Country Report Niger November 2009

Outlook for 2010-11

The political outlook has become highly uncertain following the virtual seizure of power by its president, Mamadou Tandja, who has introduced a new constitution greatly extending his powers and has gone ahead with an election, boycotted by the opposition, which gives him control of the legislature. This has generated fierce opposition and broken the consensus on which Niger's political stability has been based. Tensions are likely to continue and the country's hitherto good relations with its neighbours and with international donors may be affected. The Economist Intelligence Unit forecasts real GDP growth of 4.8% in 2010 and 5.3% in 2011, underpinned by higher mining output and major investment projects in mining, oil and infrastructure. Average inflation is forecast to fall from an estimated 4.7% in 2009 to 2.1% in 2010, before rising to 3.8% in 2011. The current-account deficit is forecast to rise from an estimated 21% of GDP in 2009 to around 30% of GDP in 2010-11, because of an increase in imported goods for developing the Imouraren uranium mine and the Agadem oilfield.

The political scene

A referendum held in August has extended Mr Tandja's term of office and has greatly increased his powers. His party, Mouvement national pour la societe de developpement (MNSD), won a landslide victory in a legislative election in October boycotted by the opposition parties. There has been a clampdown on the opposition and the press, but international condemnation could threaten foreign aid. The government has signed a peace agreement with Tuareg rebels in northern Niger. Niger was placed 34th out of 53 countries in the Ibrahim Index of African Governance.

Economic policy

The IMF has warned that the withholding of budget support by donors could disrupt fiscal consolidation. A survey by the World Bank ranks Niger as one of the worst countries in the world in which to do business.

The domestic economy

Real GDP growth is estimated to have fallen sharply in 2009, after reaching 9.5% in 2008 because of a record harvest. Year-on-year inflation fell to 0.8% in September, compared with 13.6% in December. Niger has come bottom in the UN Development Programme's latest Human Development Index.

Foreign trade and payments

China has increased its stake in Niger by winning the contract for constructing the Kandadji dam; trade between the two countries increased fivefold in 2008.