POLL-Senegal growth seen above four pct despite risks

Wed Nov 9, 2011 8:00am GMT
 

* Forecasts , , ,

* Investment infrustructure to drive growth

* Upcoming elections a key risk

By Diadie Ba

DAKAR, Nov 9 (Reuters) - PLEASE SET FOR AUTO-RELEASE AT 0800 GMT WEDNESDAY NOV 9

Senegal's economy should continue to grow at above four percent next year, analysts polled by Reuters forecast, while signalling risks related to a tense presidential election and expensive energy production.

The West African state will see growth of 4.2 percent this year and 4.3 percent next, median estimates of eight forecasts showed, with analysts pointing to the positive impact of roadbuilding and other investment schemes on the economy.

"Investment in infrastructure should boost growth to 4.5 percent in 2012, provided that electricity supply is more regular," said Lydia Boka of StrategiCo of the power outages that has hamstrung the economy in recent years.

Authorities have launched an ambitious 653 billion CFA francs plan dubbed "Takkal" (Light It Up) in the local Wolof language to address the capacity shortages and other problems strangling Senegal's mainly diesel-fueled generation sector.

The shortages have triggered street protests and solving the problem has been the top priority of President Abdoulaye Wade's government ahead of the February 2012 election in which he is expected to stand again.

"The energy sector plan, which has a clear bias in favour of inefficient and expensive short-term measures ... will continue to weigh on the budget deficit, which could reach seven percent of GDP this year," said Idrissa Yaya Diandy, an economist at Dakar's Cheikh Anta Diop University.

The 2010 deficit stood at 5.2 percent of GDP.

Samir Gadio of Standard Bank noted a recovery in passenger numbers to Dakar airport, suggesting renewed buoyancy in the tourism sector, and strong crop production in the agricultural sector.

However he cited the drag from power problems and forecast growth of 4.1 percent this year and 4.0 percent next, well under the IMF 2012 projection of 4.5 percent.

Analysts noted two other main risk factors in coming months -- the possibility of a slow-down in the global economy hitting remittances from foreign workers, and uncertainty over an election that is due in February next year.

Wade's statements that he will run again despite a legal controversy over whether he has the right to stand for a new term already sparked an angry street protest in June and some observers fear there could be repeats in months to come.

"Investors, if any, would probably delay investment decisions ahead of the 2012 elections," noted Boka. (Writing by Mark John; editing by David Lewis,Ron Askew, polling by Vuyani Ndaba)

 
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