Equatorial Guinea has been connected to the Africa Coast to Europe (ACE) fibre-optic network in an effort to boost broadband services. Nevertheless, the cost of Internet access will remain out of reach for most EquatoGuineans.
  • Ophir Energy, a UK-based oil and gas company, plans to construct a new liquefied natural gas plant following a series of gas discoveries on its offshore block, thus confirming the growth potential of the country's gas sector.

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