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Quick Facts
- Population:
- GDP (PPP):
- $30.4 billion
- -4.4% growth
- -5.6% 5-year compound annual growth
- $36,017 per capita
- Unemployment:
- Inflation (CPI):
- FDI Inflow:
Equatorial Guinea’s economic freedom score is 41.0, making its economy the 174th freest in the 2019 Index. Its overall score has decreased by 1.0 point, with sharp drops in government integrity and business freedom outweighing an increase in the score for government spending. Equatorial Guinea is ranked 44th among 47 countries in the Sub-Saharan Africa region, and its overall score is well below the regional and world averages.
Declining proven reserves and production of oil, the major economic driver during the hydrocarbons boom years, have reduced the government’s ability to use debt-financed investment to support growth. Development is uneven, and poverty remains daunting. Persistent institutional weaknesses impede private-sector development. The rule of law is weak. Pervasive corruption and onerous regulations are major hurdles for foreign and domestic investment. The government has been criticized for lack of transparency in its use and misuse of oil revenues.
Background
Equatorial Guinea gained independence from Spain in 1968. President Teodoro Obiang seized power in a 1979 coup and won reelection to another seven-year term in 2016 with 93 percent of the vote. The opposition protested the result as fraudulent. The ruling party controls 99 of 100 parliamentary seats. In 2018, the Supreme Court approved the dissolution of the main opposition party and 30-year prison sentences for nearly two dozen opposition members; Obiang later declared a total amnesty for political prisoners. Equatorial Guinea was once one of Africa’s fastest-growing economies and sub-Saharan Africa’s third-largest oil producer, but its economy is now in decline. In 2017, Obiang’s son (and vice president) Teodorín was convicted in absentia of corruption-related charges in France.
Property rights are enforced selectively, and the government can seize land with little or no due process. The judicial system is not independent, as the president is also the chief magistrate. Graft and nepotism are rampant. Foreign companies must guard against the taint of money laundering that often occurs through cross-border currency transactions and illegal international cash transfers by local companies or corrupt individuals.
The top personal income and corporate tax rates are 35 percent. Other taxes include value-added and inheritance taxes. The overall tax burden equals 20.4 percent of total domestic income. Over the past three years, government spending has amounted to 32.8 percent of the country’s output (GDP), and budget deficits have averaged 10.4 percent of GDP. Public debt is equivalent to 42.7 percent of GDP.
Persistent regulatory shortcomings impede development of a more vibrant private sector. 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. The government continues efforts to stabilize fiscally by reducing fuel subsidies but has increased other public spending.
The combined value of exports and imports is equal to 94.4 percent of GDP. The average applied tariff rate is 15.6 percent. Pervasive corruption and onerous regulations are impediments to foreign and domestic investment in Equatorial Guinea. Credit costs are high, and access to financing is limited. The government controls long-term lending through the state-owned development bank.