Embed This Data
- GDP (PPP):
- $26.1 billion
- 7.1% growth
- 8.6% 5-year compound annual growth
- $19,356 per capita
- Inflation (CPI):
- FDI Inflow:
Equatorial Guinea’s economic freedom score is 42.3, making its economy the 170th freest in the 2013 Index. Its overall score has fallen 0.5 point, driven by a notable deterioration in property rights and financial freedom. Equatorial Guinea is ranked 43rd out of 46 countries in the Sub-Saharan Africa region, and its score is below the regional and world averages.
Although the oil sector has driven high GDP growth rates and is responsible for high average income levels, overall economic development has been uneven, and poverty remains a serious problem. Political instability has undermined prospects for economic reform, and extreme reliance on natural resource–driven investment has left the economy vulnerable to external price shocks. More than half of the workforce is estimated to work in the informal economy.
Private property is vulnerable to political interference and even expropriation, and corruption is pervasive. Worsening institutional weaknesses in finance and law impede emergence of a more vibrant private sector and stifle prospects for broad-based economic development.
One-party rule ended in 1991, but opposition parties have won few victories. President Teodoro Obiang Nguema Mbasogo seized power in a 1979 coup, won deeply flawed elections in 2002 and 2009, and still tightly controls the military and the government. Tentative political reforms appear to be more show than substance. Equatorial Guinea is a significant oil producer and one of Africa’s fastest-growing economies. In 2007, oil accounted for 91 percent of GDP, 91 percent of government revenue, and 99 percent of exports. Foreign investment in the oil industry is extensive, but government management of oil wealth is not transparent and encourages corruption. Average living standards are low. Most people still rely on subsistence farming, hunting, and fishing. The president’s son, Minister of Agriculture and Forestry Nguema Obiang Mangue, has been accused of embezzling public funds to buy property in France.
Protection of property rights is poor, and the rule of law is uneven. The inefficient judicial system is subject to political influence. Enforcement of intellectual property rights is weak. Corruption seriously undermines economic security, and cronyism is pervasive, particularly in connection with the oil sector. In 2012, France issued an arrest warrant against the president’s son for laundering money and siphoning off public funds.
The top income and corporate tax rates are 35 percent. Other taxes include a value-added tax (VAT) and a tax on inheritance. The overall tax burden equals 2.4 percent of GDP. Government spending amounts to 45 percent of total domestic output, but substantial oil revenue has allowed the government to maintain low deficit and debt levels. Public debt is equivalent to less than 10 percent of GDP.
Regulations are administered inefficiently. Cumbersome procedures and high compliance costs slow licensing and increase the overall difficulty of starting a business. In the absence of private-sector employment opportunities, an organized labor market has not emerged. Existing labor regulations are outmoded and create challenging barriers to hiring. Inflation has been rising.
Burdensome tariff and non-tariff barriers continue to restrict trade freedom, in part because of the state’s reliance on tariffs as a revenue source. Foreign investment is officially welcome, but complex bureaucracy and arbitrary enforcement of regulations seriously impede investment growth. Credit costs are high, and access to financing is limited. The government controls long-term lending through the state-owned development bank.