Cameroon's economic growth seen at 4.4 pct in 2012

Cameroon's economic growth will pick up to 4.4 percent in 2012, economists surveyed by Reuters said, but the Central African nation is set to underperform its potential despite a relatively trouble-free election last month.

The growth figure, the median of forecasts, is well above the 3.7 forecast for this year, but infrastructure constraints and a poor business environment will continue to cloud the short term while uncertainty over political leadership hangs over medium-term prospects.

"A large part of the reason for the forecast uptick in economic growth is new oil wells coming on stream," said Melissa van Rensburg, at the Cape Town-based NKC Independent Economists, a consultancy that tracks frontier economies.

"(This) is expected to lead to an increase in domestic oil production during 2012-14," van Rensburg added.

The improved growth comes as commodity-rich Cameroon continues to recover from the 2008-9 financial crisis.

Better tax collection, government investment in cement factories and several infrastructure projects were cited by Standard Chartered bank in a recent briefing note as being behind the growth momentum.

An uptick in oil production - from 64,000 barrels per day in 2010 - coupled with resilient oil prices will also help the country in the short term, though Standard Chartered warned of a decline in oil output beyond 2014.

The forecast growth levels may be below most of the rest of Africa but is above the country's recent performances.

Cameroon, rich in natural resources including minerals, oil and gas and timber, has enjoyed relative political stability.

President Paul Biya's re-election last month was never in doubt as the man who has run the Central African nation for 29 years faced a divided opposition field.

But the nation has long been dogged by a tricky business climate, a large infrastructure gap and a weak financial system, issues that are unlikely to be resolved quickly as debates over who should replace the 78-year-old pick up steam.

"In the meantime, non-negligible risks also stem from the public policy inertia that would probably result from a continued and almost undisputed dominance of the CPDM (ruling party)," Standard Bank's Samir Gadio said.

Inflation is expected to average 2.9 percent for this year before slowing to 2.5 next year.

"Although consumer price inflation is expected to accelerate this year, it will still be lower than in many other developing countries," said van Rensburg.

"The reasons for this include that the CFA franc is pegged at a fixed rate against the euro, good domestic food harvests, lower import tariffs on several food products, and subsidies on fuel." she added.

 

YAOUNDE, (Reuters)

 

This article was originally posted on Sustainable Development Africa Platform

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