Country Report Sudan November 2008

Outlook for 2009-10

• 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 (NCP) maintaining control. However, there are significant downside risks.
• There are growing strains on the 2005 north-south Comprehensive Peace Agreement in the run up to possible elections in 2009, and with both sides rearming prior to the 2011 referendum.
• 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 4.6% of GDP.
• We expect global GDP growth to slow sharply to 2% 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$67/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 5.2% over the outlook period.
• As commodity prices fall, inflation is projected to average 8.3% 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$4.3bn (7.4% of GDP) in 2009-10.

Monthly review

• The president, Omar al-Bashir, announced a unilateral ceasefire in Darfur, which was met with scepticism by the rebel Justice and Equality Movement.
• The Sudan People's Liberation Movement has called for changes to nine laws that it says would hinder a democratic election. Because of delays in preparation the election is unlikely to be held before the 2009-10 dry season.
• It has been confirmed that leading member of the opposition Umma Party, Adam Madibo, has resigned, allegedly because of dissatisfaction at the party's rapprochement with the governing NCP.
• Data for the first half of 2008 showed stronger than budgeted fiscal revenue, but the subsequent decline in oil prices will constrain the full-year revenue.
• Nine Chinese oil workers were kidnapped in South Kordofan, apparently by a militia from the Misseriya tribe; four were killed during the rescue operation.
• Sudan's energy minister has said that oil production will reach 600,000 b/d in 2009, but we expect a small decline to around 455,000 b/d.

Source: Country Report