major macro economic indicators
|2018||2019||2020 (e)||2021 (f)|
|GDP growth (%)||6.2||5.6||1.5||6.6|
|Inflation (yearly average, %)||9.8||9.5||9.0||8.0|
|Budget balance (% GDP)*||-1.1||-0.5||-3.7||-3.0|
|Current account balance (% GDP)**||-18.7||-13.7||-20.5||-15.7|
|Public debt (% GDP)||38.0||34.5||45.0||46.0|
(e): Estimate (f): Forecast *Grants included **Official transfers included
- One-third of the world's bauxite reserves
- Largely untapped deposits of iron, gold, diamonds, uranium and oil
- Significant hydroelectric potential
- Dependent on mining and energy prices
- Dependent on Chinese demand for bauxite
- Low government revenue (13% of GDP)
- Inadequate infrastructure, particularly in the electricity and transportation sectors
- High poverty (53% of the population), informal economy (50% of GDP and 70% of employment), non-inclusive growth
- Difficult business environment (156th out of 190 countries in the Doing Business 2020 ranking)
Strong growth in 2021 after a sluggish year
With the announcement of a national lockdown at the end of March (including border closures and a ban on gatherings) and the decline in world trade, the Guinean economy slowed in 2020. However, it should resume brisk growth as early as 2021. Consumption, which accounts for 70% of GDP, slowed in 2020 (+1%), but its decline was mitigated by a stimulus plan, which relieved the most vulnerable households of paying their utility bills and provided food supplies. In 2021, consumption is expected to rebound, driven by progress in agricultural productivity. Investment also slackened in the wake of the crisis (+1% in 2020 against +6% in 2019), although some major projects remained on track, including development of the Simandou iron deposits, for which the government granted a 25-year concession to the SMB-Winning consortium in June 2020. The consortium, owned by Singaporean, Chinese and French interests, with a 10% stake held by the Guinean government, will invest USD 16 billion, including in the construction of a 650 km railway to transport the ore to the future deepwater port of Matakong. In addition, 2020 was expected to mark the entry into service of the Souapiti dam, which should double Guinea's energy supply. However, it has been postponed to 2021.
According to estimates by the National Agricultural Statistics Agency, the agricultural sector, which accounts for 20% of GDP and 60% of jobs, recorded good results for the 2019/2020 season thanks to an increase in the cultivated area. Conversely, the 2020/2021 season will be hurt by the closure of borders (especially coffee and cocoa production). Mining production, which accounts for 25% of GDP, contracted by about 5% between June 2019 and June 2020. Transport-related logistical disruptions and a collapse in Chinese demand weakened the sector, which should however return to its usual growth in 2021. Services, which employ 30% of the population and account for 40% of GDP, were hit as businesses were closed and tourism and transport came to a virtual standstill, but will revive with the lifting of restrictions.
Public and current accounts largely supported by international aid
Following the fiscal consolidation efforts of recent years, public accounts were adversely affected by the crisis. In April 2020, the government announced a USD 318 million stimulus plan, or 2% of GDP, aimed at increasing health spending and helping households and SMEs in difficulty. This plan, combined with a 26% drop in tax revenues, caused the public deficit to widen in 2020. Financing the deficit required greater recourse to debt from donors, including the IMF, the AfDB and the World Bank, increasing the external public debt (30% of GDP, about half of which is owed to China). Furthermore, the country is covered by the Paris Club debt service suspension initiative to the tune of USD 126 million, or 0.9% of GDP.
The current account deficit widened further in 2020, but should approach its pre-crisis level in 2021. Concerning goods, the fall in mining revenues was only partially offset by the decline in imports (reduction in the oil bill and purchases of capital goods). However, the goods deficit should narrow in 2021, driven by mineral exports, while capital goods purchases are set to recover more slowly. Although structurally in deficit, the services deficit narrowed somewhat in 2020 due to lower purchases of technical services related to investment projects. Meanwhile, in 2020, lower profit transfers by mining companies reduced the primary income deficit. Traditionally financed by FDI and project loans, the current account deficit increased and the additional financing requirements in 2020 were met through international assistance, with Guinea receiving USD 197 million from the IMF, USD 80 million from the World Bank and USD 30 million from the AfDB.
Tensions exacerbated by Alpha Condé's third term in office
President Alpha Condé, who is 82, had a new constitution adopted in March 2020 allowing him to run for a third time. Despite opposition from civil society and numerous demonstrations, the new constitution was approved by 89.8% of voters, with a turnout of 58.3%. Legislative elections were held on the same day and resulted in the president's Rally of the Guinean People (RPG) winning 79 of the 114 seats in parliament. In October 2020, Condé was re-elected president with 59.5% of the vote and a 78.9% turnout. In addition to questions raised by international observers, the opposition challenged the election before the constitutional court, but the court ruled in November 2020 that the election had been conducted properly, after weeks of protests that claimed the lives of dozens of civilians.
China-Guinea relations are in in good shape, with multiple infrastructure projects financed by revenues from mining concessions. France and the European Union have expressed doubts about the credibility of the presidential election, but this will not prevent development aid from continuing.
Last updated: February 2021