Our comprehensive assessment of South Sudan's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect South Sudan, as well as the latest industry developments that could impact South Sudan's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in South Sudan before your competitors.
South Sudan Country Risk
While hopes of genuine political reform have been raised of late, a peaceful outcome to the country's ongoing governance malaise in time for general elections in April 2015 remains unlikely .
Economic conditions in Sudan will improve over the coming quarters, but nonetheless remain challenging. We are forecasting real GDP growth of 3.5% in 2015 from an estimated 2.6% in 2014.
Sudan's inflation prospects have improved of late and we predict that price growth will average 21.5% year-on-year (y-o-y) in 2015 compared to an estimated 37.4% y-o-y in 2014. The wearing-off of high base effects (associated with the September 2013 currency devaluation), favourable agricultural production prospects and a greater degree of exchange rate stability will help to anchor inflation.
South Sudan Industry Coverage (7)
South Sudan Autos
According to data published by Renault, vehicle sales in the Sudanese auto market surged 32.3% y-o-y in June 2015, to 258 units. This brought sales for H115 to 2015 to 1,573 units, an increase of 23.4% y-o-y. We maintain our full-year sales growth forecast of 20.0%, which will see sales reach 3,480 units in 2015.
Vehicle sales still remain below their 2011 levels due to sharp declines in the market in 2012 and 2013. Over our 2016-2019 forecast period, we expect steady growth in sales at an annual average rate of 9.1%, which will see sales reach 4,920 units by 2019. However, given the low base at which sales are at now, the sector's story over the coming years will be one of recovery rather than expansion.
Another positive is our Country Risk team's view that economic growth will pick up modestly over the coming quarters, with real GDP set to expand by 3.5% in 2015 and 4.3% in 2016...
Defence & Security
South Sudan Defence & Security
BMI View: Sudan boasts one of the region's largest defence sectors but still imports a significant volume of military equipment and services from Russia, China and Iran. Over the longer term, as the country's defence sector improves and it becomes more self sufficient, we expect there to be an increasing volume of defence exports, largely to the wider African region. A key driver behind the expansion of its military capabilities will remain the deteriorating situation in South Sudan and the ongoing violence between warring factions, opposition groups and government authorities. However, even though the country is looking for new export partners, we...
Food & Drink
South Sudan Food & Drink
BMI View: We maintain our view that economic growth in Sudan will pick up modestly over the coming quarters, with real GDP set to expand by 3.5% in 2015 and 4.3% in 2016 (from an estimated 2.6% in 2014). This improvement is in large part due to easing inflationary pressures as the high base effects associated with a painful currency devaluation in September 2013 wear-off. Our forecast for a significant rise in per capita food consumption in 2015 is a result of very low current consumption and high inflation. However, the demographic profile of the countries, with their significant young population, will provide opportunities.
Economic activity In Sudan will be supported by strong agricultural production and continued robust growth in...
South Sudan Infrastructure
BMI View: Sudan and South Sudan face a multitude of issues, with ongoing conflict having drastically eroded what little investor confidence there was in the markets and as such we forecast volatile and poor growth for both countries over our ten-year forecast period to 2024. Lower oil prices, in particular, will limit the ability of governments to implement their spending plans in the infrastructure sector - focusing on current spending instead - and with little investor interest left, there will be few infrastructure growth drivers.
While current events in Sudan and South Sudan overshadow their relationship with each other, oil trade between the two remains the key to any kind of sustainable growth with the respective construction industries. Political risks in Sudan and growing fears of a loss of control outside of Khartoum have damaged the reputation of the already internationally isolated government and this could...
Oil & Gas
South Sudan Oil & Gas
BMI View: Pervasive insecurity continues to hamper production in both Sudan and South Sudan. Falling oil prices coupled with frequent supply outages and repeated damage to infrastructure is undermining the appetite for investment in both markets. Chronic underinvestment will undercut sustainable production capacity and this, alongside limited exploration activity and a weak projects pipeline, will push crude oil production into decline in the back end of our 10-year forecast period.
Pharmaceuticals & Healthcare
South Sudan Pharmaceuticals & Healthcare
BMI View: Due to the lack of production capacity among domestic companies, the majority of pharmaceuticals in Sudan and South Sudan will remain sourced from abroad. Over the long-term, domestic manufacturers will increase their market share, with the government placing an increasing emphasis on achieving self-sufficiency in terms of pharmaceutical production.
Headline Expenditure Projections
Pharmaceuticals: SDG2.35bn (USD402mn) in 2014 to SDG2.65bn (USD433mn) in 2015; +12.9% in local currency terms and +7.7% in US dollar terms. Forecast revised upwards from Q215.
Healthcare: SDG24.26bn (USD4.15bn) in 2014 to SDG27.31bn (USD4.46bn) in 2015; +12.6% in local currency terms and +7.4% in US...
South Sudan Power
BMI View: Sudan and South Sudan offer considerable long-term power production potential. South Sudan is home to large oil resources and hydropower is exploitable throughout the region. Non-hydropower renewables such as solar and wind power could also substantially increase capacity. Electricity infrastructure is, however, underdeveloped in Sudan and practically non-existent in South Sudan and investors remain deterred by the unstable political and security environment, a scenario we do not expect to improve over the short term.
Overall we do expect to see a moderate increase in total generation throughout the forecast period, with generation expected to increase from 7.5TWh in 2015 to 11.4Twh in 2024. This growth is largely dependent on several hydropower projects, with few other developments in the pipeline. Although Sudan and South Sudan offer...