Guinea Economic Outlook
Economic performance and outlook
Reforms, investment in mines, agriculture, and infrastructure, as well as the end of the Ebola crisis, contributed to an economic upturn in 2016. Real GDP grew 6.6%, reflecting strong performance in agriculture (which grew 5.8%), mining (which grew 33.5%), and energy (which grew 34%). Real GDP growth was an estimated 6.4% in 2017 and is projected to average 6.2% in 2018–19, driven by strong performances in mining, agriculture, and construction.
Cautious monetary policy is likely to keep inflation at 8.4% in 2017 and 2018, though it is projected to climb to 10.6% in 2019 due to rising import prices, particularly oil prices. Government policies succeeded in delivering a budget surplus of 0.3% of GDP in 2016. The budget deficit in 2017, estimated at 0.4% of GDP, is projected to deepen to 1.6% in 2018 and 1.8% in 2019 as a result of reforms to expand the scope of the budget and streamline public procurement. The current account deficit is expected to climb from 34.2% of GDP in 2016 to an average of 43% in 2017–19 as a result of imports related to mining projects, energy, and transportation infrastructure. Export income inflows helped widen foreign currency reserves from 1.7 months of import coverage in 2015 to 2.2 months in 2016 and an estimated
2.5 months in 2017–19. Foreign debt remained steady at 21% of GDP in 2016 and is not expected to exceed 50% in 2017–19, despite nonconcessional borrowing earmarked to fund infrastructure.
The country has launched a proactive drive to reform its 2040 Vision for Guinea and its National Economic and Social Development Plan (2016–2020). Links with historic partners have been deepened, and the country is looking for new partners. Spending control has been tightened; nonconcessional loans have been sought for infrastructure projects due to better advisement to keep indebtedness at below 50%. Loans are backed by revenues from mining operations, rather than by the value of mining assets. In November 2016, the government secured public and private funding commitments of more than $20 billion under its National Economic and Social Development Plan. The planned investment will be used for both completed and current projects.
In addition to infrastructure shortfalls, the challenges are mainly institutional and are primarily connected with governance, particularly public administration. One of the biggest challenges is how to coordinate decisions to implement visions and policies by governing institutions and how to impose penalties on those who interfere with their execution. Striving for profit, which feeds corruption, hampers the continuous and sustainable implementation of policies and measures. Low civil service salaries, which lag behind the cost of living and private-sector practice, highlight the crucial issue of payroll allocations in public administration reforms. Combined with low budgets for agencies tasked with implementing visions and policies, this situation weakens the country’s ability to develop and implement projects and use resources in a timely manner. Agricultural efficiency, in particular, fails to achieve its potential as a driver of job creation and economic growth.