Guinea-Bissau 2026 Economic Update: Pathways for Unlocking Productivity-Led Private Sector Growth

Strong growth, but fragile foundations Real GDP expanded by 5.8% in 2025, driven by a strong cashew harvest and farmgate prices that supported rural incomes and private consumption. Services and construction added support, reflecting spillovers from agriculture. Inflation fell sharply to 0.9% in 2025, offering temporary relief to households amid continued political uncertainty. Recent gains, however, remain narrowly based, with the economy still heavily concentrated in raw cashew exports. The fiscal deficit narrowed to 6.5% of GDP, above target, reflecting capital expenditure cuts and restrained spending. Tax revenue rose slightly but remained the lowest in WAEMU at 8.5% of GDP. Public debt declined to 75.6% of GDP, supported by stronger nominal growth and a prudent concessional borrowing strategy, but remains above the WAEMU ceiling. The external position improved modestly, as stronger export volumes and favorable terms of trade narrowed the current account deficit, though cashew continued to dominate exports. The financial sector remains fragile with non-performing loans rising above 22% in June 2025. These developments are examined in greater depth in the Guinea-Bissau Economic Update 2026, which explores the country’s macroeconomic recent development, outlook, and the structural reforms needed to unlock productivity-led growth.Outlook dims as politics and global pressures weigh The outlook has weakened in the wake of the November 2025 political developments and spillovers from the conflict in the Middle East, with growth projected to slow to 4.8% in 2026. The conflict impacts Guinea-Bissau through higher fuel and food import prices (each about 30% of imports) and rising freight costs that squeeze cashew export margins —estimated to shave 0.3 pp off 2026 growth, lift inflation by 2 pp, and widen the current account deficit by 1.6 pp. Short-term policy priorities should focus on protecting vulnerable households while safeguarding macro fiscal sustainability. Medium-term growth is expected to stabilize around 5%, assuming gradual political normalization. Extreme poverty is projected to decline to 37.8% in 2028, but remains highly sensitive to food and fuel price volatility, which disproportionately affects rural households. Risks are tilted to the downside: prolonged political instability could delay reforms and weaken donor engagement, while higher global food and energy prices could strain inflation, the external position, and public finances.