Sudan and South Sudan Country Risk Report Q2 2016

Sudan and South Sudan Country Risk Report Q2 2016

Core Views Tight fiscal and monetary policy stances have brought a degree of stability to the Sudanese economy following the painful split from South Sudan. That said, we believe the economy will continue to feel the lasting effects of this painful adjustment for the foreseeable future as the country's hostile political and investment climate preclude a meaningful economic revival. A feared security apparatus, financial backing from Gulf states and a piecemeal commitment to political reform negotiations will allow Sudan's ruling National Congress Party to maintain the status quo over the next two-to-three years. This maintaining of the status quo will, however, increasingly come at the expense of the country's economic and political well-being. South Sudan's August peace deal continues to hold, but with numerous key issues no closer to being resolved, the prospects for a lasting political solution continue to look slim. Meanwhile the decision to float the currency in December will deepen the country's economic pain over the near term. Despite a tentative improvement on the political front, South Sudan's economic crisis continues to deepen. The devaluation of the South Sudanese pound in late-2015 will likely keep inflation in or close to triple figures for most of 2016, heaping further pain on the war-torn, import-reliant economy.


Executive Summary
Core Views
Key Risks
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Sudan Economic Growth Outlook
Growth Squeezed On Numerous Fronts
Notwithstanding an improvement in near-term growth prospects on the back of lower inflation, the fundamental outlook for Sudan's
economy remains bleak.
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
South Sudan Economic Growth Outlook
Currency Devaluation To Deepen Economic Crisis
Despite a tentative improvement on the political front, South Sudan's economic crisis continues to deepen. The devaluation of the South
Sudanese pound in late-2015 will likely keep inflation in or close to triple figures for most of 2016, heaping further pain on the war-torn,
import-reliant economy.
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 2: 10-Year Forecast
The Sudanese Economy To 2025
Subdued Long-Term Growth Outlook
There is strong economic growth potential in the non-oil sector, but the upheaval following the secession of South Sudan and the impact
of Western-led economic sanctions will keep output well below capacity for the foreseeable future. We see Sudan's economy expanding
by an annual average 4.0-5.0% over 2015-2024.
TABLE: LONG-TERM MACROECONOMIC FORECASTS
The South Sudanese Economy To 2025
A Potential Unrealised
The South Sudanese economy is among the most underdeveloped in all of Sub-Saharan Africa, and has significant potential due to its
huge oil reserves, expanding population, large amount of arable land, and proposed integration with East African nations. However, it
faces serious challenges in order to fulfil this potential, including security concerns with its neighbour to the north and among rival ethnic
groups, a gaping infrastructure deficit, and a lack of human or physical capital.
TABLE : LONG-TERM MACROECONOMIC FORECASTS
Chapter 3: Political Outlook
SWOT Analysis
BMI Political Risk Index
Sudan Domestic Politics
Reform Chances Slim As Regime Focuses On Survival
A feared security apparatus, financial backing from Gulf states and a piecemeal commitment to political reform negotiations will allow
Sudan's ruling National Congress Party to maintain the status quo over the next two-to-three years.
South Sudan Domestic Politics
Still Major Hurdles To Political Progress
South Sudan's August peace deal continues to hold, but with numerous key issues no closer to being resolved, the prospects for
a lasting political solution continue to look slim. Meanwhile the decision to float the currency in December will deepen the country's
economic pain over the near term.
Chapter 4: Operational Risk
SWOT Analysis
Operational Risk Index
Operational Risk
TABLE: OPERATIONAL RISK
Trade Procedures And Governance
TABLE: IMPORT AND EXPORT DOCUMENTS
TABLE : BREAKDOWN OF DOCUMENTATION COSTS
TABLE: SUB-SAHARAN AFRICA – TRADE PROCEDURES AND GOVERNANCE RISK
Vulnerability To Crime
Chapter 5: BMI Global Macro Outlook
Global Macro Outlook
Tail Risks Mounting Amid Sub-Par Growth
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, 2015 AND 2016 (%)
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
TABLE: SUDAN – MACROECONOMIC DATA & FORECASTS
TABLE: SOUTH SUDAN – MACROECONOMIC DATA & FORECASTS

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