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Gabon and Rep. Congo Country Risk Report Q3 2017

Core Views

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.

Core Views

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.


BMI Index
BMI Risk Index – Congo-Brazzaville
BMI Risk Index – Gabon
BMI Index League Tables
Executive Summary – Congo-Brazzaville
Core Views
Major Forecast Changes
Chapter 1.1: Economic Outlook – Congo-Brazzaville
SWOT Analysis
Economic Growth Outlook
Government Cuts Will Weigh On Growth
The Republic of Congo will see tepid growth in 2017, after activity contracted in 2016. Although the oil sector is set to strengthen,
consumption will remain weak as the government pursues fiscal consolidation.
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
Chapter 1.2: 10-Year Forecast – Congo-Brazzaville
The Congo Economy To 2026
Structural Weaknesses To Continue Amid Oil Boom
Economic growth will remain robust in Congo-Brazzaville over our long-term forecast period thanks to rapid production growth in the
oil sector offsetting the impact of the low price of crude in the near term. However, the economy will struggle to break free of the same
structural inadequacies it has been guilty of for years: namely, a dependence on oil.
Chapter 1.3: Political Outlook – Congo-Brazzaville
SWOT Analysis
Domestic Politics
Continuing Insurgency Will Undermine Social Stability
The Republic of Congo faces fraying social stability in light of a year-old insurgency, an uncertain election timeline and weak economic
conditions. Elevated political risks will remain a weight on investment over the coming quarters.
Executive Summary – Gabon
Core Views
Chapter 2.1: Economic Outlook – Gabon
SWOT Analysis
Economic Growth Outlook
Fiscal Deterioration Creates Headwinds To Growth
Weak revenues and a rising debt load will undermine Gabon's attempts to drive economic growth through public investment. Though
multilateral assistance is likely to offer support in the coming years, capital expenditures are set to fall in the short term as interest costs
rise.
Contents
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: NET EXPORTS FORECASTS
Chapter 2.2: 10-Year Forecast – Gabon
The Gabonese Economy To 2026
Head Start In Diversification Drive Will Yield Long-Term Results
The Gabonese government's early recognition of the limitations of an oil-dependent economic model will yield some positive results
over our long-term forecast period, with economic growth to accelerate to 2020 and remain robust thereafter. Efforts at economic
diversification will help the country avoid some of the structural pitfalls of the region's other oil producers.
Chapter 2.3: Political Outlook – Gabon
SWOT Analysis
Domestic Politics
Fractures On Both Sides Render Reform Outlook Uncertain
Gabon's national dialogue process will reduce unrest that has spread throughout the country following President Ali Bongo's contested
re-election. However, fractures within both the ruling party and the opposition render the possibility of political reform uncertain.
Chapter 3: BMI Global Macro Outlook
From Reflation To Disappointment
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: CONGO-BRAZZAVILLE – MACROECONOMIC DATA & FORECASTS
TABLE: GABON – MACROECONOMIC DATA & FORECASTS

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