major macro economic indicators
|2020||2021||2022 (e)||2023 (p)|
|GDP growth (%)||4.9||4.0||4.6||5.0|
|Inflation (yearly average, %)||10.6||12.5||12.6||12.0|
|Budget balance (% GDP)||-3.1||-1.7||-1.9||-3.0|
|Current account balance (% GDP)||-13.7||-1.3||-7.0||8.0|
|Public debt (% GDP)||47.0||42.0||39.0||37.5|
(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
Growth supported by the mining sector
Despite the COVID-19 pandemic, economic growth increased in 2020, thanks to the mining sector. After remaining robust in 2021, activity should strengthen in 2022. The mining sector (25% of GDP) will continue to be the main driver, driven by rising bauxite production, which accounts for 55% of China's supply and 20% of global aluminium production. Sustained demand for bauxite and continued high gold prices will drive ore exports, curbing the impact of rising investment-related imports on the net contribution from foreign trade. In addition, investment will also support growth, benefiting in particular from improved energy supply following the commissioning of the Souapiti hydroelectric dam in 2021. The mining sector will continue to be a major recipient, through the Simandou iron ore project. Furthermore, government investment in transportation will create opportunities and support growth in the construction sector. In 2021, for instance, the government launched the construction of a 650 km railway to transport future ore production from Simandou to the future deepwater port of Matakong. However, political uncertainty following the coup could discourage some investors if it persists. The recovery of the services sector, which employs 34% of the workforce and accounts for 40% of GDP, could also be affected by political uncertainty in 2022. However, it should be supported by household consumption, which remained modest in 2021 but is poised to strengthen in 2022 as mobility restrictions are eased and inflation falls. The increase in domestic agricultural supply will relieve inflationary pressures from high food import prices. The agricultural sector, which accounts for 25% of GDP and 60% of employment, is expected to perform well in 2022, supported by World Bank financial support aimed at boosting productivity (increased fertiliser use, improved irrigation systems, increased area cultivated).
Financing needs dependent on foreign actors
The budget deficit narrowed slightly in 2021 and is expected to stabilise in 2022. The increase in capital expenditures related to investments should be offset by growth in mining sector revenues and a reduction in electricity subsidies. Financing the deficit will entail borrowing from international donors (IMF, AfDB, World Bank) and from China, the main creditor, which holds half of the external public debt (26% of GDP). The government-debt-to-GDP ratio should nevertheless stabilise in 2022 on the back of rapid economic growth.
After improving in 2021, the current account deficit is expected to widen in 2022. The increase in gold and bauxite exports (90% of exports) will be reflected in the trade balance. Moreover, the completion of the Souapiti project in 2021 should moderate the need for capital goods imports. However, the balance of services will remain largely in deficit with the resumption of purchases of technical services related to these projects, particularly transport services. Owing to the high level of foreign ownership in mining production, almost half of all net export earnings are repatriated as dividends, increasing the primary income deficit. The secondary income balance will remain in surplus thanks to international aid and workers' remittances from abroad. The deficit will be financed by FDI (covering 70% of financing needs) and project loans. However, the country's political uncertainty in 2022 could threaten these sources of financing.
Increased international pressure after the coup
On 5 September 2021, Lieutenant Colonel Mamady Doumbouya, head of the Guinean army’s Special Forces Group (GFS), seized power in a coup, announcing the arrest of President Alpha Condé, the dissolution of the government and the suspension of the constitution. After being sworn in as transitional president in October, he appointed Mohamed Beavogui as prime minister to lead the government until elections are held. However, no date has been set for the elections, fuelling uncertainty about how long the transition will last. This political upheaval follows Mr Condé's controversial re-election for a third term in October 2020, which led to demonstrations, some of which were violently repressed, and the arrest of opponents. Mr Condé, who had been in power since 2010, had had a new constitution adopted in March 2020 allowing him to run for a third term at the age of 82. While some Guineans may have welcomed the coup, it was unanimously condemned by the international and regional community, including the African Union and ECOWAS, both of which suspended the country. ECOWAS continues to press for democratic elections to be held within six months, starting from September 2021. The situation puts the country at risk of economic sanctions. For example, in November 2021, the United States suspended the country's eligibility for AGOA, a trade programme that facilitates access to the U.S. market.
Last updated: February 2022