Tuesday , October 4 2022

BEAC expects a "less-than-expected acceleration" of the economy in the CEMAC zone


Its updated forecasts are based on a growth rate of 1.7%, compared with + 0.2% in 2017, an increase in the general price level by an average of 1.7%, compared to 0.9% in 2017, an increase in the surplus of budget commitments, including donations, to 0.5% of gross domestic product (GDP) against -3.1% of GDP in 2017.

At the same time, according to the Central Bank forecast, CEMAC's current account deficit will shrink to -3.7% of GDP against -4.2% of GDP in 2017, as well as an increase of the money supply by 6.3%, for an external currency compensation rate that will remain at 59.7%.

These data strongly contradict the revised forecasts for the monetary and economic situation of the CEMAC Member States for 2018 submitted by the Monetary Policy Committee (MPC) on 25 July which focused on accelerating activity, an increase of 2.5 % vs. initial forecast + 1.9%.

At that time, the Publications Institute also saw an increase in the general price level to 1.6% on an annual average, compared with 0.9% in 2017, a surplus of the budgetary base commitments, including subsidies, 0.5 % of GDP, compared with -3.3% of GDP in 2017, while the current account deficit was expected to be -4.3% of GDP, compared with -4.0% of GDP in 2017 and an increase in the money supply of 7.1%, with an external currency compensation factor of 60.7%.

According to BEAC, the assumptions underpinning the expected changes in the macroeconomic framework for 2018 are externally the biggest recovery in crude oil prices worldwide, the devaluation of the US dollar from 5.9% to 546.9 FCFA / dollar, lower from what was previously projected (-8.9% to 529.1 CFA francs / dollar).

The same forecasts show a significant improvement in the terms of trade and domestic growth of oil production, the reduction of gas production and the continuation of macroeconomic and structural reforms by the CEMAC States.

However, the publishing house warns against the risk of not signing a Congo financial program with the International Monetary Fund (IMF), which could have a negative impact on monetary stability due to the weak mobilization of external resources that would result from such an event.

"Accelerating world economic growth will contribute to an increase in world trade volume by 4.2% in 2018 and 4.0% in 2019 compared to 5.2% in 2017 and will benefit CEMAC's economies in the medium term, the predicted deterioration in trade conditions, mainly related to the unfavorable development of oil prices between 2019 and 2020. "

The sub-regional economic and financial outlook set by BEAC forecasts a real growth rate, which should reach 3.4% in 2019 and fall to 3.0% and 3.1% in 2020 and 2021 respectively, compared with 1.7% in 2018, mainly due to the performance of the oil sector, a development stemming from the development of the agricultural sector, services, construction and public works (BTP) and manufacturing industries.

In support of non-oil business, the Central Bank is committed to restoring security in the Central African Republic and the Chad and Cameroon border with Nigeria as well as in the north and southwest regions of Cameroon. but also the implementation of the Economic and Financial Reform Program (PREF-CEMAC) and the positive results from the implementation of the fiscal consolidation measures contained in the programs signed by the States with the IMF.

In the medium term, inflation forecasts by the Bank's services are rising, remaining below the EU 3% rule, thanks to increased tax, domestic demand, increased budget revenues and fuel prices in Gabon and their continued growth in the sub-region due to their readjustment to world crude oil prices.

In the period 2019-2021, CEMAC's public finances will remain in surplus, while external accounts will have difficulty recovering over the years and the external currency coverage rate will fall from 63.5% in 2019 to 65.2% % in 2020 and 67.7% in 2021, from 59.7% in 2018, in relation to the continuing increase in net foreign assets at an annual variation of 13.4% in 2019, 7, 0% in 2020 and 14, 3% in 2021 after 19.9% ​​in 2018.

However, there are still risks to these forecasts, which are related to a discrepancy in IMF program execution, a sudden and unpredictable fall in the price of a crude oil barrel, a faster than expected Federal Reserve's tightening monetary policy. United States of America.

Given the very poor economic and financial situation, and in line with the strategic orientation of its monetary policy for 2018, BEAC plans to continue strengthening its monetary policy to raise it to a minimum equivalent to a quarterly coverage of imports goods and services and servicing external public debt.

On the basis of the favorable macroeconomic outlook for the sub-region and support for its external viability, CPM announced on 31 October its decision to increase the bid rate (TIAO) by 2,95% to 3,50% of the marginal lending facility by 4.70% to 5.25% in order to maintain the interest rate on the marginal lending facility unchanged, increase the bank's interest rate on interest rates from 7.00% to 7.55% and maintain unchanged minimum reserve requirement ratios.

FCEB / your / APA

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