The outlook for Sudan both politically and economically is increasingly difficult. It faces an internal conflict in three states, political opposition in Khartoum and an economy still devastated by the secession of South Sudan in July 2011. The regime has proved resilient to such challenges in the past and is likely to continue to be so, but the outlook for economic growth and political stability is bleak.

Domestic conflict

Despite its 50-year-long civil war ending in 2005, Sudan’s economy continues to be drained by military expenditure on internal conflict. Peace talks on what are known as the Two Areas – South Kordofan and Blue Nile – and Darfur have so far come to nothing.

The government has refused to accede to opposition demands that the two peace processes be combined, and in the meantime there are widespread reports that it continues to attack its own people in all three states. Blue Nile and South Kordofan have been in conflict with the government since 2011, when it failed to deliver on promised consultations on a degree of self-government for the two states under the terms of the 2005 Comprehensive Peace Agreement. The Darfur conflict is in its eleventh year, and has escalated in recent months.

The regime has proved resilient to challenges in the past… but the outlook for growth is bleak

Domestic politics are equally fraught. Security forces were on high alert in late May after military sources claimed that a faction of the army, the Sudan Armed Forces, was planning an insurrection. The government has denied suggestions that the group was plotting a coup, but the military has been deployed in Khartoum with “100 per cent readiness for action,” according to a spokesman for the National Intelligence Security Services.

Dialogue stalls

A process of national dialogue between the ruling party and the main opposition parties has also stalled. Only two opposition parties – the National Umma Party (NUP) and the Popular Congress Party (PCP) – signed up to join the ruling National Congress Party (NCP) in the talks.

On 17 May, the NUP suspended its participation following the arrest of its leader, Al-Sadiq al-Mahdi, after he alleged that the Rapid Support Forces, more commonly known as the Janjaweed, had committed atrocities in fighting in Darfur and South Kordofan.

The PCP remains committed to the process, but there is little optimism that it will yield any genuine resolution of the frustrations with what remains to all intents and purposes a one-party state.

GDP 2013
Sector Per cent
Agriculture 34.5
Trade and hospitality 16.8
Transport 13.6
Manufacturing 9
Other 7.6
Finance, real estate and business services 7
Government services 6.4
Mining 5.1
Source: African Economic Outlook

The government has said that the national dialogue process may delay polls scheduled for 2015 by at least a year. The NCP said in April that the incumbent president, Omer Hassan al-Bashir, will be its candidate for the elections despite concerns over his health.

Against this background of political instability, the economy is suffering acutely. Sudan is still reeling from the secession of South Sudan in July 2011, which cost the government of Sudan some three-quarters of its oil production, half its fiscal revenues and about two-thirds of its international payments capacity, according to the Washington-based IMF. The International Crisis Group warned in a report in late 2012 that the economy was on the “brink of collapse” and there has been little since to suggest a more optimistic outlook.

GDP growth slowing

Sudan’s GDP growth in 2013 was estimated at 3.4 per cent, following a drop of 3 per cent in 2012, but is expected to slow to 2.7 per cent in 2014, according to the IMF. The budget deficit was an estimated 3.8 per cent of GDP in 2012 and 2.1 per cent in 2013, while the current account deficit increased to an estimated 10.6 per cent of GDP in 2013, from 10.4 per cent in 2012.

Sudan key economic indicators
  2008 2009 2010 2011 2012 2013 2014f 2015f 2016f
Population (millions) 38.1 39.1 40.1 32.7 33.5 34.4 35.3 36.2 37.1
Nominal GDP ($bn) 54.5 53.1 65.6 67.3 63.0 70.1 63.3 65.8 69.3
GDP per capita ($) 1,430 1,359 1,635 2,061 1,881 2,040 1,794 1,818 1,866
Real GDP growth (annual change, %) 3.0 4.7 3.0 -1.2 -3.0 3.4 2.7 4.6 6.0
Total government debt (gross, % of GDP) 69.0 72.0 73.0 70.0 95.0 91.0 89.0 86.0 82.0
Current account balance (% of GDP) -1.6 -9.6 -2.1 -0.4 -10.4 -10.6 -8.2 -7.1 -6.1
Unemployment (%) 16.0 14.9 13.7 12.0 10.8 9.6 8.4 8.0 7.7
Inflation (%) 14.3 11.3 13.0 18.1 35.6 36.5 20.4 14.3 9.5
f=Forecast. Sources: IMF; MEED

The IMF forecasts the fiscal deficit will narrow to 1.3 per cent in 2014 and the current account deficit to 8.2 per cent, but a downturn in oil output from South Sudan may mean that this improvement is not realised.

The ongoing deterioration of the Sudanese pound against the US dollar is another critical area of concern. The government has maintained an official exchange rate of about S£5.50 to the dollar, but the black market rate is at least S£9. The gap between the two has been widening since the country lost a significant proportion of its hard currency revenues after the secession of South Sudan.

Khartoum has made efforts to increase domestic oil production, which by October 2013 was up to about 190,000 barrels a day (b/d), according to the petroleum ministry.

It held an upstream licensing round in 2012, has signed several other production-sharing deals and is employing enhanced oil recovery techniques on existing fields. But efforts to develop alternative sources of income have largely failed.

Tense relations

Sudan’s economic relationship with South Sudan remains critical to its economy, particularly as Khartoum claims a share of South Sudan’s oil revenues for use of its pipeline and export infrastructure.

But little has gone smoothly between the two countries in the past three years. Juba shut down oil exports in January 2012 in a dispute over transit payments, and they only resumed in May 2012.

The outbreak of war in South Sudan in December 2013 has led to a decline in oil output from about 220,000 b/d to about 165,000 b/d, and there remains the possibility of a shutdown of the other fields.