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- GDP (PPP):
- $1.9 billion
- 0.3% growth
- 2.1% 5-year compound annual growth
- $1,206 per capita
- Inflation (CPI):
- FDI Inflow:
Guinea–Bissau’s economic freedom score is 52.0, making its economy the 145th freest in the 2015 Index. Its score has increased by 0.7 point, reflecting improvements in trade freedom, monetary freedom, and the control of government spending that outweigh declines in freedom from corruption and business freedom. Guinea-Bissau is ranked 34th out of 46 countries in the Sub-Saharan Africa region, and its overall score remains well below the world and regional averages.
Despite continued instability resulting from the 2012 military coup, Guinea–Bissau has made steady progress in improving economic freedom for its citizens over the past half-decade. Since 2011, the economy has advanced in the Index by 5.5 points, the third-biggest gain in the Sub-Saharan Africa region. Led by double-digit score improvements in both the control of government spending and business freedom, Guinea–Bissau has risen out of the “repressed” category.
Improvements so far have put in place a foundation of basic economic market structures, but much more must be done to solidify an institutional environment that will foster sustained growth. The economy remains closed to outside investment and trade, and the financial sector operates largely informally. Rigid business regulations condemn much of the population to informal work arrangements, stifling dynamism and perpetuating subsistence agriculture as the dominant economic activity.
Guinea–Bissau had a civil war in the late 1990s, and there have been multiple military coups, most recently in April 2012. In May 2014, Jose Mario Vaz was elected president of the former Portuguese colony. Guinea–Bissau is one of the world’s poorest countries. It also is a major transit point for illegal South American drugs bound for Europe, and several senior military officials are allegedly involved in the drug trade. Guinea–Bissau remains highly dependent on subsistence agriculture, the export of cashew nuts (the country’s most important commercial crop), and foreign assistance.
Corruption is pervasive and has been aggravated by Guinea-Bissau’s prominent role in international narco-trafficking and political instability before the re-establishment of constitutional rule in the spring of 2014. Scant budgets and endemic corruption severely challenge judicial independence. Judges and magistrates are poorly trained, irregularly paid, and highly susceptible to graft and political pressure.
Guinea-Bissau’s top individual income tax rate is 20 percent, and its top corporate tax rate is 25 percent. Other taxes include a sales tax. The overall tax burden is equivalent to 8.3 percent of gross domestic product, and government expenditures equal 20.0 percent of the domestic economy. Public debt is equivalent to 61 percent of domestic output.
The cost of incorporating a business has been reduced considerably, and the time has been cut from over 200 days to nine, but completing licensing requirements still takes over 100 days. Much of the labor force is employed in the public sector or the informal economy. The government uses reference prices for fuel and basic foods to control prices of key products.
Guinea-Bissau has an average tariff rate of 9.8 percent. It is a member of the Economic Community of West African States and the West African Economic and Monetary Union. The uncertain political and economic climate deters foreign investment. Much of the population is still outside of the formal banking sector. High credit costs and scarce access to financing severely impede entrepreneurial activity.