Country Report Gabon January 2009

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.
• The sharp decline in oil revenue caused by falling oil prices and the expected rise in unemployment resulting from the effect of the global economic crisis on the forestry and mining sectors is likely to lead to rising social unrest.
• As the political system largely depends on his patronage network, the greatest risk to stability would be MrBongos sudden departure from the political scene.
• The forecast sharp fall in oil prices will have a major influence on the governments economic policy, as it will be the first time since 2002 that the government risks running into payment difficulties.
• Real GDP growth is forecast to reach 4.4% in 2009, owing to a significant increase in oil production, and 3.5% in 2010 as activity in the mining and forestry sectors picks up.
• Average annual inflation is expected to fall to 3% in 2009, reflecting lower global food and oil prices, and to rise again in 2010 to 3.5%, in line with commodity price increases and strong domestic demand.
• The current account is forecast to deteriorate sharply, owing to the sharp fall in oil prices, posting deficits equivalent to 16.2% of GDP in 2009 and 7.5% of GDP in 2010.

Monthly review

• The sharp drop in oil prices and the negative effect that the global economic crisis is having on some sectors have led to an intensification of strike activity.
• Mr Bongo has reshuffled top military and police personnel in order to ensure the loyalty of both corps. The newly appointed army and police chiefs are believed to be close to his son, Ali Bongo Ondimba.
• The presidential guard has been accused of beating up a journalist who had accused Mr Bongos daughter of embezzlement of public funds in an article, highlighting the regimes reduced tolerance of corruption accusations.
• The National Assembly has agreed to review the 2009 budget, which will be subject to downward revisions in line with the recent fall in oil prices.
• The IMF has expressed overall satisfaction at the governments progress towards meeting the targets agreed under the stand-by arrangement.
• The forestry sector has been the most affected by the global economic crisis: production is estimated to have fallen by 6% in 2008.