CAMEROON

Key conditions andchallenges

Table 1

2023

Population, million

28.8GDP, current US$ billion

47.4

GDP per capita, current US$1646.1

International poverty rate ($2.15)

a23.0
a46.7

a76.0

Lower middle-income poverty rate ($3.65)
Upper middle-income poverty rate ($6.85)
Gini index

a42.2

School enrollment, primary (% gross)b110.7b60.3

Total GHG emissions (mtCO2e)134.6

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2021), 2017 PPPs.
b/ WDI for School enrollment (2022); Life expectancy(2021).

Cameroon's economy grew by 4.0 percent
in 2023, up from 3.6 percent in 2022.
However, poverty reduction remains
slow, with 23.0 percent living below theinternational poverty line of $2.15 PPP
per person per day. Sustained fiscal consolidation kept the deficit at 0.8 percent ofGDP in 2023. Looking ahead, while themedium-term outlook is favorable, risks
include commodity price volatility andpersistent security crisis in certain regions. Low per capita growth coupledwith high food and energy prices may
worsen poverty.

Cameroon is the largest economy in theCEMAC region, accounting for 45 percent of the region's GDP and 63 percent
of regional foreign exchange reserves in2023. It is also the region’s most diversified economy. However, the oil sector still accounts for 2.2 percent of GDP
and 18.4 percent of fiscal revenues, keeping the country vulnerable to oil priceshocks. Cameroon’s debt pressures haveintensified, calling for cautious fiscal policies and improved debt management.
The current development model appears
incapable of delivering Cameroon’s ambition of becoming an upper middle-income
country by 2035, as institutions of governance have deteriorated, human capital remains weak, the business environment isunfavorable, and climate change represents a growing threat. The employment
landscape reflects concerning trends, particularly for the youth, with half of theworking-age population either unemployed or otherwise disengaged from theworkforce. The informal sector, constituting over 85 percent of total employment,
is experiencing a shift from agriculture tourban informal activities, calling for urban
development. Productivity, notably inagriculture, lags similar countries due tohigh input costs, limited financing, and underutilization of innovative technologies.
Cameroon has failed to reduce extreme
poverty over the past two decades.

FIGURE 1 Cameroon / Real GDP growth and contributions
to real GDP growthHousehold survey data collected in 2021/
22 suggest 23.0 percent of the population
lives below the extreme international
poverty line of $2.15 PPP per person perday. The extreme poverty rate has remained unchanged since 2001, decreasing
by only 0.9 percentage points between
2014 and 2021. The population living in extreme poverty has swelled by over 2 million since 2001 and now exceeds 6 million.
Inequality remains high, with a consumption Gini coefficient of 42.2, indicatinglarge disparities in living standards between regions and urban and rural areas.
Furthermore, fragility is proliferating, withsix out of Cameroon’s ten regions now affected by conflict, including spillovers fromconflicts in neighboring countries. Climatechange also threatens Cameroon’s povertyreduction prospects given its reliance onnatural resources, with around 4 in 10 workers being primarily engaged in agriculture.

Recent developments
Cameroon’s economic recovery continued
in 2023, with real GDP growing by 4.0 percent, up from 3.6 percent in 2022 driven by
improvements across various sectors. Services and manufacturing sectors expanded
respectively by 4.5 percent and 5.5 percent,thanks to better energy supply and marketconditions. Private investments supported
the construction sector’s growth despite
lower public spending. Agriculture sector
grew by 3.5 percent, driven by high cocoa
and cotton prices and the recovery of theCameroon Development Corporation.

FIGURE 2 Cameroon / Actual and projected poverty rates
and real GDP per capita
Poverty rate (%)

Real GDP per capita (constant LCU)

90

8000008070000070

60000060

5000005040000040

3000003020

20000010100000

002007 2009 2011 2013 2015 2017 2019 2021 2023 2025

Source: World Bank.

International poverty rate

Lower middle-income pov. rate

Upper middle-income pov. rate

Real GDP pc

Source: World Bank. Notes: see Table 2.

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Inflation increased to 7.4 percent as of theend 2023 from 6.3 percent in 2022 mainly
due to higher domestic fuel prices, despite
the tight monetary policies and global inflation easing. Despite service and income
balance improvements, the current account balance deteriorated slightly, reaching 3.6 percent of GDP from 3.5 percent
due to a widened trade deficit caused bydeclining oil and gas exports.
Fiscal consolidation efforts in 2023 resulted in a reduced fiscal deficit of 0.8 percent of GDP, down from 1.1 percent in
2022, supported by lower fuel subsidies,
reduced capital spending, and improved
tax collection. Public debt decreased to41.9 percent of GDP in 2023 from 45.3
percent in 2022. Nonetheless, Cameroon
remained at a high risk of debt distress,
despite sustainable debt levels.
The regional central bank (BEAC) maintained in 2023 a tight monetary policy tocontain inflation and support the exchange
rate. While Cameroon's banking system remained strong, vulnerabilities remained,with the non-performing loan ratio reaching 15.3 percent in 2023 and a significant
exposure to sovereign bonds.
The gradual reduction in fuel subsidies will
provide additional fiscal space for pro-poor
spending but may lead to short-term inflationary pressures. Tax incentives for agriculture and minimum wage increases will

mitigate impacts, though the latter’s effecton poverty reduction may be limited dueto the prevalence of informal employment.

OutlookThe medium-term economic outlook for
Cameroon is positive on balance but subject to downside risks. Real GDP growth isprojected at 4.3 percent in 2024 and 4.5 percent in 2025 and 2026, driven by dynamism
in agro-industry, forestry, and services.
The anticipated LNG production boom isexpected to offset declining oil field production in 2025. Improved energy supply
from projects like the Nachtigal hydroelectric dam and Memve’ele power planttransmission lines will benefit manufacturing and construction, backed by robust
public investment.
The current account deficit is expected togradually narrow over the medium term,
benefiting from sustained high commodity
prices, the LNG boom in 2025, and government export efforts. Over the mediumterm, inflation is expected to drop from 7.0
percent in 2024 to 4.9 percent by 2026, supported by moderating import price inflation, improved industrial production frombetter energy supply, and the BEAC's tightmonetary policy.

TABLE 2 Cameroon / Macro poverty outlook indicators

The fiscal deficit is projected to remain below 1 percent of GDP, supported by measures aimed at enhancing revenue andgradually reducing current expenditures,
particularly fuel subsidies. These actions
are expected to counterbalance the anticipated rise in capital expenditure necessary
for accelerating investment projects. Public
debt is projected to decline, reaching 35.5
percent of GDP by 2026, driven by improved debt management.
However, low per capita growth may exacerbate poverty, with the poverty rate at
the international poverty line of $2.15 PPP
per person per day projected to reach 25.0
percent by 2026, leaving around 8 million
Cameroonians in poverty. Moreover, foodprices are projected to rise faster relative
to other goods. Redirecting budgetary savings from fuel subsidy reductions into productive spending, including investments
in social programs and human capital,
could support the poor and vulnerable inthe short run, but sustained poverty reduction will require accelerating economic
growth that creates more jobs.
The outlook is subject to risks such ascommodity price volatility, ongoing security crises in certain regions, uncertain
budget support from external donors,
exchange rate fluctuations impacting
debt and fuel subsidies, and increased
climate-related disasters.

(annual percent change unless indicated otherwise)

Real GDP growth, at constant market prices
Private consumption
Government consumption
Gross fixed capital investment
Exports, goods and services
Imports, goods and services

2021
3.3
3.5
3.4
7.9
3.2
9.0

2022
3.6
3.6
5.1
3.2
10.1
7.3

2023e
4.0
3.7
3.1
5.1
10.1
7.8

2024f
4.3
3.7
2.4
8.4
10.0
9.7

2025f
4.5
3.8
2.2
9.0
9.9
9.9

2026f
4.6
4.0
1.7
9.1
9.9
10.0

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

3.3
4.1
4.1
2.7

3.6
4.3
4.2
3.1

4.0
4.7
4.5
3.5

4.3
5.0
4.8
3.9

4.5
5.6
5.4
3.8

4.6
5.6
5.4
3.9

Inflation (consumer price index)
Current account balance (% of GDP)

2.5
-3.8

6.3
-3.5

7.4
-3.6

7.0
-3.3

5.7
-3.4

4.9
-3.0

Fiscal balance (% of GDP)
Revenues (% of GDP)
Debt (% of GDP)
Primary balance (% of GDP)

-2.9
14.2
47.3
-1.9

-1.1
15.9
45.3
-0.3

-0.8
16.0
41.9
0.2

-0.7
16.1
40.1
0.2

-0.8
16.1
38.8
0.0

-0.7
16.3
35.5
0.0

23.0
46.7
76.0

22.9
46.3
75.6

23.9
47.7
76.5

24.8
48.3
77.0

25.2
48.4
77.0

25.0
48.4
76.7

1.8
7.3

1.4
7.4

1.5
7.6

1.5
7.8

1.8
8.1

1.7
8.4

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower middle-income poverty rate ($3.65 in 2017 PPP)a,b
Upper middle-income poverty rate ($6.85 in 2017 PPP)
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
Notes: e = estimate, f = forecast.
a/ Calculations based on 2021-ECAM-V. Actual data: 2021. Nowcast: 2022-2023. Forecasts are from 2024 to 2026.
b/ Projections using microsimulation methodology.
MPO2Apr 24