Sudan Business Forecast Report Q4 2011

Core Views
Post-secession military clashes along the disputed border between Sudan and South Sudan are likely to continue over the coming months. A sustained constructive engagement by major world powers will be required if the partition of the two territories is not to herald a return
to outright war.
The division of Sudan into separate states is set to unleash a period of marked economic volatility and uncertainty. Though a lack of data
for the separate entities impedes accurate forecasting, we believe the Sudanese economy will endure a sharp recession in 2011.
Major Forecast Changes
No major forecast changes.
Key Risks To Outlook
Secession is likely to be accompanied by further militia confrontations, with particular risks in Abyei, Unity State, Upper Nile State and Jonglei. These clashes may escalate into outright north-south confrontation – possibly in Abyei at first, but also in the states referred to above – if no oil deal is agreed within a few months following the July secession.
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Executive Summary 5
Core Views5
Major Forecast Changes5
Key Risks To Outlook5
Chapter 1:Political Outlook 7
SWOT Analysis 7
BMI Political Risk Ratings 7
Domestic Politics 8
Extended International Diplomacy In Prospect
Post-secession military clashes along the disputed border between Sudan and South Sudan are likely to continue occurring over the coming months, and a sustained constructive engagement by major world powers will be required if the partition of the two territories is not to herald a return to outright war
Long-Term Political Outlook 10
Baptism By Fire: Colossal Challenges For A New Nation
The new state of South Sudan faces multiple challenges to its stability, ranging from war risks and rapid population growth to high levels of poverty and illiteracy
Chapter 2: Economic Outlook 13
SWOT Analysis 13
BMI Economic Risk Ratings 13
Economic Activity 14
Turbulent Times Ahead
The division of Sudan into separate states is set to unleash a period of marked economic volatility and uncertainty
Investment Climate 15
Petrodollars Will Fuel Business Environment Development
The separation of Sudan and South Sudan will have significant implications for the business outlook over the longer term
Table: ECONOMIC ACTIVITY 15
Key Sector Outlook 17
Oil-Sharing Agreement Remains Out Of Reach Despite Independence
With Juba and Khartoum nowhere near an agreement on oil sharing even though South Sudan has formally declared its independence, an interim oil sharing agreement will need to be reached to prevent a shutdown of its critical oil sector
Regional Economic Outlook 18
Economic Growth: A Progress Report
Sub-Saharan Africa faces a difficult period over the coming months, with high inflation and elevated borrowing costs likely to pose challenges to policymakers
Chapter 3: 10-Year Forecast 21
Sudanese Economy To 2020 21
Secession Poses Key Risk For Long-Term Growth
There is strong economic growth potential in the non-oil sector, but the uncertainties related to the secession of South Sudan generate risks for many variables, particularly the fiscal accounts
Table: Long-Term Macroeconomic Forecasts 21
Chapter 4: Business Environment 23
SWOT Analysis 23
BMI Business Environment Risk Ratings 23
Business Environment Outlook 24
Institutions 24
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS 24
TABLE: BMI LEGAL FRAMEWORK RATING 25
Infrastructure 26
TABLE: LABOUR FORCE QUALITY 26
TABLE: ANNUAL FDI INFLOWS 27
Market Orientation 28
TABLE: TRADE AND INVESTMENT RATINGS 28
Operational Risk 29
Chapter 5: BMI Global Assumptions 31
Global Outlook 31
Second Half Risks
TABLE: GLOBAL ASSUMPTIONS 31
Table: EMERGING MARKETS AGGREGATE GROWTH 32
Table: DEVELOPED STATES REAL GDP GROWTH FORECAST 33
Table: REAL GDP GROWTH CONSENSUS FORECASTS 33
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