major macro economic indicators
|2014||2015||2016 (f)||2017 (f)|
|GDP growth (%)||5,9||5,8||4,8||4,2|
|Inflation (yearly average) (%)||1,8||2,7||0,9||2,2|
|Budget balance (% GDP)||-4,6||-2,7||-6,2||-4,9|
|Current account balance (% GDP)||-4,3||-4,2||-4,2||-4,0|
|Public debt (% GDP)||27,5||29,0||31,6||33,8|
(e) Estimate (f) Forecast
- Agricultural, oil and mining resources
- Diversified economy compared with that of other oil exporters
- Ongoing infrastructure modernisation
- Debt reduction granted in 2006 as part of the Heavily Indebted Poor Countries (HIPC) initiative and the Multilateral Debt Relief initiative
- External and public accounts dependent on oil
- Rapid rise in debt due to ambitious public investment programme
- Lack of inclusive growth and still difficult business climate
- Increased political risk: insecurity in the far north of the country and uncertainty surrounding the succession to Paul Biya (84, 35 years in office) and increasing tensions between the Anglophone minority and the regime (francophone)
Economy remains resilient despite still low oil prices
In 2017, growth could be further buoyed by investment in infrastructure projects (commissioning of the Kribi deep water port, construction of three dams and finalisation of the second bridge over the Wouri). Moreover, the gas sector could be expanded, due to the progress of the Kribi offshore gas fields. However, this industry may not expand in a uniform way, as shown by the cancellation of another LNG factory project.
The primary sector continues to play an important role (20% of GDP in 2014) and pull in significant earnings from its agricultural exports (wood, cocoa, bananas, cotton, etc.). However, cocoa production could be less significant in 2017 due to the drought, during sowing, in 2016. Therefore, the economy remains highly dependent on climatic events, despite the slow rise in global prices of commodities in 2017 (except for cocoa prices).
Due to the discovery of new reserves and the application of new extraction technologies, oil production has been turned around, for a few years at any rate.
In March 2017, IMF staff initiated discussions with Cameroon in order to put in place an economic programme, supported by the fund. The programme would aim to boost private investment, promote more inclusive growth and improve the business climate.
In 2017, inflation should increase. This could result from the rise in food products (the drought in 2016 should affect harvests in 2017) and that of energy prices. However, the pegging of the CFA franc to the euro will continue to maintain price stability. Remaining below 3%, this should boost household consumption, one of the drivers of growth.
The twin deficits are falling but the risk of overindebtedness has once again increased
Fiscal revenues are improving. Oil revenue could rise under the effect of the modest increase in oil prices. The expansion of the non-oil tax base in the 2017 budget should also allow for increased domestic revenues. Equally, the reestablishment of customs duties at 10% on clinker and the increase in the special tax on oil products should increase customs revenue. At the same time, the main items of expenditure concern capital goods, linked with the implementation of major infrastructure projects and security costs, allocated in large part to the fight against the Boko Haram terrorist group in the far north of the country.
The modest rise in the price of a barrel could result in a slight reduction in the current account deficit in 2017, given that oil products account for more than a third of total exports. Other commodities, such as wood, cocoa, aluminium and cotton will continue to diversify the country's export base. However, the need for imports linked to the implementation of large investment projects will still be important, and this means that the trade balance and that of services are expected to remain in deficit. This is also the case for revenues, as a result of the repatriation of profits by foreign firms. On the other hand, the balance of current transfers should continue to be buoyed by expatriate workers' remittances.
The country benefited from major debt relief in 2006 after reaching the completion point of the HIPC initiative. However, in the space of a few years it has again become seriously indebted. Public debt is rising due to the rapid rise in external debt under increasingly costly terms (in particular with China), combined with the growing recourse to bond issues on the regional market (as recently as October 2016) to finance infrastructure projects. Furthermore, the poor financial performance of public sector companies could create contingent liability risks for the government. In 2015, the external debt risk rose from “moderate” to “high” according to the IMF. Discussions for the implementation of the triennial economic plan, begun in March 2017, will focus in particular on regaining control of the debt trajectory
Rising tensions with the Anglophone minority, continuing insecurity in the far north of the country and ongoing uncertainty over the successor to the Head of State
The country is run by President Paul Biya (aged 83), who has held power since 1982 and whose sixth term of office runs until 2018. The Head of State has proven able, so far, to maintain a degree of balance between the country's various ethnic and linguistic communities. However, his succession could be a source of uncertainty in the medium term, in that his leaving office or his death could trigger power struggles within the ruling party and endanger this fragile balance. However, the presidential party is likely to hold on to power given the lack of a credible alternative.
Regarding its trade outlook, Cameroon signed a free trade agreement with the European Union in August 2016, thus enabling preferential access to the markets of both parties. However, the main challenge faced by Cameroon is the deterioration in its security situation since 2013 with incursions by the Nigerian Islamic terrorist group Boko Haram in the far north. The military capacity of the terrorists has been reduced following combined operations by Nigeria, Cameroon, Chad and Niger, which has however not prevented it from carrying out, from July 2015, a campaign of suicide attacks in this part of the country. This deteriorated security climate results in massive displacement of populations, notably from neighbouring countries (Chad, Nigeria, Central African Republic) towards Cameroon. In this context, the business climate should remain difficult, with the country ranked 166 out of 190 in the latest edition of the Doing Business ranking.
Security and political stability are also threatened on a second front. Since the end of October, the anglophone minority (in the north-west and south-west of the country) has been protesting to express its dissatisfaction with perceived increasing political and economic marginalization for the benefit of the francophone majority. The protests to make these claims nevertheless quickly degenerated. The reaction of the government of Paul Biya - massive deployment of policemen to disperse demonstrators, muscular arrests, incarceration of the leaders of the movement, prosecution of activists for rebellion and terrorist actions and internet cuts in the two English-speaking regions - feeds tensions and revives tensions between the two communities.
Last update: April 2017