Equatorial Guinea Economic Outlook
- Real GDP contracted by 8.2% in 2016 and is expected to shrink further by 5.9% in 2017. This recession is related to lower production in the oil and gas sectors.
- Large hydrocarbon revenues made it possible in 2016 to continue major structural changes underway for over 20 years, both in infrastructure and human development.
- One of the major challenges in stimulating entrepreneurship is the opening up of the market, in particular the improvement of the business climate and better regional integration.
In 2016, the economy of Equatorial Guinea was still dominated by the petroleum sector, which accounted for 85% of gross domestic product (GDP) and more than 94% of exports in 2015, according to the International Monetary Fund (IMF). Other relatively important sectors are construction (7% of GDP in 2015), agriculture, forestry and fisheries (2% of GDP), and trade (1.6%). Although these sectors are improving, relative to the petroleum sector, change has been very marginal since 2013. Economic diversification is slow to materialise but remains an important objective for economic growth and stability in the medium and long term. Over the past three years, the fall in oil prices has severely affected the development effort.
This fall in oil prices has immediate and lasting consequences for Equatorial Guinea’s budget, especially as it is accompanied by a decline in production, which only reached an estimated 155 000 barrels of oil equivalent per day in 2015, and amounted to a fall of 5% in volume per year over the last 10 years. This also affects the structure of the balance of payments, due to lower export earnings. The fall in government revenues has a direct impact on the rest of the economy, given the importance of public procurement in stimulating non-petroleum sectors. It should be noted that the capital expenditure reflected in the Finance Act 2015 (XAF 1 951 billion) corresponds to 85% of the forecast revenue. The 2016 Finance Act, against a background of recession, indicates that the authorities have chosen to maintain a high level of investment while maintaining a strategic balance.
The private sector in Equatorial Guinea is similar to that of many other developing countries, despite having its own local character. Large companies exploit raw materials and are almost exclusively foreign-owned, compared with small, local businesses that are disadvantaged by the poor business climate. Reforms have been started but progress is slow, and the establishment of a local class of entrepreneurs requires time and political commitment. This is the challenge to be faced in the coming decades. Equatorial Guinea has significant assets conducive to entrepreneurship and industrialisation. The country’s infrastructure is world-class, including roads, ports and energy. Another major advantage for the country’s development of entrepreneurship lies in the cultural diversity of its population and the return of a well-trained diaspora willing to invest in the country. This part of the population consists mainly of young people who speak several languages, valuable for the entrepreneurship and innovation needed to revive the economy.