Central Africa set for highest economic growth in a decade amid inflation concerns

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Business in Cameroon | Growth within the Cemac region is expected to peak at 3.6% this year, according to the estimates of Beac’s Monetary Policy Committee (MPC), which met on March 25 in Yaoundé.

Beac Governor Yvon Sana Bangui mentioned that achieving this optimistic forecast would mark the highest economic growth rate the region has seen in the last decade. The Central Bank attributes this growth projection primarily to the strong performance of non-oil sectors, expected to grow by 4.1% in 2024. This represents a significant increase from the 3.1% growth rate in 2023, highlighting a dynamic economic upswing propelled by both the private and public sectors. However, despite this positive outlook, Beac anticipates a “degradation of public finance indicators” in 2024, including a shift to a negative budget balance (-0.2%, compared to 0% in 2023). This downturn is largely due to increased investments across the area.

Meanwhile, despite efforts to combat inflation within the CEMAC countries, inflationary pressures are expected to persist throughout 2024, reaching 5.5%. This rate is nearly double the 3% tolerance threshold set by CEMAC’s multilateral surveillance criteria. Analysts at the Beac believe these inflationary trends will be driven by both the ongoing Russian-Ukrainian conflict and recent hikes in fuel prices in several CEMAC countries, including Cameroon and Chad.

In Cameroon, the government increased the prices of premium gasoline and diesel by 15% since February 3, 2024, marking the second hike within a year. The move, aimed at reducing the unsustainable fuel subsidies burdening the public treasury, was followed by an increase in urban and interurban transportation fares. These price adjustments are projected to push the inflation rate to 7% in the country in 2024, according to the National Institute of Statistics (INS).

Chad experienced a sharp rise in fuel prices on February 13, 2024, with premium gasoline and diesel prices soaring by 41% and 18%, respectively. This adjustment will contribute to inflation in Chad and the broader Cemac region. But despite these price increases, the government has implemented mitigation measures, including free water and electricity, and significant tax relief for urban transport operators, with a 50% reduction in nearly all taxes related to this sector.