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Guinea Country Risk Report 2017

Executive Summary
Core Views
Key Risks
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
Ongoing Economic Recovery Susceptible To Political Risks
Guinea's economic recovery in the aftermath of the ebola epidemic will continue in 2017 and 2018, driven by an improving outlook for
the mining sector, agriculture and big infrastructure projects. However, this recovery is subject to political risk given local opposition to
mining projects and the president's apparent desire to change the constitution and run for a third term.
TABLE: MAJOR INFRASTRUCTURE PROJECTS
GDP By Expenditure Outlook
Simandou Project Shelving Will Temper Economic Growth
Rio Tinto's decision to shelve its flagship Simandou iron ore project will temper Guinea's economic recovery in the years ahead, after
the near recessionary economic conditions in 2015. However, over the long term, increased productivity in the agricultural sector as well
as rising bauxite production – Guinea's biggest export – will help to buoy stronger economic performance.
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
External Trade And Investment Outlook
Gradual Commodity Recovery Will Ease Current Account Pressures
Guinea's current account deficit will narrow, but remain sizable, in the years ahead on the back of rising bauxite exports and the gradual
recovery in commodity prices. Guinea's sizable current account deficit as well as continued government financing needs will drive the
country's external debt load higher, thereby keeping sovereign risks elevated in the years ahead.
TABLE: TOP FIVE EXPORTS IN 2015
TABLE: TOP FIVE IMPORTS IN 2015
Monetary Policy
Exchange Rate Flexibility And Food Supply Will Ensure Price Stability
Inflation in Guinea will fall as food supply increases. The Banque Centrale de la République de Guinée's decision to improve exchange
rate flexibility will limit excessive inflation as currency adjustments occur at more gradual pace, stabilising increases in import
costs.
TABLE: MONETARY POLICY FORECASTS
Fiscal Policy And Public Debt Outlook
Subdued Revenues Keep Budget Deficit
Guinea's budget balance will narrow as the government implements fiscal consolidation in response to subdued revenues. Sovereign
risks will remain elevated due to persistent deficit financing needs, despite the narrowing of the fiscal balance over the years
ahead.
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
Long-Term Economic Outlook
Simandou Cancellation Slows Growth
Rio's Tinto's decision to shelve its large Simadou iron ore project will present headwinds to Guinea's economic growth, exacerbating the
impact of low commodity prices and increased political uncertainty. Toward the latter part of our forecast period, economic growth will
accelerate on the back of greater output from the agricultural sector and rising bauxite production.
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Contents
Chapter 2: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Third-Termism And Poverty Likely To Stoke Unrest
We believe that instability in Guinea is likely over the next ten years given lack of inclusive economic development and the incumbent
president's supposed plans to run for a third term in office. The military's ongoing involvement in the country's political affairs means that
the possibility of a coup cannot be ruled out.
Chapter 3: Demographic Outlook
Demographic Outlook
TABLE: POPULATION BY AGE GROUP
TABLE: POPULATION BY AGE GROUP %
TABLE: POPULATION HEADLINE INDICATORS
TABLE: KEY POPULATION RATIOS
TABLE: URBAN/RURAL POPULATION & LIFE EXPECTANCY
Chapter 4: BMI Global Macro Outlook
From Reflation To Disappointment
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: GUINEA – MACROECONOMIC DATA & FORECASTS

Core Views

Guinea's economic recovery in the aftermath of the ebola epidemicwill continue in 2017 and 2018, driven by an improving outlook forthe mining sector, agriculture and big infrastructure projects.

Inflation in Guinea will fall in the years ahead as increasing food supplytempers food price inflation. Furthermore, the Banque Centralede la République de Guinée's decision to improve exchange rateflexibility will limit excessive inflation as currency adjustments occurat more gradual pace, stabilising increases in import costs.

Guinea's budget balance will narrow in the years ahead as thegovernment implements fiscal consolidation in response to subduedrevenues. Sovereign risks will remain elevated due to persistentdeficit financing needs, despite the narrowing of the fiscal balanceover the years ahead.

Guinea's current account deficit will narrow, but remain sizable, in theyears ahead on the back of rising bauxite exports and the gradualrecovery in commodity prices. Guinea's sizable current accountdeficit as well as continued government financing needs will drivethe country's external debt load higher, thereby keeping sovereignrisks elevated in the years ahead.

We believe that instability in Guinea is likely over the next ten yearsgiven lack of inclusive economic development and the incumbentpresident's supposed plans to run for a third term in office. Themilitary's ongoing involvement in the country's political affairs meansthat the possibility of a coup cannot be ruled out.


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