Country Report Equatorial Guinea November 2009

Outlook for 2010-11

• The president, Teodoro Obiang Nguema Mbasogo, is expected to be re-elected in a landslide victory in November 2009, supported by repressive measures and the backing of a significant proportion of the majority Fang ethnic group.
• Despite apparent political stability, the security situation could deteriorate rapidly if ill health were to force Mr Obiang to step down suddenly, given the personality-based nature of the regime.
• There is still a risk that criminal groups operating in the Niger Delta could attack installations in Equatorial Guinea again.
• Relatively high oil prices will allow the government to continue to pursue an expansionary fiscal policy and to increase the role of the state in the hydrocarbons sector.
• Although hydrocarbons production is expected to continue falling in 2010 and to increase only slightly in 2011, real GDP is forecast to grow by 2% in 2010 and 3.7% in 2011 owing to strong growth in the non-oil sector.
• Average inflation is forecast to rise to 6% in 2010 as a result of higher fuel prices and stronger growth in the non-oil sector, and is expected to fall to 5% in 2011 owing to a moderate fall in international oil prices.
• The current-account deficit is forecast to narrow from an estimated 7.3% of GDP in 2009 to 5.8% of GDP in 2010, before widening sharply to 9.9% of GDP as a result of the deteriorating trade balance.

Monthly review

• Mr Obiang has announced that the forthcoming presidential election will take place on November 29th. The electoral campaign will start on November 5th and last for slightly over three weeks.
• Mr Obiang has urged the US and the EU not to ignore the growing piracy threat in the region and to increase co-operation to improve the security of trade lanes in the Gulf of Guinea.
• According to data recently published by the French central bank, Banque de France, the budget surplus reached an estimated 19.9% of GDP in 2008.
• Total revenue increased by 39% owing to record high prices in international markets, and public spending rose by 50% as the government accelerated the implementation of public investments and increased subsidies.
• According to the figures published by Banque de France, the current-account surplus widened from CFAfr58bn in 2007 to CFAfr266bn in 2008 owing to a sharp increase in exports.