Country Report Senegal September 2009

Outlook for 2009-10

• The political scene in 2009-10 will be dominated by rivalries over who will succeed the elderly president, Abdoulaye Wade, when his term expires in 2012 (or earlier, in the event of his death or sudden illness).
• Assuming that Mr Wade survives until the end of his term, the proposed expansion, reorganisation and rebranding of the ruling Parti democratique senegalais (PDS) is likely to strengthen his authority over the party.
• The victory of the opposition in local elections held in March 2009 suggests that it is in a strong position to challenge for power at the national level at the next presidential and legislative elections, due in 2012.
• Largely owing to the forecast for sharply reduced foreign direct investment inflows and domestic demand, the Economist Intelligence Unit forecasts real GDP growth of just 1.7% in 2009 and 2.2% in 2010.
• We have revised down our forecast for average consumer price inflation from 1.5% to 0.8%, in view of recent data. We now predict inflation at 2.7% in 2010 (previously 2%) in line with our forecast for key imported commodities.
• Although sharply lower global demand will reduce exports, imports are due to drop further, in line with sluggish domestic demand, leading to a narrower current-account deficit in 2009, of 10.7%, widening to 11.5% in 2010.

Monthly review

• In August the president provoked an outcry by claiming 35% of the future receipts from a forthcoming cultural attraction in the capital, Dakar, the design of which he claims to be his intellectual property.
• A recently published book has stirred up controversy by sharply criticising the financial management of the president's son, Karim, while he led the public agency responsible for preparing for an international summit in March 2008.
• Protracted negotiations between the government, employers and trade unions concluded on August 20th with an agreement on various concessions to workers, including a rise in private-sector wages of 4-8%.
• Groundnut producers have again voiced complaints about the government's lack of support for this key economic sector.
• According to recent data, consumer prices dropped both quarter on quarter and year on year in April-June 2009. The lower prices were driven by sharp drops in the prices of foodstuffs.
• Recently published figures show that the contribution of agriculture to GDP rose from 5.2% in 2007 to 7.4% in 2008. The rise may be partly attributable to higher government investment in agriculture.

This report covers the following industry codes:
SIC Code: 60;1;47
NAICS Code: 52;11;48