With GDP per capita of USD 8,100 in 2019, Gabon is among the wealthiest countries in sub-Saharan Africa as a result of large hydrocarbon reserves. The political situation is also remarkably stable, and should remain so even though the state of President Bongo’s health is a cause of some concern. Like other oil-producing countries in the region, Gabon will have to cope with the dual shock of the COVID19 pandemic and low global energy prices. Macroeconomic buffers are limited as Gabon was just recovering from a previous oil shock in 2015-2016. Real GDP growth reached 3.8% in 2019, up from 1% in 2018 and 0.5% in 2017, but far below an annual average rate of 5.7% in 2010-2014. In 2020, real GDP reached 2.7%.
Medium-term forecasts look brighter but risks are titled to the downside. Public detbt high is expected, making fiscal consolidation a critical challenge to overcome. The country will likely have to remain under the IMF tutelage, notably to bolster investors’ confidence. The three-year financing agreement signed with the Fund in 2017 has produced encouraging results. Greater reforms are also necessary to foster economic diversification and so improve the growth potential.
Gabon is a member of CEMAC (Economic Community of Central Africa States), with the French treasury guaranteeing the full convertibility of the CFA Franc against the euro at a fixed rate. The decline in oil exports will put the region’s external accounts under strong pressure and so increased exchange rate risk; however, the peg remains technically viable and official creditor support is expected to cover the bulk of the region’s external financing needs in 2020. In addition, a devaluation of the CFA Franc would bring more costs than benefits, reducing the appetite for such a decision.
