Authors : Olivier Manlan, Mamadou Bobo Sow
Guinea recorded a major economic slowdown for the third year running in 2015, with growth estimated at 0.1% of gross domestic product (GDP) in real terms (equal to a 2.7% decline in per capita GDP), compared with 1.1% growth in 2014 and 2.3% in 2013. The culprit was the Ebola epidemic that struck the sub-region, especially Guinea, Sierra Leone and Liberia, between December 2013 and December 2015. Other contributing factors included a wait-and-see approach to governance in the run-up to the 11 October 2015 presidential election, and the adverse international economic outlook, which hurt the prices of export goods.
In addition to this drastic fall in growth, the government relaxed its fiscal discipline, mainly through increased capital outlays on infrastructure (roads, energy, etc.). This downturn in growth, combined with low domestic and foreign revenue, increased the budget deficit from 4.1% of GDP in 2014 to 7.5% in 2015 and reduced external assets in foreign currency from four months’ worth of imports in 2013 to two months in 2015. Despite good performances since 2011 in implementing the International Monetary Fund’s (IMF) Extended Credit Facility (ECF), most performance criteria and indicative targets were not achieved.
Growth prospects are expected to improve in 2016 thanks to a more peaceful political climate and the end of the Ebola epidemic, with Guinea officially declared Ebola-free on 29 December 2015. Furthermore, the government’s commitment to redress the macroeconomic situation and vast improvements to the electricity supply thanks to the new Kaleta hydroelectric dam will improve the business environment. Economic growth is therefore expected to accelerate again, reaching 4.0% in real terms in 2016 and 4.8% in 2017.
Like many other developing countries, Guinea is facing major challenges as a result of urbanisation. In 2014, urban areas were estimated to be home to 3.7 million people, or 34.7% of the population, up from 30.6% in 1996. Guinea’s urban growth is the result of its natural population growth, the rural exodus and the transformation of the outskirts of the country’s towns and cities. Imbalances in the urban structure of towns and cities have increased, confirming the predominant role of the capital, which had 1 667 864 residents in 2014 (15.7% of the national population). The main challenges for the country are youth unemployment, worsening urban poverty (incidence increased from 23.5% in 2002/03 to 30.5% in 2007 and 35.4% in 2012) and the shortage of basic public services, including education, health care, security and decent housing.
Africa: economic transformation hinges on unlocking potential of cities, says the African Economic Outlook 2016
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