A stable currency peg and an increase in crude oil production willshield the Republic of Congo from the worst of the sustained collapsein oil prices.
Investment in infrastructure will be supported by Chinese assistance,offsetting some headwinds to growth.
Nonetheless, the government will be forced to cut expenditures overthe coming year in order to narrow its wide fiscal deficit and rebuildits sovereign credentials.
Politically, opposition to President Sassou Nguesso's continuedrule is undermining stability. A year-old insurgency has disruptedcommerce, while delayed elections will increase tensions with theopposition.
Major Forecast Changes 0We now believe the economy contracted in 2016 due to spendingcuts and trade disruptions following the severing of the rail line betweenPointe Noire and Brazzaville. We estimate real GDP growthof -2.4% in 2016.
We expect that these tailwinds will remain a weight on growth in2017, with real GDP growth expected to hit just 1.0%, instead ofour forecast of 4.2% previously.
The Gabonese economy will maintain robust growth over the comingyears, driven by public-led investments and supported by rising oilprices.
Although President Ali Bongo remains firmly in control, Gabon facesa period of weakening social stability following its contested Augustpresidential election.
The risk of unrest and strained relationships with Western governmentswill weigh on investor interest in non-oil sectors of the economy.