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Beac sees a mixed economic outlook for 2023

Beac sees a mixed economic outlook for 2023
  • Comments   -   Thursday, 28 September 2023 16:16

(Business in Cameroon) - The Bank of Central African States has released a report presenting its overall economic outlook for 2023. The assessment, based on three key macroeconomic indicators: foreign exchange reserves, inflation, and growth, was made public following the 3rd 2023 meeting of its Monetary Policy Committee (MPC) held on September 25 in Douala.

For the first indicator, Beac forecasts it to go up by 14.6%, reaching CFA7,850.8 billion by the end of 2023. This corresponds to an external currency coverage rate of 78.5%, up from 73.1% in 2022, and import reserves of goods and services for 5.23 months compared to 4.94 in 2022.  Foreign exchange reserves are the only indicator to show a positive trend over the year, according to the bank. The other two are expected to be unfavorable.

Inflation is seen at 5.7% by the end of the year, well above the regional norm of 3%. To deal with this context, the Central African Central Bank (BEAC) is once again keeping its rates unchanged. The Tender Interest Rate will remain at 5%, the marginal lending rate at 6.75%, and the deposit facility rate at 0%. Required reserve ratios also remain stable at 7% for sight liabilities and 4.5% for term liabilities. Beac says the measure is aimed at combating inflation by reducing economic financing.

"The BEAC remains proactive in tackling the rising inflation. But we should keep in mind that global economies are interconnected. We export our products abroad. If external demand decreases, we will also see a decrease in the value of products, with an impact on economies," explains Abbas Mahamat Tolli, Governor of BEAC, and Statutory President of the MPC.

As a reminder, the bank has also kept its key rates unchanged following the second MPC session held on June 26, 2023. This decision is due to "a comfortable external position (…), but still concerning internal stability," according to Abbas Mahamat Tolli.

Finally, on the third indicator, BEAC projects it to decline to 2.5% in 2023 compared to 2.8% in 2022, a decrease of 0.3%. "This is because of a more substantial decrease in the oil sector, estimated at -1.3% in 2023, along with high inflationary pressures averaging around 5.7% annually in 2023, with a decrease expected from the third quarter onward," the governor pointed out.

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