Country Report Sudan December 2008

Summary

The Economist Intelligence Unit's central scenario is that a major political crisis will be averted in 2009-10, with the ruling National Congress Party maintaining control. However, there are significant downside risks.
Strain will increase on the north-south Comprehensive Peace Agreement in the run up to planned elections in 2009, and particularly as both sides rearming prior to the referendum on southern independence in 2011.
Progress with economic reform will be limited, as the government is preoccupied by the political situation and unwilling to risk losing support from key constituencies. The fiscal deficit will average 4.3% of GDP in 2009-10.
We expect global GDP growth to slow sharply to 0.7% in 2009, as the economic downturn worsens, recovering only slowly in 2010. The price of the benchmark dated Brent Blend will fall to an average of US$35/barrel.
As oil output continues to fall and broader economic and political pressures damage non-oil growth, we expect real GDP growth to remain constrained, at an average of around 4.8% over the outlook period.
As commodity prices fall, inflation is projected to average 9% in 2009-10. The Sudanese pound will depreciate to an average of about SP2.3:US$1 in 2009 and SP2.4:US$1 in 2010.
We expect the current-account deficit to widen sharply to an average of US$4.8bn (8.9% of GDP) in 2009-10.

The issuance of an arrest warrant by the International Criminal Court against the president, Omar al-Bashir, looks increasingly likely. The president has said he might consider stepping down, but not under foreign pressure.
Initial census results (likely to be controversial) will not be released until February, which will make it difficult to hold a general election before the onset of the rainy season, pushing the likely date back to November 2009.
The US president-elect, Barack Obama, has appointed a foreign policy team that includes a number of strong critics of the Sudanese government's actions in Darfur, particular Susan Rice as his ambassador to the UN.
The slump in oil prices has led the government to publish a 2009 budget that is 15% lower than the previous year. It projects a 44% fall in oil revenues and a deficit of 6.2% of GDP, but (optimistically) assumes real GDP growth of 6%.
The Government of Southern Sudan has also issued a 2009 budget of SP3.6bn, only a 5% nominal increase on 2008 (and a decrease when the October supplementary budget is included).

Source: Country Report

This report covers the following industry codes:
SIC Code: 70;47;60;20
NAICS Code: 72;48;52;311