Country Report Gabon December 2008

Outlook for 2009-10

• The president, Omar Bongo Ondimba, will remain the dominant political figure, as he has skilfully eliminated most forms of political opposition through a combination of co-option and repression.
• As the most important parties in the presidential majority have been given cabinet positions, the Economist Intelligence Unit does not expect any of them to change sides and join the opposition.
• Opposition to the regime is increasingly being channelled through non-governmental organisations, owing to the lack of strong opposition parties.
• Although the government intends to increase capital spending substantially in order to improve the economic and social infrastructure, the reduction in fuel subsidies will allow it to increase public spending only marginally.
• Real GDP growth is forecast to remain robust, at 4.7% in 2009 and 3.8% in 2010, owing to sustained activity in the non-oil sector and a significant increase in oil production.
• Average annual inflation is expected to fall to 3% in 2009, reflecting lower food and oil prices in international markets, and to rise again in 2010 to 3.5%, in line with commodity price increases and strong domestic demand.
• The current-account surplus is forecast to narrow sharply from an estimated 10.9% of GDP in 2008 to 0.4% of GDP in 2009 and 0.2% of GDP in 2010 as oil prices fall strongly.

Monthly review

• Strike action has dominated the political scene, but no major confrontations with security forces have been reported.
• Mr Bongo has continued to play a key mediating role in the conflict affecting the neighbouring Central African Republic (CAR).
• The Conseil economique et social (CES) has stated that the 2009 draft budget presented by the government needs to be reviewed to take account of lower oil prices.
• Despite the sharp rise in oil prices in the first half of 2008, the countrys foreign-exchange reserves rose only moderately as the government used some of them to fund the debt buyback deal with the Paris Club in early 2008.
• Global financial turbulence is affecting Gabonese commercial banks, leading to a fall in foreign assets, an increase in foreign liabilities, and a slowdown in deposit and private-sector credit growth.
• The works at the Grand Poubara project, a new hydroelectric project on the Ogooue river, have started and are expected to be completed by 2014.

This report covers the following industry codes:
SIC Code: 60;15;13
NAICS Code: 52;23;211