Moderate slowdown in growth driven by extractive industries and public spending

After the shocks of 2023 (coup d'état and landslides interrupting energy supplies and rail transport), the Gabonese economy recovered its growth potential in 2024, as the effect of these shocks faded. Eroding prices and stagnating oil production due to the gradual maturation of oilfields, which were barely offset by the development of new fields, will weigh on growth in 2025. Oil exports will be under pressure, especially as Chinese demand, which accounted for 25% of Gabon's exports in 2023, is set to slow in 2025. However, FDI inflows will remain strong due to (relatively) high world oil prices and the potential for production gains, if recent oilfield explorations bear fruit. A case in point is the future drilling of the Bourdon well by BW Energy and its partner Panoro Energy, as part of the Dussafu permit. Furthermore, as part of its national transition plan (2024-2026), Gabon will be stepping up its efforts to diversify its economy. The dynamism of construction and agriculture, the latter driven by the development of timber and palm oil, will play a key role in growth in 2025. Lastly, the mining industry will gain in importance thanks to rising manganese prices and production, notably with the exploitation of new deposits at Okondja and Okouma. FDI in the Banianka and Belinga iron ore mines, which are due to come on stream in 2025, will also boost non-oil exports. Growth will also be underpinned by increased public spending, mainly on infrastructure projects, voter registration, human capital development and social inclusion. Private consumption, encouraged by the extension of fuel subsidies, will also reinforce this trend.

Inflation is due to fall further in 2025, reflecting the monetary tightening adopted by the BEAC. It will remain below the regional convergence threshold of 3% set by the CEMAC due to lower prices for imported foodstuffs and fuels on which the country is heavily dependent. The BEAC could therefore loosen its monetary policy in 2025 – the main key interest rate stood at 5% in 2024. However, the accommodating fiscal policy, marked by rising public spending and an expected fall in revenues, could rekindle inflationary pressures. A slowdown in the FED's interest rate cut could also lead to a depreciation of the CFA franc and thus create imported inflation.

A widening public deficit and a fragile current account surplus

In 2025, the budget deficit will widen as a result of increased public spending, notably the extension of fuel subsidies, the rise in the public sector wage bill and election-related costs. At the same time, public revenues will decline due to lower oil revenues (50% of tax revenues). This deficit will be financed mainly by drawing on the country's foreign exchange reserves. Public debt will increase, exceeding the CEMAC ceiling of 70% of GDP. Domestic debt accounts for a large share (66%), with access to external financing remaining limited.

With Gabon's export earnings dependent on hydrocarbons, a drop in the trade surplus is expected in 2025 despite an expected rise in manganese exports and the irruption of iron ore exports. At the same time, imports will remain buoyant, driven by consumer demand and investment projects in oil, mining and forestry, with their associated transport infrastructures. The structural deficit in services will also widen due to the increase in imported technical skills. In addition, the repatriation of foreign companies' profits will weigh on the current account balance. External debt, which is entirely public, will decrease as a percentage of GDP by 2025. In November 2024, Gabon announced the redemption of half of the USD 605 million eurobond due in June 2025, which has boosted investor confidence. To redeem the debt, the country will draw on its foreign exchange reserves. These covered 2.7 months of imports at the end of 2023, which is below the prudential threshold of three months. Last, the expiry in June 2024 of the IMF's Extended Fund Facility (USD 553.2 million), with no new agreement in sight in the short term, will exacerbate financing risks in 2025.

Elections expected in 2026

In 2023, General Brice Oligui Nguema led a military coup that overthrew President Ali Bongo Ondimba, marking the end of the era of the Gabonese Democratic Party, which had been long criticised for its dynastic regime in place since 1967. Following the overthrow, the junta dissolved the government, suspended the constitution and instituted a military transition. Although the coup was criticised by both the UN and the African Union, it was widely welcomed by the population, which was fed up with decades of bad governance and entrenched corruption. A new constitution was approved by referendum on 16 November 2023 by 91.6% of voters, following a turnout of 54%. It includes political and legal reforms, including a limit of two seven-year presidential terms, the abolition of the position of Prime Minister and a procedure for the impeachment of the President to counterbalance the strengthening of executive power. The results were validated by the Constitutional Court, paving the way for civilian elections that have been provisionally scheduled for August 2025. That said, a return to civilian rule is unlikely before 2026 due to the involvement of various political players and the multiple stages preceding the process, including revision of the Electoral Code. There is also a risk that the army will refuse to relinquish power once the transitional period is over. However, international support will play a crucial role in encouraging the junta to respect its transition commitments.

In March 2024, the Economic Community of Central African States (ECCAS) lifted its political sanctions against Gabon and reintegrated it into the regional bloc. France, with its strategic extractive interests in Gabon, maintained an open dialogue with the junta. After suspending financial aid in the wake of the coup d'état, the US stepped up its diplomatic and economic engagement with Gabon with the announcement in October 2024 of a USD 5 million aid package to support the democratic transition. Initiatives to improve port security, maritime surveillance and bilateral investment ties were also implemented.