New downward revision of growth 2015 forecasts by CEMAC

The economic growth of member countries of the Economic and Monetary Community of Central Africa (CEMAC) for 2015, previously set between 4.2 and 4.3%, will fall to an even lower level to 2.8 %, announced the Bank of Central African States (BEAC), the regional central bank on Thursday.

According to the BEAC, at its second regular annual session of its Monetary Policy Committee (MPC) at its headquarters in Yaoundé, the economic outlook for the end of 2015 will be marked by "a slowdown in growth and in connection with the cons-performance of the oil sector” of CEMAC.

This was revealed at a press release at the end of the meeting to explain “a significant decline in domestic demand and a decline in non-oil sector activities”

But despite a slowdown of growth to 2.8%, the projections predict an ease in inflationary pressures to 2.9%, in contrast to the budget balance which recorded a deterioration of 3.7% of the GDP. The external current account deficit meanwhile, stabilized at 11.4% of the GDP and the external coverage rate of the currency to 78.4%.

The Governor of the BEAC, Lucas Abaga Nchama, justifies this gloom by a slowdown in investments related to oil production.

"The commitments made by some companies that announced the start of production of a new field, given the price and the cost of operation (the investment cost) have slowed down. So they are not proceeding but holding on," he said.

In its previous forecast in late March, the BEAC had reported promising prospects in this sector based on an increase in the production and dynamism of the non-oil sector, "particularly at the food production, manufacturing and Telecommunication divisions.”

She had therefore expected a GDP growth of 4. 2% to 4.3% beside 5% by the end of 2014 with an inflation rate of 2.8% "in connection to a slowdown in domestic demand”, accompanied by a "deterioration of the fiscal balance to -6.3% of GDP" and a "widening external current account deficit to 20% of the GDP." During the same period, the International Monetary Fund (IMF) meanwhile said it is already less optimistic on lowering the rate of growth to 2.2%. Its economist and head of mission for the CEMAC zone, Zamaroczy Mario, concluded that "2015 will be a year of challenges."

According to him, the fall of crude oil prices has not had any major impact in 2014 when growth was 4.6% (against 4.2% according to the estimates of BEAC who established 3.2% the previous year), "but it should weigh on economic activities in 2015 by lowering the growth rate to 2.2% due to the decline in oil production and public investment."

However, Lucas Abaga Nchama on this analysis said the fall in the price of oil will continue to have less impact on the countries of the region since these states "have declined their investment spending significantly. Some states making less money today dropped their routine."

With the aim to boost the regional economy, the BEAC has stated that it has once again decided to reduce its key rate of tenders to bring it from 2.95% to 2.45%. It is an opportunity for its leader to celebrate "since the 2009-2010 credit to the economy is steadily increasing."

Established in 1994, CEMAC comprises six countries: Cameroon, Congo, Gabon, Equatorial Guinea, Central African Republic (CAR or Central Africa) and Chad. With the exception of the CAR which has been shaken by a serious political and military crisis since the end of 2012, oil is the main source of income of these countries, accounting for up to 70 to 80% of export earnings of many of them.