Guinea-Bissau: Economic Outline
Guinea Bissau’s economic performance remains highly dependent on the prices of cashew nuts, which account for almost 90% of employment and three-quarters of exports (the so-called “green oil” of Guinea Bissau). Economic activity expanded by 4.2% in 2023 (2.1% per capita), maintaining the same rate as 2022. Agriculture and government infrastructure investments fueled growth on the supply side, particularly in the construction sector. However, inflationary forces led to a decline in private consumption on the demand side. The World Bank forecasts that economic activity will grow by around 4.7% in 2024 (equivalent to 2.2% per capita), driven by the positive outcomes of a robust cashew campaign, as the easing of inflationary pressures and a strong cashew season will encourage private consumption.
Concerning public finances, fiscal consolidation endeavors were disrupted due to unplanned increases in discretionary spending and decreased customs receipts, causing the fiscal deficit to expand to 7.6% in 2023, up from 6.1% in 2022. Factors contributing to this included legislative elections, accumulation of arrears in the energy sector, rice subsidies amounting to 0.2% of GDP, and investments in urban road infrastructure, all of which maintained debt levels above the convergence criterion at 77.8% of GDP. Enhanced revenue collection and improved spending discipline may potentially reduce the fiscal deficit to 4.8% of GDP in 2024. This figure could increase to 5.6% if planned arrears clearance is factored in, with public debt projected to decrease to 75.6% of GDP. However, the speed of fiscal adjustment hinges significantly on bolstered revenue mobilization, reinforced expenditure controls, and heightened grant financing. Yet, the uncertainty surrounding the country's persistent political volatility adds a considerable level of unpredictability to these projections. Inflation persisted at 8% (year-on-year) in 2023, up from 7.9% in 2022, primarily due to increases in food and energy prices. This contrasted with the average inflation rate of 1% recorded between 2015 and 2020 (data World Bank).
The World Bank classifies Guinea Bissau as a low-income country (the GDP per capita PPP was estimated at USD 2,191 in 2022, among the lowest in the world), and estimated unemployment at 3.1% in 2023. Poverty is widespread, especially in rural regions. Despite agricultural growth and elevated food prices, poverty remained stagnant at approximately 26% between 2022 and 2023. An anticipated recovery in the agricultural sector is forecasted to contribute to a partial decline in the poverty rate to 25.4% in 2024. Continued improvement is projected, aided by decreasing food prices, potentially reducing poverty to 24.1% in 2025, lifting over 15,000 individuals out of poverty. By 2026, the poverty rate is expected to further decline to 22.6%.
| Main Indicators | 2022 | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 1.72 | 1.97 | 2.15 | 2.32 | 2.50 |
| GDP (Constant Prices, Annual % Change) | 4.2 | 4.2 | 5.0 | 5.0 | 5.0 |
| GDP per Capita (USD) | 906 | 1,017 | 1,087 | 1,150 | 1,213 |
| General Government Gross Debt (in % of GDP) | 80.4 | 77.8 | 76.5 | 74.0 | 71.6 |
| Inflation Rate (%) | 7.9 | 7.2 | 3.0 | 2.0 | 2.0 |
| Current Account (billions USD) | -0.16 | -0.19 | -0.12 | -0.11 | -0.11 |
| Current Account (in % of GDP) | -9.6 | -9.4 | -5.6 | -4.6 | -4.3 |
Source: IMF – World Economic Outlook Database - October 2021.
Note: (e) Estimated Data
| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| CFA Franc BCEAO (XOF) - Average Annual Exchange Rate For 1 GBP | 800.68 | 749.15 | 741.42 | 731.88 | 737.93 |
Source: World Bank - Latest available data.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 50.3 | 10.5 | 39.2 |
| Value Added (in % of GDP) | 30.9 | 13.5 | 50.2 |
| Value Added (Annual % Change) | -0.8 | -0.7 | -4.3 |
Source: World Bank - Latest available data.
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Labour Force | 779,105 | 800,827 | 792,581 |
Source: International Labour Organization, ILOSTAT database
| 2017 | 2018 | 2019 | |
|---|---|---|---|
| Total activity rate | 72.87% | 72.90% | 72.89% |
| Men activity rate | 79.17% | 79.11% | 78.98% |
| Women activity rate | 67.01% | 67.11% | 67.19% |
Source: International Labour Organization, ILOSTAT database
The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
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Source: Index of Economic Freedom, Heritage Foundation
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The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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