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Guinea Economic Outlook
Macroeconomic performance and outlook
Guinea’s economic growth has remained steady thanks to reforms improving the business environment. Real GDP growth is estimated at 6.2% for 2019 (6.0% in 2018). The tertiary sector’s contribution to growth— improved traffic at the Conakry port, growth of the mobile phone sector, and the opening of new hotel complexes— was 3.6 points in 2018, while those of the primary and secondary sectors were 0.7 points and 1.7 points, respectively.
The tax burden, 13.7% of GDP in 2018, reached an estimated 14.7% in 2019. The budget deficit, 1.5% of GDP in 2018, reached an estimated 2.9% in 2019 and was projected at 2.8% in 2020. By end 2018, the current account deteriorated and registered a deficit of 2.3% of GDP after having recorded a surplus of 4.3% at the end of 2017. Public debt represented 36.7% of GDP at the end of 2018 and should remain below 45% until 2021. The annual rate of inflation, 9.8% in 2018, reached an estimated 9.7% in 2019. The exchange rate for the Guinean franc, which continues to depreciate, rose from 1,797 to the dollar in 2000 to 9,011 in 2018, due to the low repatriation of export earnings for mining products. According to the results of a 2014 survey, the 5.2% unemployment rate was coupled with a 12.8% underemployment rate. Poverty (at the national poverty line) rose from 41.9% in 2002 to 55.2% in 2012 (last year studied).
Tailwinds and headwinds
Guinea’s economic outlook should allow for an average annual GDP growth of 6% in 2020–21. In addition to its mineral resources, the country could leverage its significant water resources. It has an estimated 6.2 million hectares of potential farmland, 75% unused, and 64,000 hectares of irrigable land, of which less than 10% is developed. The country’s hydroelectric potential, less than 6% tapped, is estimated at 6,000MW with guaranteed energy of 19,300GWh a year.
Imports of food processed, most of which can be produced locally, rose to nearly $558 million in 2018. The government plans to reduce its food trade deficit by 50% by 2025 and to create agribusiness processing zones to carry out its development pilot in the Boké and Kankan administrative regions. This pilot will create a body of knowledge to replicate in all 10 of the country’s agropoles.
Despite efforts by the central bank, inflation has continued to increase in the past five years and hovered between 8% and 10% since 2016, mainly due to the increase in food product prices, which represent 37.6% of the food basket. The increase is due to deteriorating roads and bridges, which increase travel times for perishable farm products from production to consumption areas. During the rains of August 2019, it could take a week and cost approximately $70 per ton to ship farm products from Nzerekoré to Conakry (864 kilometers), roughly equivalent to the cost of shipping a ton of rice from Bangkok by ship. High inflation means Guinea faces structural difficulties in adhering to ECOWAS convergence criteria. This inflationary trend will not be reversible if road conditions continues to worsen, making local agricultural products more expensive than products imported from Europe and Latin America.