Economic expansion in Cameroon is accelerating, and we predict that real GDP grow will be 4.6% in 2014. The country's economy will outperform its Central African peers, averaging 4.8% growth between 2014 and 2018.
Faltering oil production and high import demand will cause Cameroon's current account deficit to widen to 6.0% in 2014. We expect the shortfall to remain relatively stable over the coming years.
High spending on capital projects will keep the country's fiscal deficit wide. The shortfall could expand rapidly if the government is unable to control spending on costly fuel subsidies.
The Banque des États de l'Afrique Centrale cut its core interest rate by 250 basis points to 3.25%. While we do not expect that the cut will have a significant impact on the regional economy, further loosening is likely in 2014.
Key Risks To Outlook
Escalating violence in the Central African Republic poses a threat to Cameroon's eastern province. We believe that the government will succeed in preventing a major breakdown of political authority, but a larger-than-expected influx of refugees could destabilise the region.
New oil discoveries could lead to a significant change to our balance of payments and government revenue forecasts.
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