Country Report Gabon May 2009

Outlook for 2009-10

• The president, Omar Bongo Ondimba, who over the past four decades has skilfully eliminated most forms of political opposition through a combination of co-option and repression, will remain the dominant political figure.
• As the political system largely depends on MrBongo's patronage network, the greatest risk to stability would be his sudden departure from power.
• The sharp decline in oil revenue caused by falling oil prices, combined with the rise in unemployment stemming from the impact of the global downturn on the forestry and mining sectors, is likely to lead to growing social unrest.
• The forecast sharp fall in oil prices will also have a major influence on the government's economic policy, as it will be the first time since 2002 that the government risks running into payment difficulties.
• Real GDP is forecast to contract by 1.2% in 2009, as the global economic downturn hits activity in the non-oil sectors, and to grow by 2.5% 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, before rising again in 2010, to 3.5%, owing to commodity price increases and strong domestic demand.
• The current account is projected to move into deficit, by the equivalent of 3.1% of GDP in 2009 and 1.1% of GDP in 2010, owing to an expected sharp fall in oil export revenue as a result of lower international oil prices.

Monthly review

• Industrial action in the public sector has intensified in recent weeks, and minimal services at the country's main hospitals have not been maintained.
• The government has adopted a revised 2009 budget, projecting a dramatic fall in oil revenue. Total spending is budgeted to fall only modestly as the public-sector wage bill has been increased owing to pressures from trade unions.
• In order to increase the confidence of international investors, the government has outlined a series of additional sources of funding that it could draw on if revenue were to fall further than currently expected.
• The government has reduced its oil production forecast for 2009 from 12.8mtonnes to 12.6m tonnes owing to lower investment in marginal oilfields.
• Comilog, a manganese producer, expects manganese output to fall from 3.3m tonnes in 2008 to 1.9m tonnes in 2009, owing to a decline in global demand.
• The government has revised down its real GDP growth forecast for 2009 to 0.8%, similar to the latest projection from the IMF, to take account of the severe impact of the global economic downturn on the Gabonese economy.

Source: Country Report