|Select Economic and Financial Indicators||2014||2015||2016||2017e||2018f|
|Real GDP (% change)||3.7||3.5||6.6||6.7||5.8|
|GDP (USD bn)||8.8||8.8||8.5||9.2||9.9|
|Fiscal Balance (% GDP)||-3.2||-6.9||-0.2||-0.5||-1.9|
|Broad Money (% change, end period)||12.3||20.3||9.9||11.6||14.2|
|Exports (USD bn)||2.0||1.6||2.5||3.2||3.8|
|Imports (USD bn)||2.9||2.7||5.1||5.4||5.4|
|Current Account Balance (% GDP)||-13.4||-15.4||-31.9||-25.0||-21.4|
|FX Reserves (USD bn, end period)||0.8||0.2||0.6||0.7||1.0|
|Exchange Rate (average)||7,025.1||7,450.0||8,392.0||9,111.8||8,965.6|
Real GDP: The end of the Ebola outbreak that crippled the economy in 2014-15 has ushered in a period of normality and stability with improvements in the country’s key growth drivers, mining and agriculture. We expect the pace of economic expansion to remain strong as bauxite and gold production maintains momentum and as agricultural production increases (assuming good weather conditions). Ongoing development to boost the country’s electricity generation capacity will also lend some support to growth; the government with assistance from China, is investing in the construction of a new dam, Souapiti dam, which is expected to become operational in 2021, with an installed capacity of 450 megawatts and an average annual output of 1.9bn kWh. These developments are likely to underpin growth above 5.0% in 2018, although this would depend also on the continuation of reforms implemented under the IMF-supported Extended Credit Facility (ECF) arrangement approved in December 2017, after the previous programme was completed in November 2016. Failure to effectively implement reforms could undermine growth prospects.
Inflation: Inflation is expected to remain high in 2018, in line with domestic demand and as the central bank struggles to contain liquidity in an environment of high government spending. Efforts by the government to limit net domestic bank financing of the government, and enhance central bank liquidity management will also be challenging, adding to inflationary pressures.
Fiscal balance: The budget deficit is likely to widen in 2018 as efforts to implement the government’s four-year national economic and social development plan (PNDES) 2016-20 gains momentum. This is despite higher export receipts and tax revenue. Under the PNDES, the government plans to focus on infrastructure development and to strengthen mining sector operations. This will require significant amount of funding, without which, it would put a severe strain on the fiscal account. Nonetheless, following the new ECF programme, we expect that fiscal weakening will be limited; however, deficits are likely to persist on the fiscal account, putting downward pressure on the currency.
Current account: Reflecting imports for large-scale mining and energy projects, higher oil prices, high government spending and a narrow export base, we expect the deficits on the current accounts to remain large (above 20% of GDP) over the forecast period, sustaining pressure on the currency.
The country’s heavy reliance on mining commodities (which are susceptible to changes in world prices) and donor funding pose risks to the country’s economic outlook, especially if there is another commodity price shock or a suspension of donor funds. This would jeopardise the country’s large infrastructure programme, adversely affecting growth. Rising oil prices also pose a risk to the economy given that it is a net oil importer.
Exchange Rate Structure
|Target||No predetermined target but BCRG frequently intervenes|
|Type of intervention||Via spot market|
|FX Products||Spot||Forwards||Non-deliverable Forwards||Options||Swaps|
|Daily trading volume (USD mn)||n/a||n/a|
|Average trade size (USD mn)||n/a|
|Settlement cycle||T, T+1,T+2|
|FX Market Structure||The FX system consists of the BCRG, 15 commercial banks, and about 30 FX bureaux. Commercial banks conduct FX transactions for their clients, The interbank market is present even though the level of transactions is relatively low, we see an increase since the beginning of the year in the number of transactions and volume.|
|Non-resident FX Regulations||Spot||Forwards||Non-deliverable Forwards||Options||Swaps|
|Trade and FDI flow||No restrictions||n/a|
|Resident FX Regulations||Spot||Forwards||Non-deliverable Forwards||Options||Swaps|
|Trade and FDI flow||No restrictions||n/a|
|Primary Market||Treasury bills||Treasury notes||Treasury bonds||Central Bank bills||OMOs|
|End use||Government financing||Government & infrastructure financing||n/a||Liquidity management|
|Maturity structure||90, 182- and 364-days||3-yrs||7 days|
|Daily trading volume||Limited trading||n/a|
|Average trade size||Limited trading|
|Ecobank local affiliate contact details:
Ecobank Guinée, Immeuble Al Iman, Avenue de la République, Conakry
Tel: +224 63 70 14 34 / 35
|Government debt (% GDP)||35.1||42.1||42.9||42.9||47.2|
|External debt (official creditors, % GDP)||20.8||21.4||22.8||24.2||31.4|
|External public debt stock (USD bn)||1.8||1.9||1.9||2.2||3.1|
|Share of total sub-Sahara debt (%)||0.7||0.7||0.7||0.7||0.9|
Hydrocarbon & mineral production
Guinea has diverse mineral resources, most of which are untapped. The country has the world’s largest reserves of bauxite (aluminium ore), estimated at 7.4bn tonnes, and is the world’s fifth largest producer, with estimated output of 24.5mn tonnes in 2016, most of which is exported. This figure is expected to grow significantly in the future following the launch of the Emirates Global Aluminium (EGA) project in 2016, which aims to increase exports by more than 10mn tonnes per year. Guinea is also a middle-ranking gold producer, with estimated output of 49 tonnes in 2016 (mostly artisanal), as well as of diamonds, with estimated output of 112,797 carats in 2016. There are long-standing plans to develop Guinea’s rich iron ore reserves, notably the world’s largest high-grade deposit at Simandou. Mining firm Rio Tinto recently sold its 46.6% stake in the Simandou project to Chinese firm, Chinalco, which plans to start production of iron ore in 2018.
Guinea has no known hydrocarbon reserves. However, active exploration in the country’s offshore is ongoing, led by the Hyperdynamics and Sapetro JV which owns all the three licensed offshore blocks. Previous drilling encountered hydrocarbons in non-commercial quantities. Guinea consumed 923,300 tonnes of refined products in 2016, around 4% higher than the previous year. Guinea imports all of its refined products.
Soft commodity production
Guinea is a small-scale agricultural producer. The country is one of West Africa’s minor producers of cocoa, with estimated output of 20,000 tonnes in 2016/17, and also produced 200,000 60-kg bags of Robusta coffee. However, Guinea’s cocoa and coffee output and exports fluctuate from season to season, owing to the level of smuggled flows of coffee and cocoa beans from neighbouring Côte d’Ivoire. Guinea also produced 11,700 tonnes of natural rubber and around 10,000 tonnes of cashew nuts in 2016, all of which were exported. The country is West Africa’s fourth largest producer of milled rice, with estimated output of 1.4mn tonnes in 2016, but this is insufficient to meet domestic demand and the deficit is met by imports.
Guinea’s imports totalled US$3.3bn in 2016. Guinea is entirely dependent on imports of petroleum products, worth US$412mn in 2016, reflecting the lack of local refining capacity. Guinea is also dependent on imports of machinery, vehicles, electronics and pharmaceuticals, together worth US$1bn in 2016, and of industrial raw materials such as iron & steel (US$166mn) and plastics (US$104mn), reflecting the country’s poorly developed manufacturing sector. Given Guinea’s limited agricultural output, the country also imports large volumes of cereals, worth US$272mn in 2016, representing 5.2% of SSA’s rice imports and 1.9% of wheat imports.
Guinea’s exports totalled US$2.4bn in 2016. Gold has overtaken bauxite as Guinea’s most valuable export, worth US$1.5bn in 2016, almost two-thirds of all exports, most of which went to Ghana and India. Bauxite (aluminium ore) exports totalled US$622mn, with Spain, Ireland and Germany as the largest offtakers. Guinea also exported small quantities of soft commodities, including fish (US$33mn), cashew nuts (US$30mn), natural rubber (US$28mn) and coffee (US$20mn).