Boston, MA -- (ReleaseWire) -- 03/31/2014 -- The worsening crisis in the Central African Republic will have a destabilizing effect on eastern Cameroon, forcing the country to increase its military presence along the poorly defended frontier. Violence will remain limited to the provinces of East and Adamaoua, and will not pose a threat to major Cameroonian population centres.
Rising consumer spending and government investment in capital projects will contribute to accelerating Cameroonian economic growth in 2014. We predict that real GDP growth will reach 5.3% this year, an increase from 4.9% in 2013. Economic expansion will remain around 5% over the duration of our 2014-2018 forecast period.
Production at several newly opened oil wells will boost Cameroon's exports in 2014, leading to a moderation in the country's current account deficit. New projects will not prevent the maturation of the country's main oil fields from causing total petroleum exports to decline over the coming years. We predict that Cameroon's current account deficit will stabilise around 4% of GDP.
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Contained inflation in most states and a regional economic recovery make it unlikely that the Banque des Etats de l'Afrique Centrale will cut rates again in 2014. Were the central bank to act, however, BMI stresses that Central Africa's shallow financial system and weak transmission mechanisms mean that a change in monetary policy would have little impact on the region's economy.
A combination of rising oil production and higher domestic revenues will cause Cameroon's fiscal deficit to narrow in 2014, but high spending on both capital projects and government administration will cause the country's budget shortfall to stabilise between 2.0% and 3.0% of GDP over the duration of our 2014-2018 forecast period.
Over the next 10 years we see Cameroon's growth exceeding long-run levels, averaging around 5.0% annually. A weak business environment and poor governance have long held down growth, however, and we expect them to continue to constrain economic expansion over the decade to come.
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