Consumer spending in Gabon is forecast to see rapid growth this year, growing by 4.1% year-on-year from 0.9% year-on-year in 2020. This comes after the Covid-19 pandemic disrupted economic activity and led to weaker GDP growth.
Despite the fact that nominal spending remained positive in 2020, it was generally below the country’s inflation rate. The country’s inflation rate increased by an estimated 3.5% year-on-year. Food and non-alcoholic drinks spending however trended about 8.1% year-on-year. Thus, outperforming all other categories, as consumers prioritized essential commodities.
Fitch Solutions forecasts food and non-alcoholic drinks spending to grow by 6.0% year-on-year, representing a decline from last year’s. However, spending within the other consumer categories will report stronger growth over 2021. Underpinned by slightly lower inflation, Fitch forecasts this would average 3.0% year-on-year over 2021.
Also, Fitch Solutions notes that the growth forecast is in line with Gabon’s growth forecast of 3.6% year-on-year over 2021. This was after an estimated contraction of 3.3% y-o-y in 2020. The fiscal stimulus provided by the government last year brought some level of protection to consumers and the economy.
While average unemployment inched up to an estimated 22.7% in 2020 from 20.0% in 2019, it would have gotten worse, had the government not intervened, Fitch Solutions believes. The government’s financial support to households and businesses gave the economy the needed cushioning to ensure a reboot.
Furthermore, unemployment will fall to 21.2% in 2021, yet it will remain above pre-pandemic level in 2019.
Government support measures and vaccine rollout
During the nationwide lockdown, when the spread of the pandemic had shrunk, the government announced the easing of lockdown restrictions in April 2020. Non-essential businesses such as salons and garages reopened for business.
Three months afterward, businesses in the hospitality industry such as restaurants with outdoor terraces also reopened. The government announced further easing in October 2020, but this did not last long. The government declared a state of emergency in December 2020 through to January 2021. This resurrected the many restrictions instituted in April 2020.
At June 2020, the Gabonese government approved the Amended Budget Law that redirected US$ 118.7 million to Covid-19 related spending. The government added US$194 million to support measures such as food stamps, electricity and water subsidies, tax holidays as well as SMEs.
Towards actions to vaccinate its people, Gabon received its first batch of Covid-19 vaccines on March 12, 2021 after approval for use in the country. The vaccines are a donation of 100,000 doses of China’s Sinopharm.
In February 2021, Gabon’s Ministry of Health approved Russia’s Sputnik V Covid-19 vaccine. But as of April 2, 2021, 0.1% of Gabon’s population had received at least one dose, which indicates that only a small number of the population have been vaccinated. Thus, indicating high exposure to risks posed by the Covid-19 pandemic.
According to Fitch Solutions, the forecasts risks being revised if the issues of vaccine rollout delay, stoppage of government support resurface ahead.
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