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- GDP (PPP):
- $25.4 billion
- -12.2% growth
- -2.3% 5-year compound annual growth
- $31,758 per capita
- Inflation (CPI):
- FDI Inflow:
Oil has been the major source of high economic growth in Equatorial Guinea over the past five years. Overall economic development has been uneven, and poverty remains daunting. Privatization and liberalization half-measures have made little difference, and improving the investment and business climate remains an urgent priority.
Persistent institutional weaknesses impede development of a more vibrant private sector. Pervasive corruption and onerous regulations are major hurdles for foreign and domestic investment. The rule of law is weak, and private property is vulnerable to bureaucratic interference and even expropriation. Restrictive labor laws hamper employment and productivity growth. It is estimated that more than half of the workforce is employed in the informal economy.
President Teodoro Obiang Nguema Mbasogo seized power from his uncle in a coup in 1979. He most recently won reelection in April 2016 with 93 percent of the vote, a result that the opposition protested as fraudulent. In 2014, more than $30 million in assets allegedly purchased with embezzled funds was seized from Obiang’s son by U.S. authorities. Human rights organizations criticize Obiang for similarly enriching himself through corrupt practices. Equatorial Guinea is one of Africa’s fastest-growing economies and sub-Saharan Africa’s third-largest oil producer. The government is trying to diversify its economy by developing its agricultural, fishing, financial services, and tourism sectors.
Property rights are enforced selectively. Despite laws regarding the rights of property owners, the government can seize land with very little, if any, due process. Because the president is also the chief magistrate, the judicial system is not independent. Graft and nepotism are rampant. The government views domestic private firms without links to the regime as suspicious.
The top personal income and corporate tax rates are 35 percent. Other taxes include a value-added tax and a tax on inheritance. The overall tax burden equals 2.8 percent of total domestic income. Government spending has amounted to 39.3 percent of total output (GDP) over the past three years, and budget deficits have averaged 5.7 percent of GDP. Public debt is equivalent to 20.1 percent of GDP.
Cumbersome procedures and high compliance costs slow licensing and make starting a business more difficult. Existing labor regulations are outmoded and create challenging barriers to hiring. During the commodity boom, the government misused its substantial oil revenues to subsidize strategic sectors; now government revenues have plummeted as a result of plunging global oil prices and poor management of the oil sector.
Trade is extremely important to Equatorial Guinea’s economy; the value of exports and imports taken together equals 178 percent of GDP. The average applied tariff rate is 15.6 percent. Weak regulatory and judicial systems may discourage foreign investment. Credit costs are high, and access to financing is limited. The government controls long-term lending through the state-owned development bank.