World Bank economic update flags Equatorial Guinea job reforms as hydrocarbon decline deepens

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Equatorial Guinea job reforms update

Highlights

Equatorial Guinea's economy is projected to contract 5.8% in 2025 and by about 1% annually in 2026–2027 due to falling hydrocarbon production.
Government revenue will drop to 16.3% of GDP in 2025, with a fiscal deficit near 0.5% and the current account deficit widening to 1.1% of GDP.
The World Bank urges reforms targeting education, business environment, and private capital mobilization in sectors like agribusiness and tourism for large-scale job creation.

Economic outlook and reform priorities

As reported by the World Bank, the fourth edition of the Equatorial Guinea Economic Update examines recent economic developments and outlines policy options to generate more and better jobs as hydrocarbon production declines.

The report says Equatorial Guinea's economy contracts by an estimated 5.8% in 2025 after modest growth of 0.4% in 2024. It attributes the downturn to a sharp fall in hydrocarbon production, while gains in agriculture and services are not enough to offset the contraction in industry. Preliminary data also indicate that economic activity remains weak in early 2026, with GDP projected to contract by an average of about 1% a year in 2026 and 2027 before a modest recovery in 2028, supported by new gas projects.

According to the update, the country has an opportunity to turn the move away from oil dependence into a more diversified and job-rich development path. It identifies three main priorities, strengthening education, skills, electricity, digital connectivity and social protection; improving the business environment through better access to finance, stronger competition and simpler firm entry and tax compliance; and mobilizing private capital for sectors with high employment potential, especially agribusiness and tourism, alongside fisheries, digital services and energy-related activities.

Fiscal strain and sectors with job potential

Fiscal and external pressures intensify as government revenue falls to 16.3% of GDP in 2025, the fiscal balance remains in deficit at about 0.5% of GDP and the current account deficit widens to 1.1% of GDP. The report says poverty increases despite easing inflation and is expected to rise further in the near term as weak income growth and higher living costs weigh on households.

The World Bank highlights the green economy, including agribusiness, as the area with the strongest near-term potential for large-scale job creation and productivity growth, particularly in rural areas. Tourism also offers significant room for employment creation, especially for women and young people, given Equatorial Guinea's biodiversity and natural assets.

The update says the jobs challenge is urgent but manageable if the country improves learning and skills, lowers barriers facing firms and directs public and private investment toward sectors that can create employment at scale. It adds that sustained reform implementation, stronger private sector participation and better alignment between education and labor market needs will be central to building a more diversified, resilient and inclusive economy.

In our earlier article on rising sovereign borrowing risks in a higher-rate environment, we examined how persistent geopolitical shocks and elevated public spending can erode fiscal headroom and increase refinancing strain. We also noted that emerging and frontier markets are particularly exposed because debt-service costs are often high relative to limited revenue bases, leaving public finances more vulnerable when inflationary pressures and funding costs stay elevated.

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