ECONOMY
Guinea-Bissau is among the world's least developed nations and depends mainly on agriculture and fishing. Guinea-Bissau exports some fish and seafood, although most fishing in Guinea-Bissau's waters is presently not done by Bissau-Guineans and no fish or seafood is processed in Guinea-Bissau for export. The country's other important product is cashews. License fees for fishing provide the government with some revenue. Rice is a major crop and staple food and, if developed, Guinea-Bissau could potentially be self-sufficient in rice. Tropical fruits such as mangos could also provide more income to the country if the sector were developed. Because of high costs, the development of petroleum, phosphate, and other mineral resources is not a near-term prospect. However, unexploited offshore oil reserves may possibly provide much-needed revenue in the long run.
The military conflict that took place in Guinea-Bissau from June 1998 to early 1999 caused severe damage to the country's infrastructure and widely disrupted economic activity. Agricultural production is estimated to have fallen by 17% during the conflict, and the civil war led to a 28% overall drop in gross domestic product (GDP) in 1998. Cashew nut output, the main export crop, declined in 1998 by an estimated 30%. World cashew prices dropped by more than 50% in 2000, compounding the economic devastation caused by the conflict. Before the war, trade reform and price liberalization were the most successful part of the country's structural adjustment program under International Monetary Fund (IMF) sponsorship. Under the government's post-conflict economic and financial program, implemented with IMF and World Bank input, real GDP recovered in 1999 by almost 8%. In December 2000 Guinea-Bissau qualified for almost $800 million in debt-service relief under the first phase of the enhanced Heavily Indebted Poor Countries (HIPC) initiative. However, Guinea-Bissau's Poverty Reduction and Growth Fund program with the IMF was suspended that same month--following disbursement of the first tranche--due to off-program expenditures by the Yala regime. Thus, IMF and Paris Club internal debt relief for Guinea-Bissau was also suspended in 2001.
After a disastrous 2006, Guinea-Bissau's economy bounced back in 2007. Cashews,
the country's principal cash crop, rebounded strongly in 2007 after the
government's 2006 attempt to artificially set the price of cashews at 70 U.S.
cents/kg--more than twice what traders were willing to pay. The economy also
benefited from robust growth in the country's tourism industry. Guinea-Bissau
appears ready to continue its economic growth in 2008 with new support from
international donors and a recovery in cashew exports. Guinea Bissau has
announced that Angola will be investing U.S. $500 million in a project to mine 3
million tons of bauxite per year. The IMF and World Bank resumed development
support, and in January 2008 the IMF announced its approval for $2.8 million in
emergency post-conflict assistance. Oil prospecting continues; however, this has
yet to provide results that would encourage significant investment. GDP is
projected to increase in 2008, with the deficit projected to decrease.
GDP (2007): $386.8 million (est.).
Annual growth rate (2007): 3.7% (est.).
GDP per capita, purchasing power parity (2005): $600 (est.).
Natural resources: Fish and timber. Bauxite and phosphate deposits are not exploited; offshore petroleum.
Agriculture: Products--cashews, tropical fruits, rice, peanuts, cotton, palm oil. Arable land--11%. Forested--38%.
Industry: Very little industrial capacity remains following the 1998 internal conflict. The cashew processing industry is nascent.
Trade: Exports--$110 million (f.o.b., 2006): cashews ($66 million, 2006), fish and shrimp ($1 million, 2006). Major markets (2006)--India 72.4%, Nigeria 17.2%, Ecuador 4.1%, Italy 1.4%, and South Korea 1.3%. Imports--$28 million (f.o.b., 2006): food ($49million, 2005), fuel and energy ($20 million, 2006), capital goods ($8 million, 2006). Major suppliers (2006)--Senegal 22.6, Portugal 17.7%, .6%, Italy 12.2%, Pakistan 4.3%, and Cote d'Ivoire 3.2%.
