Overview
Located in Central Africa, Gabon has significant natural resources. With a maritime facade on the Atlantic Ocean, it is bordered by Cameroon, Equatorial Guinea and the Republic of Congo. Despite its vast area, mainly forested, Gabon has only 2.3 million inhabitants in 2023.
Gabon's level of urbanization is one of the highest in Africa, with more than 80 % of its population resides in urban areas. The two main cities, Libreville and Port-Gentil are home to nearly 59 % of inhabitants. Youth is a distinctive feature of its demography: half of the population is under 20, and while the fertility rate in urban areas is four children per woman, it rises to six in rural areas.
A pioneer in ecology, Gabon is actively working to protect its rainforest, making it a net absorber of carbon. It is a champion of carbon neutrality initiatives. Its diverse ecosystem offers fertile soils, abundant coastal resources, and fisheries. However, despite its economic potential, the country struggles to translate its resource wealth into sustainable and inclusive growth.
Political situation
Gabon has a nuanced political history, rich in twists and turns. Under the presidency of Omar Bongo Ondimba, who came to power in 1967, the country became a single-party state, dominated by the Gabonese Democratic Party (PDG).
His son, Ali Bongo Ondimba, succeeded him in 2009 and was re-elected in August 2016 in a highly controversial election marked by a relatively low voter turnout (59%). Legislative and municipal elections held in 2018 saw a large victory for the PDG, which retained its two - thirds majority in the National Assembly.
Ali Bongo was deposed on August 30, 2023, following a military intervention orchestrated by the Committee for the Transition and Restoration of Institutions (CTRI).
Brigadier General Brice Clotaire Oligui Nguema is appointed president of the Gabonese transition. At the beginning of this period, several institutions, including the Senate, the National Assembly and the Constitutional Court are temporarily dissolved. Elections are envisaged under a new constitution at the end of the transition. The latter should end in August 2025.
Economic situation
August 2023 coup d¡¯¨¦tat triggered significant changes in Gabon¡¯s economic policies, including the implementation of more expansionary fiscal policies and increased efforts to strengthen institutions and transparency in public financial management. Economically, the coup itself did not cause significant disruptions, with the notable exception of the restaurant and other nighttime services sectors, which were significantly impacted by the prolonged curfews.
Gabon¡¯s growth in 2023 was nonetheless affected by both external and internal factors. While oil production increased by 7.6%, due in part to previous investments to optimize production from mature fields, growth was affected by heavy rains and landslides that blocked part of the country's only railway for several weeks, affecting manganese and timber exports. The Gabonese economy thus grew by 2.4% in 2023, compared to 3.1% in 2022. This underperformance of the wood and manganese sectors, combined with the fall in oil prices, resulted in a deterioration in the country's current account balance, which nevertheless remains positive in 2023. Inflation, for its part, continued to fall, standing at 3.7% in December 2023. This fall in inflation is the joint result of the introduction of additional measures aimed at containing the cost of living and the implementation of a more restrictive monetary policy by the BEAC.
State budget revenues, which reached 23.4% of GDP in 2023, increased significantly, supported by both a sharp rise in oil production and tax revenues. Tax revenues benefited from the efforts implemented by the transitional authorities to reduce the level of tax expenditure and secure tax revenues, in particular through the digitalization of the tax administration and the digitalization of the customs office on the country's northern border at the end of 2023. However, public expenditure also increased significantly at the same time, resulting in an increase in the budget deficit, which stood at 1.0% of GDP in 2023. Public investments have indeed increased significantly due to the acceleration of infrastructure projects. Expenditures also increased due to the organization of the August 2023 elections, the resumption of public sector recruitment from the end of 2023, the increase in fuel subsidies and several other social measures introduced by the new authorities. The deterioration of the budget balance, combined with the introduction of additional components identified since the transition period in the scope of public debt (such as VAT refund arrears), thanks to the transparency efforts of the Transition authorities, brought public debt to 72.1% of GDP in 2023.
Gabonese growth is expected to remain positive but moderate over the coming years, due to the gradual depletion of oil reserves, projected from 2025 onwards.
However, other sectors such as the timber industry, palm oil and rubber plantations, as well as the start of production at the Belinga iron deposit and new manganese deposits, should play a key role in future growth.
Nevertheless, significant risks weigh on growth prospects. The political context, so far relatively stable thanks to popular support for the transitional authorities, could deteriorate with the organization of the referendum for the adoption of a new constitution and the upcoming electoral deadlines. A quick return to constitutional order is crucial to avoid regional sanctions that would further limit the country's access to certain sources of funding.
Another significant risk would come from the deterioration of the country's fiscal situation due to the expected decline in oil revenues from 2025, combined with strong pressures on state spending to meet the high social demand.
Finally, Gabon also faces the risk of reduced access to financing and increased borrowing costs, given, on one hand, the tightening of global financial conditions and, on the other hand, the significant financing needs anticipated to cope with the maturity of eurobonds in 2025. The accumulation of payment arrears, despite the efforts of the new authorities, exacerbates this risk.
Without corrective measures, an increase in budget deficits could compromise debt sustainability, already estimated at more than 70% of GDP in 2023, with a projection reaching 80% by 2026. These risks led to the downgrade of Gabon's credit rating by Moody's and Fitch in mid-2024.
Last Updated: Oct 22, 2024
