Equatorial Guinea Economic Update, 2nd Edition

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Equatorial Guinea's economy reentered recession in 2023, with GDP growth estimated at -5.7 percent, primarily due to a decline in hydrocarbon production and domestic demand [14][15][38] - The fiscal position deteriorated, with hydrocarbon revenues decreasing from 27.3 percent of GDP in 2022 to an estimated 19.1 percent in 2023, while government spending as a percentage of GDP increased [15][16] - The report emphasizes the need for structural reforms to diversify the economy away from oil dependency and promote sustainable growth, particularly through the forestry sector [19][22][29] Summary by Sections Chapter 1: Recent Economic Developments and Outlook - Economic activity in Equatorial Guinea contracted in 2023, driven by a decline in the hydrocarbon sector, with oil production decreasing by 21.7 percent [14][15] - The non-hydrocarbon sector showed growth, particularly in construction and services [14] - The medium-term economic outlook remains negative, with projected average real GDP growth of -3.7 percent from 2024 to 2026 [17][18] Chapter 2: Designing Fiscal Instruments for Sustainable Forestry - Equatorial Guinea has significant forest resources, covering about 87 percent of its territory, but faces challenges with deforestation and forest degradation [20][21] - The forestry sector's contribution to GDP has declined from 20 percent in 1995 to 0.2 percent in 2023, highlighting the need for local value-added processing [21][22] - The report discusses the potential of fiscal reforms to enhance revenue from the forestry sector, suggesting the implementation of a "bonus-malus" system to incentivize sustainable practices [25][29] - Recommendations include adjusting forest tax rates based on ecological impacts, promoting forest certification, and enhancing community engagement in forest management [29][30]