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- GDP (PPP):
- $17.7 billion
- -4.9% growth
- -1.3% 5-year compound annual growth
- $23,370 per capita
- Inflation (CPI):
- FDI Inflow:
Equatorial Guinea’s economic freedom score is 40.4, making its economy the 173rd freest in the 2015 Index. Its overall score has dropped by 4.0 points, the biggest decline in this year’s Index. Equatorial Guinea is ranked 44th out of 46 countries in the Sub-Saharan Africa region, and its score is far below the regional and world averages.
Economic freedom in Equatorial Guinea has declined by over 7 points over the past half-decade, and the country has registered its lowest score ever in the 2015 Index. Led by a 49-point deterioration in its score for government spending, it has dropped even further into the “repressed” category. Scores for financial freedom and property rights have plummeted by over 10 points.
Abundant oil reserves have generated high economic growth, but most Equatorial Guineans remain trapped in poverty. A corrupt government and the small group of presidential cronies and other elites have captured billions of dollars in petroleum rents. The government continues to influence foreign investment decisions, subsidize key industries, control the flow of capital, and generally maintain its pervasive presence in the economy. The judiciary is one of the weakest in the world and is directly influenced by the president’s office.
President Teodoro Obiang Nguema Mbasogo seized power in 1979 and continues to control the military and the government. Human rights organizations criticize Obiang for using an oil boom to enrich himself at the expense of his people. In 2011, U.S. authorities filed suit to seize $71 million worth of assets allegedly obtained illegally by the president’s family. Equatorial Guinea is one of Africa’s fastest-growing economies and Africa’s third-largest oil producer. The oil boom has led to a dramatic increase in government revenue in recent years, but the standard of living has been slow to increase due to endemic corruption, mismanagement of oil revenues, and an absence of the rule of law.
President Obiang and his inner circle dominate the economic landscape with absolute power. Graft is rampant. In 2014, the French government announced a formal investigation into money laundering by Obiang’s son, Teodorìn, Equatorial Guinea’s second vice president. U.S. authorities are also investigating. The judiciary is not independent as the president is the chief magistrate. Protection of property rights is poor.
Equatorial Guinea’s top individual and corporate income tax rates are 35 percent. Other taxes include a value-added tax and a tax on inheritance. The overall tax burden equals 2.4 percent of gross domestic product. Government spending, which stands at 47.8 percent of the domestic economy, is mostly funded by hydrocarbon revenue. Public debt equals 9 percent of domestic income.
Starting a business costs about the level of average annual income, and completing licensing requirements takes over 140 days. The inefficient labor market lacks flexibility, and imbalances persist in the demand for and supply of skilled workers. The government has misused its substantial oil revenues to subsidize strategic sectors such as fisheries, agriculture, and ecotourism.
Equatorial Guinea’s average tariff rate was 15.6 percent as of 2007. It may take weeks to import goods. The government screens foreign investment and imposes additional sectoral restrictions. The small financial sector remains underdeveloped, with only four commercial banks in operation. The high costs of finance and limited access to credit instruments hinder entrepreneurial activities. There is no stock exchange.