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- GDP (PPP):
- $25.1 billion
- -3.1% growth
- -0.2% 5-year compound annual growth
- $32,266 per capita
- Inflation (CPI):
- FDI Inflow:
Oil has driven high GDP growth rates, but Equatorial Guinea’s overall economic development remains uneven, and poverty is pervasive. Political instability undermines prospects for reform, and extreme reliance on natural resource–driven investment has left the economy vulnerable to external price shocks.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: 43.7 (up 3.3 points)
- Economic Freedom Status: Repressed
- Global Ranking: 170th
- Regional Ranking: 43rd in Sub-Saharan Africa
- Notable Successes: Monetary Freedom
- Concerns: Corruption, Property Rights, and Open Markets
- Overall Score Change Since 2012: +0.9
Private property is vulnerable to political interference and even expropriation, and corruption is widespread. Worsening institutional weaknesses and the fragile rule of law impede emergence of a more vibrant private sector, stifling prospects for broad-based economic development. More than half of the workforce is estimated to work in the informal economy.
President Teodoro Obiang Nguema Mbasogo seized power in 1979 and controls the military and the government. Human rights organizations criticize Obiang for using the oil boom to enrich himself at the expense of the nation. In 2014, U.S. authorities settled three civil suits with Obiang’s son requiring him to sell and then surrender to the U.S. more than $30 million of his assets allegedly purchased with embezzled funds. Equatorial Guinea is one of Africa’s fastest-growing economies and its sixth-largest oil producer. The oil boom has led to a dramatic increase in government revenue, but because of corruption, mismanagement of oil revenues, and absence of the rule of law, the standard of living has not kept pace. The Industrial and Commercial Bank of China committed to a $2 billion infrastructure investment in Equatorial Guinea in April 2015.
President Obiang, his sons, and his inner circle continue to dominate the economic landscape with absolute power. Graft and nepotism are rampant. The government views domestic private firms without links to the regime as suspicious. In May 2015, the president decreed the “complete dissolution” of the judiciary without explanation and then appointed new judges with ties to the regime. Protection of property rights is poor.
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 2.3 percent of GDP. Government spending amounts to 42.6 percent of total domestic output, but substantial oil revenue has allowed the government to maintain low deficit and debt levels. Public debt equals less than 10 percent of GDP.
High compliance costs slow licensing and increase the difficulty of starting a business. In the absence of private-sector employment opportunities, an organized labor market has not emerged. During the commodity boom, the state misused its substantial oil revenues to subsidize strategic sectors such as fisheries and agriculture. With the plunge in global oil prices in 2015, government revenues have plummeted.
Equatorial Guinea’s average tariff rate was 15.6 percent as of 2007. Bureaucratic barriers interfere with international trade and investment flows. The government screens foreign investment and imposes some sectoral limits. Credit costs are high, and access to financing is limited. The government controls long-term lending through the state-owned development bank.