Guinea-Bissau: Economic Outline
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Guinea Bissau’s economic performance remains highly dependent on the prices of cashew nuts, which account for almost 70% of employment and 80% of exports (the so-called “green oil” of Guinea Bissau). Prices for raw cashews, which were already under pressure from excess supply in the last few years, tumbled as a consequence of the Covid-19-induced crisis, which slowed processing activities and caused a contraction in demand. As a result, GDP growth slowed down to 1.5% in 2020 according to IMF latest estimates. It rebounded to 3.8% in 2021, owing to higher cashew nut production, public investment in critical externally financed infrastructure, the gradual lifting of Covid-19 containment measures, and a gradual improvement in business confidence (IMF). Economic growth is forecast to further strengthen to 4% in 2022 and 5% in 2023 (IMF).
In 2021, Guinea Bissau’s economy started to recover from the Covid-19 pandemic and its impact on the strategic cashew nut sector. The overall fiscal deficit decreased from 10% GDP in 2020 to an estimated 5.4% GDP in 2021, due to the unwinding of pandemic-related effects, greater revenue mobilization and expenditure controls (IMF). Fiscal consolidation is expected to continue in 2022. The IMF initially projected public debt to gradually decrease from 79.3% GDP in 2020 to 79.1% GDP in 2021, 78.1% GDP in 2022 and 76.1% GDP in 2023. However, recent analysis forecast public debt to slightly increase in 2021, mainly because of domestic currency depreciation and the rephasing of the clearance of legacy arrears (IMF). Inflation increased from an estimated 1.5% in 2020 to 1.9% in 2021, and is expected to remain stable at 2% in 2022 and 2023 (IMF). In July 2021, the IMF approved a Staff-Monitored Program (SMP), which supports the government’s program of reforms aimed at stabilizing the economy, improving competitiveness, and strengthening governance. Guinea Bissau’s authorities may benefit from an Extended Credit Facility (ECF) arrangement in 2022 if the SMP’s implementation is satisfactory.
The World Bank classifies Guinea Bissau as a low-income country (GDP per capita PPP was estimated at USD 1,948 in 2020). About 69% of the population live in poverty and 25% suffer from chronic malnutrition (UN). Data from to the World Bank show that the unemployment rate in the country was around 6.7% for 2020. The dimensions of the informal economy, as well as trafficking in narcotics are hard to assess, but they play an important role in the country's economic activities. In fact, the country struggles with South American drug traffickers, who are sometimes linked to the army. The UNDP ranked Guinea Bissau 175th out of 189 countries in the world in its 2020 Human Development Index.
| Main Indicators | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| GDP (billions USD) | 1.52 | 1.70 | 1.62 | 1.69 | 1.83 |
| GDP (Constant Prices, Annual % Change) | 1.5 | 5.0 | 3.8 | 4.5 | 5.0 |
| GDP per Capita (USD) | 839 | 918 | 857 | 874 | 927 |
| General Government Gross Debt (in % of GDP) | 76.5 | 78.5 | 82.0 | 80.3 | 77.7 |
| Inflation Rate (%) | 1.5 | 3.3 | 5.5 | 4.0 | 3.0 |
| Current Account (billions USD) | -0.04 | -0.05 | -0.11 | -0.08 | -0.08 |
| Current Account (in % of GDP) | -2.7 | -3.2 | -6.5 | -4.7 | -4.5 |
Source: IMF – World Economic Outlook Database - October 2021.
Note: (e) Estimated Data
| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| CFA Franc BCEAO (XOF) - Average Annual Exchange Rate For 1 MUR | 16.68 | 16.88 | 16.38 | 16.49 | 14.63 |
Source: World Bank - Latest available data.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 60.5 | 8.6 | 30.9 |
| Value Added (in % of GDP) | 30.9 | 13.5 | 50.2 |
| Value Added (Annual % Change) | -0.8 | -0.7 | -4.3 |
Source: World Bank - Latest available data.
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Labour Force | 779,105 | 800,827 | 792,581 |
Source: International Labour Organization, ILOSTAT database
| 2017 | 2018 | 2019 | |
|---|---|---|---|
| Total activity rate | 72.87% | 72.90% | 72.89% |
| Men activity rate | 79.17% | 79.11% | 78.98% |
| Women activity rate | 67.01% | 67.11% | 67.19% |
Source: International Labour Organization, ILOSTAT database
The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
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Source: Index of Economic Freedom, Heritage Foundation
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Latest Update: February 2023
