Recent Developments & Prospects
Economic Cooperation, Regional Integration & Trade
Economic & Political Governance
Public Sector Management, Institutions & Reform
Natural Resource Management & Environment
Thematic analysis: Structural transformation and natural resources
Authors: Gérard Bizimana, Glenda Gallardo, Lauréline Pla
- The country has entered into recession following a decline in oil revenue. Growth was
negative (-1.4%) in 2013 and is projected to remain so, at -1.8%, in 2014.
- The authorities maintained investment expenditure high at 37.9% of GDP, causing a
budget deficit of 7.5% of GDP in 2013.
- Oil and gas revenue have allowed rapid development of basic infrastructure in
recent years, but there was no attending diversification of the economy or significant
improvement of the population’s living conditions.
Equatorial Guinea’s economy went into recession in 2013, posting negative growth estimated at-1.4% of GDP after +5.3% growth in 2012, and is expected to continue to deteriorate in 2014 (-1.8%) and 2015 (-8.5%). The recession is the result of a fall in oil revenue and lower gas and oil output, both of these highly dominant factors in the country’s economy.
Hydrocarbons excluded, growth of the economy was largely driven by public investment aimed at developing and improving basic infrastructure such as roads, ports and airports. Public capital expenditure has grown constantly in recent years, and this trend should continue into 2014 and 2015, despite the fall in oil revenue that began in 2012. The fiscal deficit, which grew from 5.4% of GDP in 2012 to 7.5% in 2013, is therefore projected to deteriorate further, reaching 11.4% of GDP in 2014 and 12.8% in 2015.
Production at the significant oil and gas deposits discovered in the 1990s has driven strong economic growth, allowing per capita income to surge to an estimated USD 29 940 in 2013. Although revenue from hydrocarbon production has enabled rapid development of basic infrastructure in recent years, growth has not yet been supported by a process to diversify the economy, and improvements in the population’s living conditions have been very slow. The country’s Human Development Index (HDI) stood at 0.554 in 2013, ranking it 136th out of 187 countries, while it is ranked 59th in terms of per capita GDP. The oil and gas sector currently amounts to nearly 90% of GDP and provides almost all of the country’s exports, while agriculture, the population’s main source of income, is limited to subsistence farming and covers only 30% of the country’s needs.
Aware of the need to make growth more inclusive and to broaden its bases, the authorities have developed a national economic and social development plan, the PNDES (Plan Nacional de Desarrollo Económico y Social), aimed at turning Equatorial Guinea into an emerging economy by 2020. The first phase of the plan (2008-12) focused on developing transport and electricity infrastructure and public buildings (hospitals and schools) at the cost of substantial capital expenditure financed by oil and gas revenue. The second phase, begun in 2013, plans to maintain high public investment in infrastructure while targeting the development of five priority sectors that offer the country untapped comparative advantages and could generate wealth and jobs: agriculture and livestock farming; fisheries; petrochemicals and mining; tourism; and financial services. The authorities wish to improve the business climate in these areas to attract foreign investment and move up the global value chains (GVCs).
Table 1: Macroeconomic indicators
|Real GDP growth||5.3||-1.4||-1.8||-8.5|
|Real GDP per capita growth||2.5||-4.2||-4.5||-11.2|
|Budget balance % GDP||-5.4||-7.5||-11.4||-12.8|
|Current account balance % GDP||-12.6||-7.9||-10.8||-0.5|
Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.