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: Dominique Puthod , Lauréline Pla , Glenda Gallardo
- In 2014, Equatorial Guinea failed to recover from the 2013 recession caused by cheaper oil prices and lower oil and gas production.
- To maintain its budgetary balance, the country had to draw on the reserves it had stowed away in offshore banks and in the Bank of Central African States (BEAC).
- Equatorial Guinea’s spatial-development policy is geared towards exploiting the economic complementarities of a dispersed territory.
Several of Equatorial Guinea’s gas and oil fields matured in 2013, and the subsequent decline in production, on which the country was highly dependent, pushed the economy into recession. Although new fields opened, they did not fully offset the fall in the value of crude-oil production in a context of declining international prices. Growth was therefore once again negative (estimated at -2.1%) in 2014. Although non-oil and gas activities play a secondary role in the economy, they were somewhat vibrant, especially in the construction sector. Without reliable data it is difficult to make accurate growth projections for 2015 and 2016. In 2015, gross domestic product (GDP) is projected to contract drastically, due to the ongoing drop in gas and oil production and the squeeze on public investment in infrastructure. GDP growth could fall to -8.7% in 2015 before bouncing back to a positive 1.9% in 2016.
The Emerging Equatorial Guinea Forum held in Malabo in February 2014 attracted nearly 300 foreign investors and was testament to the authorities’ determination to diversify the economy. In 2008, the authorities launched a national economic and social development plan, the Plan Nacional de Desarrollo Económico y Social (PNDES), which aimed to diversify the country’s sources of growth by 2020. During the first phase of the plan (2008-12), road, port and airport infrastructure were created, the electricity supply network was improved and public housing and buildings were built, chiefly financed by oil and gas revenue. As scheduled by the PNDES, the authorities began to pull back public investment in 2013, but commitments to developments in progress for the five years to come have remained considerable. Given the fall in oil revenue since 2013, the authorities had to draw on the available external resources they had garnered in the form of official reserves with the BEAC and deposits in offshore or domestic banks. The continued decline in oil production and international prices are expected to force the government to continue to draw on their reserves at the risk of depleting them.
In order to diversify the foundations of its economy and to exploit the country’s potentialities, Equatorial Guinea is implementing an ambitious spatial-development policy. The current projects aim to develop growth hubs throughout the country, connected by major roads. Development of the major city areas, in particular Oyala on the mainland, will provide access to good-quality housing, water, electricity and public services such as healthcare and education.
Table 1: Macroeconomic indicators
|Real GDP growth||-4.8||-2.1||-8.7||1.9|
|Real GDP per capita growth||-7.6||-4.9||-11.4||-0.8|
|Budget balance % GDP||-4.5||-7.2||-7.9||-8.1|
|Current account balance % GDP||-8.1||-9.9||-8.4||-7.7|
Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.