Economic Outlook - High Inflation Will Cloud Otherwise Bright Outlook - JULY 2017

BMI View: Real GDP g rowth in Sudan will be dampened by high inflation in 2017, which will constrain consumer spending. However, we note that increasing investment into the country in the wake of sanctions removal will bolster the longer-term outlook, with most economic benefits to come in 2018 and thereafter.

While Sudan's growth is set to be subdued in 2017, the longer-term outlook is more positive. High inflation, caused by a weak currency, import bans and subsidy cuts, will dent consumer spending power over the coming quarters and hurt private consumption - the engine of the Sudanese economy. However, investment is beginning to trickle back in following the conditional removal of US trade and financial sanctions in January. This will improve the business environment through developing infrastructure, and also lead to new opportunities for agricultural and mineral production, bolstering exports in the coming years. The removal of sanctions will undergo a review in July, meaning that the re-imposition of the restrictions could pose a significant downside risk to this outlook. However, our core view is that they will be permanently removed owing to positive political developments ( see ' Resumption Of Peace Talks Presents Upside Potential To Outlook ' , April 21). As such, we forecast real GDP growth of 2.6% and 4.2% in 2017 and 2018, compared to an estimated 2.7% in 2016.

High Inflation To Squeeze Consumers

Increased Investment Will Support Growth
Sudan - Real GDP Growth
e/f = BMI estimate/forecast. Source: BMI, World Bank

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