| 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 by 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 the effects of Russia’s invasion of Ukraine, before dropping to 2.9% in 2024. Possible headwinds include the continuing COVID-19 pandemic, the 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 favourable regulation. |
| For the full document click the link below: |
| Gabon: Economic Outlook GDP |
