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

Overview & Synopsis

Economic activity strengthened in 2025, but recent gains remain fragile and insufficient to secure sustained, inclusive growth amid heightened political uncertainty. Fiscal consolidation progressed, but vulnerabilities persist. The external position improved modestly in 2025, as stronger export volumes and favorable terms of trade developments narrowed the current account deficit. The outlook has weakened in the wake of renewed political instability and rising external shocks following the conflict in the Middle East. On the fiscal side, consolidation is expected to continue gradually, but risks remain tilted to the downside. The external sector outlook remains fragile and subject to elevated downside risks. In the short term, policy priorities should focus on protecting vulnerable households while safeguarding macro fiscal sustainability. Over the medium term, the episode underscores the urgency of reducing structural vulnerabilities. Advancing economic diversification, investing in agro-processing and food security, and improving trade logistics and port efficiency will help dampen exposure to global commodity and shipping shocks. Strengthening governance and policy credibility will further enhance resilience by supporting investor confidence during periods of global uncertainty.