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
Author: Olivier Manlan
- Political instability, due to tough negotiations over holding parliamentary elections along with problems with mining investment, slowed growth to about 2.0% in 2013 (from 3.9% in 2012).
- The September 2013 parliamentary elections ended the political transition and ushered in better prospects for jobs and investment.
- A conference of Guinea’s partners and investors in November 2013 in Abu Dhabi focused on agriculture, infrastructure and human resources development. The promised USD 6 billion of funding will aim to create jobs, reduce poverty and boost the country’s inclusion in regional and international trade.
Economic growth was estimated at 2.0% in 2013 (down from 3.9% in 2012), due to political unrest linked to holding parliamentary elections and a drop in mining investment. Growth should increase to 4.2% in 2014, driven by agriculture, construction and better electricity supply.
The economic recovery plan backed by the International Monetary Fund (IMF) Extended Credit Facility (ECF) continues satisfactorily. Inflation fell to 11.9% in 2013 (from 20.8% in 2010) and should fall further in 2014 and 2015. The budget deficit is expected to be curbed and monetary funding of it ended. Required minimum bank reserves, despite being a high 20% of deposits, will be monitored.
Successful macroeconomic stabilisation and the start of reforms to boost the productive sector and the business climate have not been enough to register clear economic and social gains. Poverty still affects 55.2% of the population more than half a century after independence (1958), and governance is still inadequate. Guinea ranks 164th out of 182 countries in Transparency International’s Corruption Perceptions Index and 178th out of 187 countries in the United Nations Development Programme (UNDP) Human Development Index (HDI). Infrastructure, public utilities and government services remain insufficient and the private sector is still small.
The government adopted its third poverty reduction strategy paper (PRSP 3) in 2013 aimed at speeding up reforms in natural resource management and the productive sector (agriculture, energy and water supply, mining, investment and business) to remove economic transformation obstacles such as low farm labour productivity. The primary sector employs three-quarters of the workforce but only provides a fifth of GDP. A weak industrial sector, unsuitable infrastructure and poor energy supply limits the country’s inclusion in global value chains (GVC). Low capital productivity and a large, inefficient and unmotivated bureaucracy are other blocks. The end of the political transition and a new quest for social cohesion seem promising for the success of the PRSP 3.
Table 1: Macroeconomic indicators
|Real GDP growth||3.9||2||4.2||4.3|
|Real GDP per capita growth||1.3||-0.5||1.7||1.8|
|Budget balance % GDP||-3.2||-5.2||-2.5||-0.4|
|Current account balance % GDP||-33.9||-20.2||-18.3||-24.7|
Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.