Guinea-Bissau’s economy demonstrated notable resilience in 2025, according to the World Bank Group’s Guinea-Bissau Economic Update (Spring 2026), released today.
Real GDP expanded 5.8% in 2025, buoyed by a strong cashew harvest and farmgate prices that supported rural incomes and private consumption. Yet beneath this encouraging headline, the country faces mounting structural pressures — including elevated public debt, a fragile financial sector, and a private sector that is growing in employment but shrinking in productivity.
The report, titled Pathways for Unlocking Productivity-Led Private Sector Growth, examines Guinea-Bissau’s macroeconomic trajectory, fiscal and financial sector risks, and the policy agenda required to shift the economy toward a more diversified and productive growth model.
“Guinea-Bissau has shown resilient growth in 2025 — but resilience anchored in a single crop and weighed down by falling labor productivity is not a foundation for lasting prosperity. Turning today’s investment into better jobs and rising incomes for Bissau-Guinean households will require a fairer tax system, broader access to finance, and institutions that firms can rely on” said Rosa Brito, World Bank Group Resident Representative for Guinea-Bissau.
Inflation fell sharply to 0.9% in 2025, offering temporary relief to households amid continued political uncertainty. The fiscal deficit narrowed to 6.5% of GDP, though consolidation relied heavily on spending restraint rather than stronger revenue generation. Public debt stood at 75.6% of GDP — above the WAEMU ceiling. Non-performing loans surged to over 22% by mid-2025, sharply curtailing credit to small and medium enterprises (SMEs), women-led firms, and the broader private sector.
Looking ahead, GDP growth is projected to ease to 4.8% in 2026, reflecting subdued investment and lingering political uncertainty following the political transition of November 2025. Spillovers from the Middle East conflict are projected to reach Guinea-Bissau mainly through higher fuel and food import prices (each about 30% of imports) and rising freight costs that squeeze cashew export margins. Policy priorities should focus on protecting vulnerable households while safeguarding macro fiscal sustainability. Extreme poverty is expected to decline to 37.8% by 2028, though rising food and fuel prices risk slowing that progress.
Drawing on the 2025 World Bank Enterprise Survey, the report finds a striking divergence between investment and labor productivity in Guinea-Bissau’s private sector. The share of firms investing in fixed assets rose from 45.1% in 2006 to 61.2% in 2025 — yet labor productivity turned sharply negative, dropping from 6.2% to -6.8%. Firms are hiring more workers without expanding output, pointing to a pattern of low-quality job creation that leaves wages, efficiency, and living standards stagnant. Taxation, access to finance, and institutional unpredictability have emerged as the most binding constraints, while gender gaps in firm ownership and credit access further narrow the productive base of the economy.
To reverse this trend, the report calls for broadening the tax base and simplifying compliance, including scaling up digital filing and introducing a streamlined SME regime, while expanding access to finance through stronger credit systems and targeted support for SMEs and women-led firms. It also underscores the need to modernize customs to enhance predictability, sustain energy reliability and utility governance, and close the digital gap through telecom reforms and deployment of the national fiber backbone.
“Guinea-Bissau’s private sector challenge is not a lack of entrepreneurship— it is a lack of the conditions that allow firms to grow, formalize, and become more productive. Addressing firms most binding constraints in a coordinated way is what will turn investment into productivity and growth into better jobs.”, said Maria Elkhdari, Country Economist for Guinea Bissau and lead author of the report.
Distributed by APO Group on behalf of The World Bank Group.
