Guinea-Bissau Economic Outlook
Economic performance and outlook
Economic growth dipped slightly from 5.8% in 2016 to an estimated 5.5% in 2017 and is projected to be 5.2% in 2018. Growth in 2017 was driven mainly by food crop production (which grew 8%, up from 5.6% in 2016) and the fishing industry (which grew 9.5%, up from 9% in 2016). In the secondary sector, construction grew 16.6% in 2017 following a sharp downturn of 17.8% in 2016. In the tertiary sector, retail was up 8.9% in 2017. On the demand side, the key determinants of GDP growth in 2017 were personal spending, public investment, and exports. These reflect situational factors, such as the rise in the price of cashew.
Public finances improved in 2017. The budget deficit (including grants) shrank from 4% of GDP in 2016 to 2% in 2017, mainly reflecting the increase in tax revenues from CFAF 66.1 billion in 2016 to CFAF 79.9 billion in 2017. Inflation as measured by the consumer price index was estimated at 2.3% in 2017—well below the West African Economic and Monetary Union (WEAMU) ceiling of 3%. Total outstanding public debt (domestic and foreign) is expected to be 43.3% of GDP, down from 47.3% in 2016, within the WAEMU ceiling of 70% of GDP. The current account was in surplus in 2016 (2.2%) and 2017 (2.8%), due to a trade
surplus of 4.6% in 2016 and 3.1% in 2017.
Tax revenues improved in the first half of 2017, up 36.3% from the same period the previous year. This reflects more efficient tax collection, particularly of customs duties, which leaped 26% from 2016. The 39.8% rise in the international price for cashew in 2017 (to $1,950 per ton) helped Guinea-Bissau’s economy. Specifically, the decline in cashew exports (from 201,921 tons in 2016 to 192,661 tons in 2017) was offset by a rise in export prices, from CFAF 772 per kg in 2016 to CFAF 1,100 per kg in 2017. Cashew export revenues are expected to grow 31%, from CFAF 162 billion in 2016 to CFAF 212 billion in 2017.
Political uncertainty continues to dominate economic prospects. The November 2016 appointment of Umaro Sissoco Embalo as Prime Minister, following the Conakry accord of October 2016, was rejected after failing to win the approval of the African Party for the Independence of Guinea and Cape Verde. The Parliament, which was shut down in December 2015, has not resumed sitting. The date for parliamentary elections, which are expected to occur in 2018, has not been set. This situation hinders the business environment and governance and fuels social unrest. The country is ranked 176 out of 190 countries in the World Bank’s 2018 Doing Business report and 168 out of 176 countries on Transparency International’s 2016 Corruption Perceptions Index. According to the United Nations Development Programme’s 2015 Multidimensional Poverty Index, 80% of the country’s population lives in multidimensional poverty, 58% of those in deep poverty.