Heightened political and macroeconomic risks are the main factors behind our poor outlook for new vehicle sales market in Sudan. We maintain our bearish forecast for Sudanese new car sales at just 6,890 new car sales in 2018 - up slightly from 4,000 cars expected to be sold in 2013.
Last quarter, we saw significant room for optimism for the autos market in South Sudan, thanks to its huge oil reserves, expanding population, large amount of arable land and proposed integration with other East African nations. However, with the country plunging back into crisis, this hangs in the balance. While conflicts between various tribes and ethnicities were already ongoing in both countries, the descent into full-scale armed conflict in South Sudan has major negative implications for both countries, significantly curtailing growth and deteriorating the external accounts.
We have downgraded our forecast for South Sudan's growth in 2014, from 21.1% to 10.6%, owing to the disruptions associated with the conflict.
We have made an upward revision to South Sudan's inflation for 2014 as shortages are expected to occur. We now see inflation rising to 24.2% year-on-year by end-2014, compared to our previous projections of 12.0%.
We expect that Sudan's economy will grow at a quicker pace than in 2013, but substantial challenges remain, including rampant inflation, security challenges, import dependence, and severe economic imbalances will keep real GDP expansion below potential. We are forecasting growth of 2.5% in 2014, up from an estimated 1.4% in 2013.
Inflation averaged 36.6% over the first 11 months of 2013, among the highest rates in the world. Unfortunately for consumer purchasing power, the trend is in the wrong direction, with price growth rising to 42.6% year-on-year in November, up from a low of 22.9% in August. Although policymakers have committed to bringing inflation under control by refraining from printing money to finance government expenditures, we expect that...