Guinea-Bissau Economic Forecast
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Guinea-Bissau has a wealth of natural resources such as oil, bauxite and phosphates. However social and political instability has hindered any attempt to develop and capitalize on these industries.
Guinea-Bissau’s economy relies heavily on cashew nut production as well as any form of foreign assistance. In 2004, the World Bank, IMF and the United Nations Development Programme (UNDP) provided US$107 million emergency budgetary support for Guinea-Bissau, accounting for over 80 percent of it’s national budget.
Guinea-Bissau has a wealth of natural resources such as oil, bauxite and phosphates. However social and political instability has hindered any attempt to develop and capitalize on these industries.
Guinea-Bissau’s economy relies heavily on cashew nut production as well as any form of foreign assistance. In 2004, the World Bank, IMF and the United Nations Development Programme (UNDP) provided US$107 million emergency budgetary support for Guinea-Bissau, accounting for over 80 percent of it’s national budget.
Cashew nut production in Guinea-Bissau, on the other hand, represents 20 percent of its GDP and contributes 85 percent of all jobs. Despite being the sixth largest producer of cashew nuts in the world, the industry is extremely undeveloped, with practically no forms of technology being used. It also faces structural problems; caused by socio-political situation, such as a dubious judicial system, land regulation issues, and lack of access to credit and insurance.
The cashew nut industry remains one of Guinea-Bissau’s key source of income. However its not as lucrative as other potential industries. An estimate by the African Economic Outlook indicated utilization of Guinea-Bissau’s bauxite, phosphates and oil resources could potentially double or even triple Guinea-Bissau’s foreign exchange and fiscal revenues.
Unfortunately, the likelihood of this happening remains unclear. Accordingly, Guinea-Bissau’s economic forecast is conditional on future structural reforms as well as continual foreign assistance. Changes in Guinea-Bissau’s social and political climate could also distort any projections.
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Guinea-Bissau’s GDP Forecast
Guinea-Bissau is one of the poorest countries in the world with a GDP (PPP) of US$1.793 billion and a nominal GDP (current prices, US dollars) of US$0.825 billion in 2010. While GDP (PPP) grew by 4.43 percent compared to 2009, nominal GDP shrank by 1.67 percent.
Fortunately, both numbers are expected to experience slow but steady growth for the next five years. GDP (PPP) is likely to see an annual growth of between 5.69 to 6.51 percent from 2011 to 2015 while nominal GDP (current prices, US dollars) will increase annually by 3.15 to 6.67 percent during the same time period. By 2015, Guinea-Bissau’s GDP (PPP) and nominal GDP (current prices, US dollars) are predicted to hit US$2.42 billion and US$1.087 billion respectively.
Likewise, Guinea-Bissau’s GDP (PPP) per capita over the next five years is experience to grow annually at a slow but constant rate of between 2.67 to 3.42 percent. Guinea-Bissau’s GDP (PPP) per capita is expected to be US$1261.68 by 2015, as compared to US$1082.01 in 2010.
Guinea-Bissau’s Unemployment Forecast
Guinea-Bissau’s current population is 1.657 million with 632,700 of the population in the labour force. Due to the political and social unrest that has plagued the country since its independence in 1974, there is a lack of reliable data for Guinea-Bissau’s labour force. Unemployment statistics or forecasts are practically non-existent.
The IMF and CIA World Fact Book have no available data on Guinea-Bissau’s unemployment rate. However, according to 2006 estimates by The African Economic Outlook, 46.87 percent of young people aged 15-24 living in the capital of Bissau were unemployed, compared to 19.34 percent of the same age group living in rural areas.
Guinea-Bissau’s relatively young labour force could be a result of high mortality and low life-expectancy rates. According to the UN, Guinea-Bissau has the 8th highest mortality rate in the world, its population only has an average life expectancy of 46.4 years, ranking it among the bottom ten nations in the world. Poverty, conflicts, rampant HIV/AIDS infection, poor healthcare and poor social infrastructure are the main causes.
Guinea-Bissau’s Inflation Rate & Current Account Balance Forecast
Prior to adopting the CFA Franc monetary system in 1997, inflation rates in Guinea-Bissau were among the most volatile and highest in the world, ranging between 15.176 percent in 1994 and 119.585 percent in 1987.
However, since its switch to the West African CFA France (XOF) together with Benin, Burkina Faso, Cote d’Ivoire, Mali, Niger, Senegal and Togo, inflation rates has been far more stable. In the past 10 years, the mean inflation rate (average consumer price change) has been 2.2798 percent with a median of 2.376 percent. 2010 saw an inflation rate (average consumer price change) of 1.5 percent while forecasts estimate that the inflation rate should hover around 2.5 percent for the next 5 years.
A combination of good weather and more efficient harvesting techniques saw cashew nut production increase by over 20 percent in 2010. As a result, Guinea-Bissau’s current account balance rose by 37.04 percent to US$17 million compared to 2009. This number is expected to fall in 2011 by 5.88 percent – increased development in Guinea-Bissau should see its current account balance eventually improve to US$20 million in 2013, and stay at the same level until 2015.
Read more on Guinea-Bissau’s economy, including industry information and trade statistics on EconomyWatch below.
