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publicationJuly 1, 2025

Guinea Economic Update 2025

Guinea Economic Update 2025

STORY HIGHLIGHTS

  • Guinea¡¯s GDP growth accelerated to 5.7 % in 2024, driven by both the mining and non-mining sectors, and is anticipated to reach low double digits in the medium term, fueled by the commencement of Simandou iron ore operations.
  • The emergence of Simandou iron ore exports, expected by 2026, will boost GDP growth but could also amplify existing inclusive-growth challenges. However, it could also present an opportunity to transform Guinea's economy if appropriate macro-fiscal measures and key sector reforms are implemented.
  • Guinea¡¯s fiscal policy is characterized by low expenditure levels relative to peers, as inadequate domestic revenue mobilization significantly constrains public spending, especially for infrastructure. Guinea has potential to increase domestic resource mobilization through reforms to enhance tax revenue share, particularly from large companies, including mining.

The presents an overview of Guinea¡¯s evolving macroeconomic position, recent economic developments, macroeconomic outlook, and risks. It provides initial view on how Guinea can strengthen domestic revenue mobilization and management, as a prelude to the more comprehensive analysis for the Guinea Public Finance Review (PFR) under preparation. Here are some highlights from the report:

Macroeconomic and Poverty Developments and Outlook

  • Robust Growth: Between 2019 to 2023, Guinea¡¯s GDP growth was robust, averaging 5.1%. In 2024, growth accelerated to 5.7%, driven by both the mining and non-mining sectors.  Inflation accelerated slightly to 5.1% in 2024, due to a temporary fuel shortage caused by a fuel depot explosion in December 2023.
  • Challenges: Despite robust growth, poverty remains high, with 52.0 percent of the population below the international poverty line of $3.65-a-day in 2017 PPP. Between 2019 and 2024, the poverty rate rose by 7.0 percentage points, pushing 1.8 million additional people into poverty. Simandou iron ore exports are expected to boost GDP growth but may exacerbate existing inclusive-growth challenges unless reforms are implemented.

Domestic Resource Mobilization and Management for Inclusive and Sustainable Development

  • Resource Mobilization: Guinea's resource mobilization remains limited, with tax revenues averaging only 12.8% of GDP annually from 2016 to 2023, lower than peers and well below the 15% minimum threshold deemed necessary to support long-term growth.
  • Challenges and Opportunities: Insufficient domestic revenue mobilization in Guinea constrains the ability to scale up priority spending, implement ambitious investment programs, and fund local development initiatives. However, Guinea has potential to increase domestic resource mobilization and key reform areas include enhancing tax audit efficiency, improving the integrity of the taxpayer database, ensuring timely filing and payment of taxes, and deepening digitalization of revenue administration.