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- GDP (PPP):
- $12.2 billion
- 3.9% growth
- 2.9% 5-year compound annual growth
- $1,121 per capita
- Inflation (CPI):
- FDI Inflow:
Guinea’s economic freedom score is 53.5, making its economy the 133rd freest in the 2014 Index. Its overall score is 2.3 points higher than last year, with notable improvement in half of the 10 economic freedoms including investment freedom, labor freedom, and business freedom. Guinea is ranked 27th out of 46 countries in the Sub-Saharan Africa region, and its overall score is below the world and regional averages.
Over the 20 year-history of the Index, Guinea’s progress toward greater economic freedom has been uneven but generally downward. Overall, its economic freedom score has declined by 5.9 points, one of the 20 biggest drops in the history of the Index. Its scores for property rights, business freedom, monetary freedom, and financial freedom have deteriorated by more than 10 points.
The overall entrepreneurial environment remains severely constrained. An overbearing regulatory framework, exacerbated by poor access to credit and high financing costs, stifles economic activity and hurts business expansion and the development of a vibrant private sector. Corruption, perceived as widespread, is a serious problem.
In 2008, a military junta led by Captain Moussa Dadis Camara seized power and suspended the constitution. The first free democratic presidential election since independence in 1958 took place in November 2010. Alpha Conde won the presidency and was inaugurated in December after a court challenge. Political violence erupted in February 2013, and parliamentary elections, the results of which were not immediately available, were delayed until September. Guinea is host to hundreds of thousands of refugees from Côte d’Ivoire, Sierra Leone, and Liberia. Electricity and water shortages are common, and much of the workforce is engaged in subsistence agriculture. Despite possessing two-thirds of the world’s bauxite reserves and large deposits of iron ore, gold, and diamonds, the population remains impoverished due to the absence of property rights, rampant corruption, poor government administration, poor infrastructure, and political instability.
Corruption is a serious problem, and many government activities are shrouded in secrecy. Guinea has rich natural resources, yet the majority of the population lives in poverty. Despite demonstrating a modest degree of independence in the past few years, the court system remains subject to political interference and lacks transparency. The rule of law is uneven, and protection of property rights is very weak.
The top individual income tax rate is 40 percent, and the top corporate tax rate is 35 percent. Other taxes include a value-added tax (VAT) and an inheritance tax. The overall tax burden is 15.6 percent of GDP. Government expenditures are 22 percent of gross domestic output. In 2012, Guinea benefited from a $2 billion IMF-financed debt relief that cut public debt from 105 percent of GDP to below 45 percent in four years.
The business start-up process still takes 16 days on average. Completing licensing requirements takes more than 150 days and costs about the level of average annual income. With the labor market relatively underdeveloped, most formal employment remains confined to the public sector. Despite substantial subsidies provided to the state electrical utility, there are widespread and frequent power shortages.
The average tariff rate for Guinea is 11.9 percent. Imports of rice, flour, and sugar are not allowed. The legal and regulatory systems are a challenge for foreign investors to navigate. The financial sector remains underdeveloped, providing a very limited range of services. Many people still rely on informal lending and have no bank accounts.