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Cameroon Country Risk Report Q3 2015


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Cameroon Country Risk Report Q3 2015

Core Views

Cameroon’s real GDP growth will slow in 2015, largely due to theeffects that weak oil prices will have on the economy. Private consumption,amid lower interest rates, will remain the key driver ofeconomic expansion.

The government of Cameroon is showing no signs of reducing itsspending commitments in response to the slump in oil prices that isexpected to shave nearly 10% off planned state revenues for 2015.

The focus on boosting non-oil revenues will not prevent a wideningof the budget deficit to 5.9% of GDP this year, which will be financedthrough increased borrowing.

Inflation will fall in Cameroon in 2015, due to lower global oil prices,subdued domestic demand and the low cost of food and transport.

While the Banque des États de l’Afrique Centrale will cut its key policyrate by 45 basis points in 2015 as it seeks to stimulate economicgrowth and household spending in Central Africa, we expect thatcheaper credit will have few tangible effects, given the low levels ofbanking penetration in the region.

We expect Cameroon’s current account deficit to swell to 4.7% ofGDP in 2015, from 4.4% in 2014, as plummeting oil prices and afall in tourism revenues weigh on exports of goods and services.

A weaker currency will provide some relief via lower imports, butwe forecast the current account to expand further over the mediumterm.

As long as the Boko Haram insurgency continues to operate withrelative impunity in Nigeria, the Islamist group will become an evergreater threat to stability in the north of Cameroon. One beneficiaryof the crisis has been Cameroonian president Paul Biya, who hasused it to increase his international legitimacy.


Executive Summary
Core Views
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
President Biya Buoyed By Growing Terrorist Threat
As long as the Boko Haram insurgency continues to operate with relative impunity in Nigeria, the Islamist group will become an ever
greater threat to stability in the north of Cameroon. One beneficiary of the crisis has been Cameroonian president Paul Biya, who has
used it to increase his international legitimacy.
Long-term political outlook
Boko Haram And Presidential Succession The Biggest Risks
Cameroon's single greatest uncertainty over the next decade is how a transition from the leadership of President Paul Biya, who has
ruled since 1982, is managed. Other threats include regional instability caused by marauding Islamist militia, although the country's
fundamentals are relatively strong by Sub-Saharan African standards, and we expect broad political continuity.
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic activity
Growth Subdued By Lower Oil Prices
Cameroon's real GDP growth will slow in 2015, largely due to the effects that weak oil prices will have on the economy. Private
consumption, amid lower interest rates, will remain the key driver of economic expansion.
table : Econo mic Activity
Fiscal Policy
More Borrowing Needed To Sustain Expenditure
The government of Cameroon is showing no signs of reducing its spending commitments in response to the slump in oil prices that is
expected to shave nearly 10% off planned state revenues for 2015.
table : Fiscal Polic y
Monetary Policy
Inflation To Fall Sharply In 2015
Inflation will fall in Cameroon in 2015, due to lower global oil prices, subdued domestic demand and the low cost of food and transport.
While the Banque des États de l'Afrique Centrale will cut its key policy rate by 45 basis points in 2015 as it seeks to stimulate economic
growth and household spending in Central Africa, we expect that cheaper credit will have few tangible effects, given the low levels of
banking penetration in the region.
table : Mone tar y Polic y
Balance Of Payments
Slump In Oil, Tourism To Weigh On Current Account
We expect Cameroon's current account deficit to swell to 4.7% of GDP in 2015, from 4.4% in 2014, as plummeting oil prices and a fall in
tourism revenues weigh on exports of goods and services.
table : Curren t Accoun t
Chapter 3: 10-Year Forecast
The Cameroon Economy To 2024
Trend Growth Will Accelerate
Economic growth in Cameroon will slow in 2016 due to a weak oil sector, but the country's long-term outlook is bright. Private
consumption, agricultural output, and capital investment will lift real GDP growth to an average of 5.3% between 2019 and 2024.
table : Long -Ter m Macroecono mic Forecas ts
Chapter 4: Operational Risk
SWOT Analysis
Operational Risk Index
Operational Risk
table : Opera tional Ris k
Legal Environment
table : Sub -Saharan Africa - Legal Ris k
Costs Of Labour
table : Sub -Saharan Africa - Labour Cos t Ris ks
Chapter 5: BMI Global Macro Outlook
Global Outlook
Softening Growth Picture
Table : Global Assu mptions
Table : Developed States , Real GDP Grow tH, %
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
Table : Emerging Mar kets, Real GDP Grow th, %

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