Economic activity in Equatorial Guinea recovered moderately in 2024 with an estimated growth of GDP by 0.9%, with higher contributions from the industrial and service sectors. The non-hydrocarbon sector expanded, led by the manufacturing sector. However, the hydrocarbon sector continued to decline. Overall, growth remains negative on a per-capita basis. Sluggish growth, higher food inflation, and limited employment opportunities have increased poverty, with more than half of Equatoguineans still living in poverty and an unemployment rate estimated at about 14% of the workforce.
In 2024, the fiscal and external balances deteriorated, mainly due to declining hydrocarbon export earnings, underscoring the importance of diversifying revenue sources. Government revenues fell by 15%, mainly from lower corporate taxes from oil companies, while spending dropped to 18.5% of GDP as a result of fiscal consolidation efforts. This turned the fiscal balance from a 2.4% surplus in 2023 into a deficit of 0.6% of GDP. The current account deficit widened, with exports falling to 23% of GDP in 2024. The debt-to-GDP ratio decreased to 36.9%, down from 38.5% in 2023.
GDP growth in Equatorial Guinea is forecast at -1.2% in 2025-2027 amid high global uncertainty and declining hydrocarbon production. Despite a decreasing GDP, poverty is expected to decline from 57.0% to 55.8% between 2024 and 2027 due to the projected expansion in the labor-intensive agriculture and service sectors. Fiscal and external positions are projected to deteriorate over the medium term owing to declining export earnings amid lower oil prices and production. The main downside risk to the outlook is the faster-than-expected decline in the hydrocarbon sector combined with delays in diversifying the economy.
Special Topic: Managing Equatorial Guinea’s Wealth for Sustainable Growth and Development
Measures of national wealth complement GDP by providing a broader view of an economy’s long-term sustainability and growth potential. While GDP measures final goods and services produced during a year, national wealth measures the stock of a country’s assets which are the foundation of economic activity and development, including natural resources, human capital, and produced capital.
Equatorial Guinea's produced capital surged during the oil boom but has declined since 2014 due to diminishing oil revenues and reduced public investment. Overall, the country experienced a more than 100-fold increase in produced capital between 1995 and 2020, bolstered by public investments following major oil and gas discoveries. In 2020, the country’s produced capital per capita was above that of structural peers such as Congo, Azerbaijan, and Gabon but remained below that of aspirational countries such as Oman, Kuwait, or Qatar. The 2008-2017 period marked a transformative era for the nation, with substantial infrastructure development projects under the National Development Plan 2020, including roads, ports, and public buildings. However, since the end of the oil boom in 2014, the accumulation has slowed due to falling oil revenues and lower public investment.
The Equatoguinean government has made strides in improving education and health outcomes over the past years; however, human capital outcomes remain below those of other countries at Equatorial Guinea’s income level. Mean years of schooling increased from 5.9 in 2019 to about 8 in 2022 yet still fall short of the 11.85 average in upper-middle-income countries (UMICs). The literacy rate in Equatorial Guinea is higher than the average for Sub-Saharan Africa (SSA) but lower than the average for UMICs. The estimated human capital index shows that a child born today in Equatorial Guinea is expected to be around 50% as productive as they could be if they enjoyed complete education and full healthcare, compared with 56% in UMICs, on average. Social spending at 1.9% of GDP in 2024 (from 2.3 % of GDP in 2023) remains below that of the average for SSA and CEMAC.
Equatorial Guinea’s extensive forest cover is increasingly under threat, with rising deforestation rates and growing degradation compromising the vital ecosystem services that forests provide. Forest cover declined from 97% in 2000 to 94.5% in 2020, driven by mounting pressures from urbanization, illegal logging, agricultural expansion, and infrastructure. In 2000, Equatorial Guinea’s forests retained an estimated 71% of their original biodiversity, which fell to 67.9% in 2010, and further to 65.5% by 2020. The monetary value of carbon retention services provided in 2020 (expressed in terms of annualized social cost of carbon) was estimated at $3.9 billion, and the sediment retention services at $45 million, highlighting the critical environmental and economic role forests play in global climate regulation and land preservation. Adjusted net saving and adjusted net income have deteriorated significantly between 2000 and 2020, reflecting the growing pressure on the country’s long-term wealth and sustainability due to oil reserve depletion and increasing deforestation.
Equatorial Guinea needs strong reforms to protect and expand its wealth assets. Increasing spending on education, skills, and healthcare is vital, while aligning investments with fiscal space. Equatorial Guinea must diversify revenue sources, adopt strong fiscal discipline, strengthen domestic revenue mobilization, and promote private sector participation. This requires strengthening governance and public financial management and improving the business climate. With respect to produced capital, its effective use to drive economic growth requires complementary reforms of the business environment. Promoting sustainable agriculture, informed land planning, local wood processing, and ecotourism are essential to preserve forests and the environment while diversifying the economy. Finally, the international community must scale up its support and fairly compensate Equatorial Guinea for the global carbon retention services its forests provide.