Coface Group
Gabon

Gabon

Population 1.6 million
GDP per capita 11,484 US$
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Country risk assessment
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Synthesis

major macro economic indicators

  2013  2014 2015 (f) 2016 (f)
GDP growth (%) 5.6 4.3 2.5 3.8
Inflation (yearly average) (%) 0.5  4.5 0.6 2.1
Budget balance (% GDP)  1.8 2.7 -3.6 -3.6
Current account balance (% GDP) 12.3 8.3 7.0 -6.0
Public debt (% GDP)  29.2 28.9 39.0 42.0

 

(f) Forecast

STRENGTHS

  • 5th largest oil producer in Sub-Saharan Africa; 2nd largest African timber producer; aiming to be the world's leading manganese producer
  • Economic diversification efforts undertaken under the “Plan Gabon Emergent”

WEAKNESSES

  • Economy highly dependent on the oil sector
  • Re-emergence of budget and external deficits
  • High cost of production factors linked to infrastructure inadequacy (transport and electricity)
  • High unemployment and widespread poverty

Risk assessment

Growth hit by oil price collapse

Growth declined sharply in 2015 under the impact of falling oil prices and the significant drop in oil output as a result of strikes and the rehabilitation of a number of wells. There was then the impact of cuts in investment spending which the government was obliged to make to keep the public finances under control. Economic activity is expected to again pick up as of 2016 thanks to election spending, the natural resources sector (agri-business, gold and manganese mines, wood processing) and the services sector.
The discovery of new oil deposits did not compensate for the gradual depletion of older wells and the country has to deal with a decline in its oil production. Oil exploration is likely to be affected by the fall in oil prices. The weak state of the oil market is behind the slowing down in public investment and efforts to diversify and modernise the economy, undertaken by the authorities as part of the Plan stratégique Gabon émergent (PSGE), could also be at risk.
Despite the country’s oil wealth, poverty and unemployment levels remain high. This wealth did not translated into a real improvement in living conditions of the population as a result of large number of obstacles to development such as inadequate infrastructure, in particular transport, shortages of skilled labour and poor business climate, constraints that could one day be overcome if the objectives of the PSGE are achieved.

 

Public and external accounts into the red as of 2015

On the fiscal front, the fall in oil receipts, which provided over 50% of government revenues in recent years, forced the government to cut public spending as of 2014. The reduction reached 14% in 2015 but should be much smaller in 2016, as a result of the upcoming elections. Capital spending in particular has been regularly revised downwards although the government stated that it does not want to cut this too heavily in priority areas (transport and information and communication technologies). The budget surplus narrowed in recent years as a result of the huge increase in public investment resulting from the launch of the PSGE. With the fall in oil prices and the downward trend in oil production, this surplus turned into a deficit in 2015. Government debt is still at a moderate level but the country’s debt quickly expanded following the early repayment of the debt owed to Paris Club creditors in 2008. Gabon also exceeded in 2015 the 35% of GDP debt ceiling it set itself and has to deal with higher borrowing costs on the bond markets.
Current account surpluses have also given way to a substantial deficit in 2015 as a result of the sharp decline in oil exports (80% of sales of goods abroad until 2013), and this despite the fall in imports associated with reduced public demand and global prices for basic products. In 2016, sales of oil are expected to remain at a low level, still suffering from low oil prices, but exports of non-oil products (manganese and wood in particular) are expected to keep on growing. There is likely to be a slight growth in imports, mainly because of the elections. The trade surplus should increase somewhat and remain below the deficit in the balance of invisibles, with the latter reflecting the cost of freight and insurance, the purchases of technical services from abroad and the repatriation of profits.

 

Rising tension as presidential and parliamentary elections approach in 2016

The political situation is becoming increasingly tense as the presidential and parliamentary elections scheduled for 2016 get nearer, and at the same time as the economic situation deteriorates. Defections from within the ruling party and the creation of an opposition front, although its own internal divisions are far from disappearing, should lead to closer election results than in the past. A dissident group has also emerged within the governing party, questioning the lack of democracy within that organisation. On top of this, the lack of improvements in living conditions for a large part of the population, the high level of unemployment and public service deficiencies are all feeding into social discontent.

 

Last update: January 2016

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