major macro economic indicators
|2014||2015||2016 (f)||2017 (f)|
|GDP growth (%)||4.3||4.0||3.2||4.5|
|Inflation (yearly average) (%)||4.5||0.1||2.5||2.5|
|Budget balance (% GDP)||2.7||-1.2||-2.8||-2.7|
|Current account balance (% GDP)||8.1||-2.3||-5.3||-4.7|
|Public debt (% GDP)||32.2||44.0||47.5||46.5|
(e) Estimate (f) Forecast
- 5th largest oil producer in Sub-Saharan Africa; 2nd largest producer of wood in Africa; aiming to become world’s leading manganese producer
- Work on economic diversification as part of the Emerging Gabon Strategic Plan
- Economy highly dependent on the oil sector
- Re-emergence of budget and current account deficits
- High cost of factors of production, linked with inadequate infrastructure (transport and electricity)
- High unemployment and endemic poverty
- Worsening political context
Weak oil prices weighing on growth
Activity continued to slow in 2016 under the impact of low oil prices, but increased spending aimed at alleviating social tensions ahead of the presidential election and foreign finance helped to some extent sustain consumption and investment. Investment levels however may have suffered as a result of the disturbances following the announcement, at the end of August 2016, of the re-election, disputed, of President Ali Bongo. Investments already made in the mineral ore and wood processing industries as well as those in the agriculture sector (palm oil and rubber) should however give a boost to growth as of 2017. Inflation moved higher in 2016, reflecting wage rises, but should remain under control in 2017.
The country is facing a gradual decline in its oil production as crude oil reserves are being depleted. Output has been in decline for almost twenty years and this is expected to continue into the foreseeable future, although improvements in extraction technologies and the discovery of smaller deposits are likely to slow the rate of decline. The collapse in oil prices and lower production have limited the government’s ability to invest and slowed the effort to diversify and modernise the economy undertaken by the government as part of the Emerging Gabon Strategic Plan (PSGE) launched in 2010.
There is work needed concerning the effectiveness of investments, together with a number of obstacles to growth that need to be cleared (unreliable electricity supply, inflexible job market and shortage of skilled and trained workers, and concerns around the security of contracts). Finally, the benefits of growth are far from being shared across all layers of society. Despite abundant natural resources and per capita income amongst the highest in Sub-Saharan Africa, poverty remains endemic and unemployment high.
Public and external accounts in the red
The public account surplus started to dwindle as of 2010 following the huge public investments made with the implementation of the PSGE. The budget fell into the red in 2015 as a result of the collapse in oil revenues, which forced the government to cut public spending. The continuing plunge in oil receipts in 2016, at the same time as spending was increased for the elections and the preparations for the Africa Cup of Nations (2017), led to a further deepening of the deficit. This should however stabilise against GDP in 2017 thanks to the slight recovery in oil prices. The public debt, whilst still at a moderate level, increased rapidly in recent years, rising from 19.7% in 2012 to 44% of GDP in 2015 as a result of a Eurobond issue and the depreciation of the CFA franc. There has also been a rise in its borrowing costs on the financial markets for Gabon.
In 2015, the country also recorded its first current account deficit in seventeen years following the collapse in oil exports (down to 77% of total exports) and this despite the contraction in imports linked with falling domestic demand and world commodity prices. Exports continued to fall in 2016, still suffering from lower oil sales which largely offset the increase in manganese and wood sales. In 2017, the current account deficit is likely to shrink slightly thanks to the slow rise in crude oil prices and the continuing expansion in non-oil exports.
Acute post-electoral crisis
The disputed re-election of Ali Bongo in August 2016 triggered violent confrontations between the supporters of the opposition candidate, Jean Ping, and security forces (two days of riots, deaths and hundreds of arrests). The Constitutional Court confirmed the victory of the outgoing president in September, which did not stop the European Union observers continuing to denounce the failings of the Gabonese electoral system. Calm has since returned to the country but its political landscape needs to be rebuilt as legislative elections planned for December 2016 have been postponed until July 2017. There is enduring social unrest, further fostered by the level of inequality and failings in terms of basic services. Finally, the long-term development of the country remains limited by governance shortcomings.
Last update: January 2017