Cameroon Economic Forecast

Smaller expansions in fixed investment and exports pushed economic growth down to 3.6% year on year in Q3 (Q2: +4.0% yoy). Incoming data for the final quarter of 2022 paints a similarly downbeat picture: Oil output was lower in October–December, while crude prices fell in the same period, likely hurting revenue. Moreover, average inflation in Q4 reached its highest level since mid-1995, boding poorly for household spending in the quarter. Turning to Q1, oil production continued to decline in January. That said, year-on-year tax revenues in Q1 grew by 14.6%, which should have buttressed public spending. Meanwhile, in early May, the country received a USD 35 million loan from the Islamic Development Bank to invest in the Western anglophone region—an area marked by regional separatism and conflict with the government. Development in this area could improve long-term regional security.

Inflation eased to 7.3% in December—the latest month of available data—from 8.2% in November, above the Bank of Central African States’ 3.0% target. Meanwhile, the Bank raised its policy rate to 5.00% in late March. This year, lower commodity prices, the CFA’s euro peg and higher interest rates should dampen inflation. Commodity price spikes are an upside risk.