Cameroon’s Economic Outlook: The Challenges Ahead in the 3rd Quarter of 2024
In its economic forecast test for the third quarter, Beac cites, among others, the sectors of agriculture, services and processing.
As we approach the third quarter of 2024, Cameroon’s economy faces a complex set of challenges that could potentially dampen economic activity. Drawing insights from recent reports by the International Monetary Fund (IMF) and the World Bank, this blog post delves into the sectors that may negatively impact Cameroon’s economic performance in the upcoming quarter.
The IMF’s latest consultation report highlights Cameroon’s resilience amid successive shocks, with a real GDP growth of 3.6% in 2022, expected to accelerate to around 4% in 2023. However, the report also indicates potential headwinds that could slow down this growth trajectory. The agroindustry and service sectors, which have been buoyant, may face constraints due to external factors such as global economic slowdowns and internal challenges like infrastructural deficiencies.
The World Bank’s economic update for Cameroon points to a deceleration of economic growth to 3.3% in 2023, down from the previous year’s 3.6%. This slowdown is attributed to lower-than-expected public investment, rising prices, and ongoing internal conflicts. These factors are likely to continue into the third quarter of 2024, with particular stress on the primary, secondary, and tertiary sectors. Fiscal consolidation efforts, rising domestic inflation, and the residual effects of external shocks like the COVID-19 pandemic and the conflict in Ukraine are additional concerns that could hinder economic activity.
The rising cost of living, especially food prices, is another significant challenge that could negatively impact households and, by extension, the broader economy. High food prices and transportation costs have driven inflation up, which could lead to reduced consumer spending and a contraction in the retail sector.
Moreover, the forestry sector, despite its potential, has not reached its full potential, contributing only 3.8% to GDP and providing 45,000 jobs. Fiscal reforms in this sector are essential for sustainable growth, but the short-term impact of such reforms could be disruptive to the existing economic activities.
In conclusion, while Cameroon’s economy has shown resilience, the third quarter of 2024 may be marked by challenges across various sectors. The government and stakeholders must navigate these challenges carefully to maintain the country’s growth momentum and ensure long-term economic stability. Policy measures that address the immediate concerns while laying the groundwork for sustainable growth will be crucial in the coming months.
The Bank of Central African States (BEAC) has just published the CEMAC economic forecast test for the 3rd quarter of 2024, which provides an overview of the economic situation in all six states of the sub-region (Cameroon, Central African Republic, Congo, Gabon, Equatorial Guinea and Chad). In the specific case of Cameroon, several products/sectors of activity were expected to show negative performances in the current 3rd quarter. In detail, we first have the agricultural sector with cotton and rubber activities which are expected to experience a decline in performance during the current quarter. According to Beac, the projected decline in cotton is a consequence of the end of the 2023/2024 campaign. Concerning rubber, “stakeholders in the sector are facing difficulties such as the deterioration of access roads linked to the lack of maintenance of rural roads, as well as insufficient maintenance of factories and mills. In addition, the still insufficient exploitation of the fields by CDC workers concerning the security situation could further cause production to decline,” indicates the Beac.
Next comes the activities of the palm oil branch, the decline of which is linked to “the production cycle of the oil palm, which is not conducive to an optimal harvest during this period.” Followed by the forestry and logging segment, whose activities are also expected to decline due to “the decline in demand (…) the poor condition of the roads and disruptions to the supply of electricity in forest areas constitute obstacles to the development of this sector.”
The processing sector, specifically the flour milling sector, should follow the downward trend observed in the agricultural sector. The Beac indicates to this effect that “the 3rd quarter generally corresponds to a period of activity that is relatively slow in the flour milling industries. Consequently, activity would be stable in this sub-branch in the 3rd quarter of 2024.” The same is true for metallurgy, whose decline in activities would be a consequence of the drop in demand and the absence of orders and substantial investments.
The last sector of activity that should follow this downward trend is that of services with the wholesale and retail trade of capital goods and equipment which “continues to suffer from the decline in household purchasing power linked to the persistence of inflationary tensions as well as disruptions in supply chains. Then the accommodation and catering sector will suffer because of the climatic conditions.
However, the country’s economic activity over the period under review will be supported by the increase recorded in activities in food crops, livestock, oil mills, cement works, production and distribution of electricity, gas and air conditioning and construction.
