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Gabon Economic Outlook

Recent macroeconomic and financial developments

Real GDP grew 3.0% in 2022, up from 1.5% in 2021, due to the healthy state of the oil sector (which grew 7.1%) and the nonoil sector (which grew 2.3%). Growth in the oil sector was driven by the 45.3% rise in oil price associated with the 6.1% increase in oil production in 2022, and growth in the nonoil sector was driven by agriculture (which grew 4.9%), forestry (which grew 6.5%), and transportation (which grew 4.2%). The Bank of Central African States tightened monetary policy in 2022 by raising key rates several times to respond to inflationary pressures and boost foreign reserves. Inflation rose to 4.2% in 2022 from 1.1% in 2021 due to higher food prices and the effects of Russia’s invasion of Ukraine. The fiscal balance turned to a surplus of 0.8% in 2022 from a deficit of 1.1% in 2021 due to higher oil revenue (up 51.8%). Debt fell to 52.6% of GDP in 2022 from 66.0% in 2021 thanks to lower financing needs. Reserves, which are used to finance the debt, dropped from 3.0 months of import cover in 2021 to 2.64 in 2022. The current account deficit was 1.2% in 2022 thanks to 45.7% growth in exports of goods and services.

Despite natural resources wealth and high GDP per capita ($8,017 in 2021), social indicators remain poor, with poverty estimated at 33.4% and unemployment estimated at 28.8% in 2021.

Outlook and risks

Real GDP is projected to grow 2.7% in 2023 and 2.8%
in 2024 due to high demand for export products (oil,
manganese, wood, palm oil) and continued economic
reforms. The budget balance is projected to remain
in surplus, at 1.6% in 2023 and 1.2% in 2024. The
current account balance is likely to narrow to 1.9%
of GDP in 2023 before widening slightly to 2.1% in
2024. Inflation is projected to rise to 3.8% in 2023,
still above the 3% target due to effects of Russia’s
invasion of Ukraine, before dropping to 2.9% in 2024.
Possible headwinds include the continuing COVID-19
pandemic, effects of Russia’s invasion of Ukraine, and
political instability linked to presidential elections in
August 2023.

Climate change issues and policy options

Green finance remains limited despite the country’s substantial
natural capital, which consists of forests, arable
land, minerals, oil, waterways, and the like. About 88%
of the country is covered by forest, a massive carbon
sink, which according to the REDD+ initiative allowed
the country to absorb 187 million tons of carbon dioxide
between 2010 and 2018. In July 2022, the country
committed to being carbon-neutral by 2050. The estimated
finance needed to adequately respond to climate
change for 2020–30 is $658 million a year, while an
average of $83 million a year was received in 2010–
20. All these funds came from the public sector: 57%
from the government, 37% from multilateral partners,
and 5% from climate funds. The two national financial
institutions accredited by the Green Climate Fund to
mobilize green finance are the Caisse des Dépôts et
Consignations and the Fonds Gabonais d’Investissements
Stratégiques. The private sector has only limited
involvement in financing climate objectives due to low
financial returns on associated projects. The government
could encourage private investment in sustainable
climate projects through tax incentives, innovative
financing mechanisms, and favorable regulation.

Source: African Economic Outlook (AEO) 2023

African Economic Outlook 2023

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