Country Report Equatorial Guinea September 2008

Outlook for 2008-09

• The president, Teodoro Obiang Nguema Mbasogo, is expected to be re-elected by a landslide in 2009, as the population is afraid to voice discontent and he enjoys the support of a significant proportion of the Fang ethnic group.
• Mr Obiang will continue to exercise power principally through a network of relatives and members of his Esangui clan of the Fang ethnic group, which originates from near Mongomo in the east of the country.
• Despite this apparent underlying stability, given the personality-based nature of the regime, the security situation could deteriorate rapidly if Mr Obiang were to be forced to step down suddenly.
• Improving public infrastructure and promoting economic diversification will continue to be the government's main economic policy objectives in 2008-09.
• Real GDP is expected to post strong growth of 11.5% in 2008 as production from new oil- and gasfields reaches full capacity, before falling to 0.5% in 2009, as no new fields are planned to come on stream in that year.
• Inflation is forecast to fall from 7% in 2008 to 5.5% in 2009, owing to a slowdown in economic activity and in money supply growth.
• Higher oil production and a sharp increase in international oil prices are expected to widen the current-account surplus to 17.2% of GDP in 2008, narrowing to 5.1% of GDP in 2009 as a result of a fall in oil prices.

Monthly review

• Equatorial Guinea and Gabon have announced that they are preparing key documents to refer their maritime border dispute to the International Court of Justice next September.
• Equatorial Guinea has asked to become a full member of the community of Portuguese-speaking countries, Comunidade dos Paises de Lingua Portuguesa (CPLP), in a move aimed at diversifying its international partners.
• Equatorial Guinea and Angola have signed a five-year co-operation agreement in the oil sector that is expected to increase the influence of Angola's national oil company, Sonangol, in the country.
• The government has announced that it plans to hold talks with the UK-based, BG Group, to discuss the existing contract since it believes that the company is making an "extremely unfair profit" from its operations in Equatorial Guinea.
• The methanol plant at Punta Europa was temporarily shut down in the second half of July owing to an unplanned catalyst change, which led to a 15% increase in prices in international markets..