GUINEA

Key conditions andchallenges

Table 1

2023

Population, million

14.2GDP, current US$ billion

23.0

GDP per capita, current US$1617.5

International poverty rate ($2.15)

a13.8
a46.6

a86.8

Lower middle-income poverty rate ($3.65)
Upper middle-income poverty rate ($6.85)
Gini index

a29.6

School enrollment, primary (% gross)

b98.0

b58.9

Total GHG emissions (mtCO2e)45.9Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2018), 2017 PPPs.
b/ Most recent WDI value (2021).

Mining investment will boost growth to
7.1 percent in 2023, poverty will decline
slightly, and the fiscal deficit widen to 1.6
percent as capital spending rises. Growthin 2024 will slow primarily due to a dipin mining and slight impacts of the December 2023 fuel depot explosion. Extreme poverty is projected to fall in 2024
as food prices ease. Risks include delays tothe political transition and reforms.

Growth was robust over 2019-23, averaging 5.4 percent (2.9 percent per capitaterms) driven by the mining sector andagriculture productivity growth, supporting low fiscal deficits to GDP (averaging1.7 percent). However, weak mining linkages to non-mining sectors, headwinds
from Dutch-disease (DD) dynamics, andrecent external shocks from the COVID-19
pandemic and Russia’s invasion of
Ukraine limited job creation and poverty
reduction. The $2.15 international poverty
rate was 10.6 percent on average over thesame period, only marginally affected by
the mining-driven growth. The Simandou
mining operation, expected to almost
triple Guinea’s GDP in the medium term,holds potential to transform Guinea’s
economy and create jobs if reforms are implemented that counter DD.
However, the ongoing mining boom, andassociated real appreciation of the local
currency, adversely affects competitiveness of non-mining sectors and hampers
efforts to diversify the economy to create
more and better jobs. Structural challenges include low human capital levels,
large infrastructure gaps, an underdeveloped financial sector, weak institutional
capacity, and large gender gaps in education, earnings, agriculture productivity, and political representation. Weak fiscal revenue mobilization constrains public investment. Recent increases in digital

FIGURE 1 Guinea / Debt, fiscal deficit, and inflation

Percent of GDP
45

access and e-government transactions havehelped bolster economic activity and streamlined tax collection; yet further digitalization and structural reforms are needed tospur diversification and inclusive growth.

Recent developments
Growth accelerated to 7.1 percent in 2023
(4.6 percent per capita terms) bolstered bystrong mining sector performance. Bauxite
production surged by 22 percent, and gold
exports by 10 percent attributable to bothartisanal operators and new formal sector
companies. On the demand side, an investment surge (private and public) fueled
growth. The fiscal deficit widened to
1.6 percent of GDP in 2023 from 0.9 percent in 2022, due to a 1.3 percentage pointof GDP increase in capital expenditure.
Inflation decelerated but remained high,at 9.3 percent in 2023, down from 11.6
percent in 2022, aided by stable transport
costs and prudent fiscal and monetary
policy (reserve money increased only by
3 percent and broad money by 1.5 percent). However, food price inflation isestimated to have increased from 13.9
percent in 2022 to 16.2 percent in 2023.
Consequently, the US$2.15 international
poverty rate is expected to remain at 10.5
percent in 2023, same as in 2022. With
inflation easing, and to encourage credit
to the private sector, the central bank reduced its key rate by 50 basis points to
11 percent, and the reserve requirement
ratio from 15 percent to 13 percent in
September 2023.

FIGURE 2 Guinea / Actual and projected poverty rates andreal GDP per capita
Poverty rate (%)

Percent1440Real GDP per capita (constant million LCU)

100

7.0

90

12

6.0

80

35
1070

5.025

860

4.020

640

3.0

430

2.030

50

151020502021

2022

Debt (lhs)20232024 eFiscal defit (rhs)2025 f2

1000

1.00.02007 2009 2011 2013 2015 2017 2019 2021 2023 2025

2026 fInflation (CPI, rhs)

Source: World Bank.

International poverty rate

Lower middle-income pov. rate

Upper middle-income pov. rate

Real GDP pc

Source: World Bank. Notes: see Table 2.

MPO

1Apr 24

The current account balance (CAB)
widened to -12.9 percent in 2023, due toa significant decrease of trade surplus,
linked to FDI-related imports and a fall inexports price. Mining-related FDI, themain source of external financing, increased to 15 percent of GDP in 2023, while
the real effective exchange rate is likely tocontinue to appreciate.

OutlookMining will continue to drive growth
while the non-mining sectors, impacted
by the fuel depot explosion in midDecember 2023, recover. Growth willslow to around 4.9 percent in 2024
(2.4 percent per capita) and accelerate
to 6.3 percent on average in 2025–2026(excluding Simandou mine exports anticipated by end-2026), though below
the potential of 9.3 percent. Despite deceleration in agriculture and services,

the $2.15 international poverty rate is
projected to decline to 9.3 percent in
2024 and 8.1 percent in 2025 due toeasing food price inflation. Given thelimited poverty gains from mining-driven growth, redistribution mechanisms
to vulnerable populations and productivity gains in non-mining sectors will
be required for inclusive growth.
Inflation would decelerate to 8.8 percentin 2024 and 8.1 percent on average in
2025-26, due to easing supply constraints
and improving road-network conditions,facilitating food distribution, as well as toprudent monetary policy including minimal fiscal financing.
The fiscal deficit (including grants) would
widen to 2.7 percent of GDP due to increased capital expenditures but decrease
to 2.1 percent in 2025-2026 consistent withprudent fiscal policies. Tax revenues are
to increase slightly in 2024 to 12.7 percentof GDP, buoyed by tax administration reforms and additional mining revenues
from implementing the bauxite-reference-

TABLE 2 Guinea / Macro poverty outlook indicators

price mechanism as of July 2022. Electricity
subsidies are to decrease by 38 percent, per
the 2024 budget law, as utility company
reforms bear fruit, particularly the continued rollout of prepaid meters and intensified billing recovery efforts. Debt-to-GDP
would decrease slightly to 35.3 percent in
2024 and to average 32.0 percent in2025-2026, due to reduced domestic debt.
The CAB is forecast to remain high at-12.7 percent of GDP in 2024 as the FDIinduced trade deficit persists yet would
improve slightly during 2025-26 to an average -10.1 percent. Mining-related FDI,
the main source of external financing, isexpected to rise to 17 percent of GDP
in 2024, while the real effective exchange
rate would likely continue to appreciate.
Risks are tilted to the downside as political transition uncertainties leading up to
the 2025 elections could slow implementation of reforms, potentially reducing
private investment. On the upside, mining related FDI inflows could increase,reflecting planned new projects.

(annual percent change unless indicated otherwise)

Real GDP growth, at constant market prices
Private consumption
Government consumption
Gross fixed capital investment
Exports, goods and services
Imports, goods and services

2021
5.0
0.6
16.8
8.3
0.8
-6.2

2022
3.7
7.6
-22.4
6.2
5.8
6.7

2023e
7.1
4.8
3.4
39.8
11.3
18.2

2024f
4.9
3.3
24.8
48.4
6.8
25.3

2025f
6.2
4.7
4.6
41.8
6.0
20.3

2026f
6.5
4.7
5.6
3.9
5.9
3.3

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

5.1
8.3
3.15.2

4.6
5.4
2.0
6.5

7.1
5.1
10.8
5.1

4.9
3.0
6.7
4.4

6.2
4.4
7.8
5.7

6.5
5.1
8.9
5.0

Inflation (consumer price index)

12.6

11.6

9.3

8.8

8.7

7.5

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

0.6
11.1

-0.3
12.1

-12.9
15.0

-12.7
17.4

-12.3
16.9

-7.8
9.6

Fiscal balance (% of GDP)
Revenues (% of GDP)
Debt (% of GDP)
Primary balance (% of GDP)

-1.9
15.2
41.5
-0.8

-0.9
13.2
36.70.0

-1.6
13.8
35.5
-0.4

-2.7
13.9
35.3
-1.6

-2.1
14.2
33.7
-1.2

-2.1
15.3
30.3
-1.3

11.1
44.5
86.7

10.5
44.5
87.3

10.5
44.7
87.6

9.3
41.2
85.0

8.1
38.5
82.6

7.8
38.4
83.8

3.2
10.8

3.1
10.7

3.1
10.7

3.2
10.6

3.1
10.5

3.1
10.4

a,b

International poverty rate ($2.15 in 2017 PPP)a,b
Lower middle-income poverty rate ($3.65 in 2017 PPP)a,b
Upper middle-income poverty rate ($6.85 in 2017 PPP)
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
Notes: e = estimate, f = forecast.
a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2023. Forecasts are from 2024 to 2026.
b/ Projections using microsimulation methodology.

MPO2Apr 24