major macro economic indicators
|GDP growth (%)||3,9||2,1||0,8||2,7|
|Inflation (yearly average, %)||-0,1||2,1||2,5||2,5|
|Budget balance (% GDP)||-1,1||-6,6||-3,6||-2,3|
|Current account balance (% GDP)||-5,7||-10,2||-9,3||-6,7|
|Public debt (% GDP)||44,7||64,2||59,0||59,0|
- 5th largest oil producer in Sub-Saharan Africa; 2nd largest African producer of timber; world’s leading producer of highly coveted manganese
- Drive to diversify the economy undertaken under the Emerging Gabon Strategic Plan
- Stable CFA franc
- Economy highly dependent on oil sector
- High cost of production factors, linked to inadequate infrastructure (transport and electricity)
- Informal sector representing 40-50% of GDP
- High unemployment and endemic poverty
- Degraded political context, rampant corruption
- Accumulation of domestic and external arrears
Fragile recovery in 2018 due to slow progress on diversification
Activity slowed in 2017 because of lower prices for oil, on which the Gabon economy strongly depends, and because of poor performance in the tertiary sector. Cash liabilities, as well as an unfavourable economic picture, have weakened the banking sector, which has issued less credit. The economy will remain delicate in 2018, even if recovery is likely following the increase in crude oil prices. The non-oil share of GDP is expected to grow, particularly that of the mining, agri-food and timber sectors. The authorities’ goal under the Emerging Gabon Strategic Plan (EGSP) is to focus on the country’s dependence on commodities, especially oil (27% of GDP in 2016). Under a public/private partnership, in 2017 the Singaporean company, Olam, opened the world’s largest palm oil factory. The production of manganese will remain dynamic due to sustained demand, while the iron and cement sectors could rebound after the drop in orders in 2017. A special economic zone was created in Nkok to provide tax incentives for economic development and to attract FDIs. It is located close to the port of Olam at Owendo, which was inaugurated in October 2017 (EUR 276 million). A loan from the AfDB in late 2017 for EUR 100 million will support continued progress under the agricultural programme, GRAINE, to reduce Gabon’s food imports.
Ongoing fiscal consolidation in 2018
The public accounts surplus fell gradually after 2009, because of increased public investment associated with the implementation of the EGSP. State revenues are, thus, closely linked to oil revenues (59% of tax receipts) and the fall in crude oil prices only pushed up the government’s financing needs. Under the Economic Stimulus Plan (PRE, 2017-2019), the government’s objective is to bring the deficit down below the 3% threshold. It is in this context that fiscal consolidation has helped reduce the public deficit from 2017 and this should continue in 2018 despite higher spending, specifically through investment in infrastructure for transport, water and electricity supply, and Internet access. Income is expected to rise with the strengthening of measures to mobilise tax receipts and customs revenues and the desire to integrate certain activities in the formal sector. Financing the deficit is mainly through concessional loans, notably via the IMF, which granted a 3-year Extended Credit Facility (USD 642 million, 4% of GDP) and the World Bank, which released USD 200 million to clear the country’s trade arrears. Gabon has seen its borrowing costs on the financial markets rise, following a downgrade in its sovereign debt rating. In November 2017 Gabon issued CFA 100 billion (USD 180 million) in bonds at a yield of 6.5% on the regional financial market of the Central African Economic and Monetary Community (CAEMC) to finance its PRE projects.
Following a modest increase in the oil price, exports (79% dependent on black gold) are expected to increase in 2018. Against this, the import volumes are growing because of equipment and manufactured goods needed for investments under the EGSP. The trade balance, in surplus until 2015, will therefore remain in deficit as will the balance of services. The current account deficit will be financed by FDIs (about 5% of GDP) and new concessional loans.
Relative political stability following the serious post-electoral crisis of 2016
The contested re-election of Ali Bongo in August 2016 sparked violence between supporters of the opposition candidate, Jean Ping, who declared himself the victor, and the security forces (two days of riots, deaths and hundreds of arrests). The parliamentary elections, initially planned for July 2017, have been postponed until April 2018 by the Constitutional Court and could be postponed again. The argument put forward, qualified as force majeure, is that the reforms discussed as part of the national dialogue after the demonstrations of 2016, have been delayed. The project, which includes the review of 40 articles of the Constitution, was presented to the Council of Ministers on 28 September 2017. Jean Ping refused to take part of it. The measures comprise greater powers for the National Assembly compared to the Senate, as well as a two-round process for the national, parliamentary and presidential elections (compared with one round currently). Some amendments were rejected by the opposition on grounds that they would extend the president’s powers. Nevertheless, the opposition is unlikely to be in a position to prevent the adoption of constitutional reform by the parliament, as Ali Bongo’s Gabonese Democratic Party (PDG) has a majority in the house. In August 2017 the President announced the formation of a government which includes members of the opposition.
Despite the reforms, the business climate remains fragile (167th in the Doing Business 2018 rankings) because of infrastructure shortcomings, corruption, and difficulty in conducting business.
Last update: January 2018