Population 4.092 million
GDP 13.743 US$ billion
@rating
country
Business climate
assessment
| 2010 | 2011 | 2012(e) | 2013(f) | |
|---|---|---|---|---|
|
GDP growth (%)
|
8.8 |
3.4 |
4.9 |
5.3 |
|
Inflation (yearly average) (%)
|
5 |
1.8 |
5.1 |
4.5 |
|
Budget balance (% GDP)
|
16.1 |
16.4 |
3.7 |
3.1 |
|
Current account balance (% GDP)
|
5.1 |
0.8 |
0.2 |
0.3 |
|
Public debt (% GDP)
|
23.9 |
22.5 |
23 |
21.6 |
| (e) Estimate (f) Forecast | ||||
STRENGTHS
- Oil and forestry wealth
- Expanding mining sector
- Support of the international financial community, debt cancellation under the HIPC initiative
WEAKNESSES
- Heavy dependence on oil
- Lack of infrastructures
- Very difficult business environment, weak governance
- High poverty levels
Risk assessment
Growth increasingly driven by the non-oil sector
Activity increased in 2012, despite a slight fall in oil production (105 million barrels produced during the year), as the construction and public works, transport and energy sectors continued to support the growth of the non-oil sector thanks to public investment. Despite high import content, spending on reconstruction decided after the explosion of an ammunition depot in Brazzaville in March also stimulated activity.
Oil production is expected to continue to decline in 2013 (100 million barrels projected), but this fall is again likely to be largely offset by the expansion in non-oil production, itself expected to benefit from the ongoing public investment programmes.
The economy remains largely dominated by the oil sector (69% of GDP, 76% of government revenues and 87% of exports in 2011) even though the production of the fields currently being exploited is falling. Unless new offshore drilling is undertaken following recent discoveries, oil production is expected to contract strongly in the next twenty years (to 1/6th of its present level). The non-oil sector, for its part, has become an important driver of growth. Timber benefits from strong Chinese demand, telecommunications are expanding and mining exploration is booming (iron ore mining could begin at the end of 2013).
Inflation is higher again mainly due to the higher wage bill, increased social benefits and the cost of dealing with the damage caused by the explosion in the capital. It is above the CEMAC convergence criteria (3%).
Stronger external position but many challenges ahead
The growth of imports and the repatriation of large profits by oil companies almost brought the current account surplus down to zero in 2012 despite higher oil prices. Purchases abroad are expected to stabilise at a high level in 2013 and the price of oil is expected to decline slightly. However, the external position remains strong. Foreign direct investments in the oil sector contribute to the rise in foreign exchange reserves. Above all, the country’s external assets have grown strongly thanks to the high budget surpluses achieved in recent years (though these are currently declining due to higher capital spending). Net external debt thus became negative at the end of 2011, following renewed debt cancellation under the HIPC initiative the year before. Today, although debt has begun to grow again, mainly due to loans granted by China, the country is at a low risk of debt distress. Nevertheless, many challenges still lie ahead. The downward trend in oil production and uncertainties over the future movements in the price of oil make it necessary to conduct a prudent fiscal policy and to accelerate the process of diversifying the economy. And the country continues to suffer from a very difficult business environment, a lack of infrastructures and widespread poverty.
Very little political openness
President Sassou Nguesso, whose term ends in 2016, and his party continue to dominate political life. Last October, the opposition spoke of a serious crisis in the country concerning in particular respect for freedom and has called, without success, for a national sovereign conference. The different political dialogues conducted hitherto have not, however, led to any significant reforms. In principle, the president is serving his last term, but he could be tempted to amend the constitution. Considering the strong concentration of power in his hands, his unexpected departure would probably result in a period of instability. Relations with the Democratic Republic of Congo (DRC) have stabilised even through the instability there is still a source of concern.
