Guinea-Bissau, one of the world’s poorest and most fragile countries, has a population of approximately 1.9 million. Guinea-Bissau borders Senegal to the north and Guinea to the south, and its Atlantic Ocean coast features the Bijagós archipelago, with 88 islands. Despite its small size, Guinea-Bissau is home to a large variety of ethnic groups, languages, and religions.
Political Context
Guinea-Bissau has a history of political and institutional fragility dating back to its independence from Portugal in 1974. It is among the most coup-prone and politically unstable countries in the world. Since independence, four successful coups have been recorded, with another 17 coups attempted, plotted, or alleged. Some progress was made with the previous president, José Mário Vaz, who was the first to complete a full term since independence. The 2019 presidential elections were followed by a political crisis that ended in April 2020, with ECOWAS recognition of Umaro Sissoco Embaló as President of the Republic. Following a political crisis and the dissolution of Parliament by President Embaló in May 2022, early legislative elections were held in June 2023. In December 2023, Parliament was again dissolved and closed following a constitutional crisis, and a presidential initiative government was appointed. General elections are scheduled for November 23, 2025.
Economic Overview
Guinea-Bissau’s economy expanded by an estimated 4.6% in 2024 (2.3% per capita), an increase from 2023 (4.4%), but lower than earlier projections (5%), mainly due to a weaker-than-expected cashew performance. Growth in 2024 was supported by the service sector and increased production of subsistence crops, with higher farmgate prices boosting private consumption. Headline inflation averaged 3.8% in 2024, down from 7.2% in 2023. However, price pressures have picked up since June 2024, due to increasing domestic food prices. The current account deficit (CAD) widened to 8.5% of GDP in 2024 (from 8.3% in 2023), reflecting a decline in international cashew prices and an almost 15% drop in export volumes. On the fiscal side, better spending controls contributed to improving the fiscal deficit to 7.3% of GDP in 2024 (down from 8.2% in 2023). However, the outturn fell short of expectations, as tax collection fell significantly below target—mainly due to lower-than-expected revenue from cashew exports and income taxes.
Growth is projected to reach 5.1% in 2025 (2.8% per capita), reflecting a good cashew campaign and higher external demand. Increased producer prices and international cashew prices will boost private demand and activity in the service sector, while momentum in construction is likely to continue. Inflation is expected to decelerate further, to reach 3.3% in 2025. Consequently, poverty is expected to decline to 25.7% in 2025. Recovering external demand and significantly higher cashew export prices will boost export values, helping reduce the CAD to 6.5% of GDP in 2025. Improved revenue collection and continued spending discipline could lower the fiscal deficit and public debt to 4.8% and 80.5% of GDP, respectively, in 2025. This fiscal adjustment is highly dependent on the effective implementation of revenue-enhancing reforms, stronger expenditure controls, and increased grant financing.
Real economic growth is projected to remain resilient over the medium term, stabilizing at around 5% between 2026 and 2028. Beyond cashews, growth will be supported by construction and service sector activity. Lower electricity costs—due to the shift to OMVG as a power source—and investments in roads and connectivity infrastructure (such as the Bissau port and the new airport terminal) will contribute to enhancing trade and regional integration. Inflation is projected to decelerate to an average of 2% by 2028. Further progress is expected, with regard to poverty reduction, with poverty reaching 24.2% in 2026 and falling further to 22.8% in 2027, equivalent to more than 40,000 people leaving extreme poverty, compared to 2024. Improved revenue collection, stronger expenditure controls, and continued donor engagement will support further fiscal consolidation. The fiscal deficit is projected to narrow to 3.0% of GDP by 2028, with public debt falling to 72.4% of GDP that same year.
Despite recent progress, there are significant risks to the outlook. Economic growth could be dampened by weak performance in the cashew sector, international shocks to commodity markets, rising food prices, and delays in resolving outstanding arrears. Climate shocks, weak performance of SOEs, and banking sector fragilities could generate contingent liabilities. While the authorities are currently committed to a robust reform agenda, political and institutional instability could weaken the fiscal consolidation agenda and momentum for structural reform.
Last Updated: Mar 27, 2025
