World Bank Urges Equatorial Guinea to Leverage Forests for Growth

The World Bank has released its 2025 Equatorial Guinea Economic Update, offering a detailed assessment of the country’s recent economic performance, medium-term outlook, and structural development challenges. The report calls for urgent action to diversify the economy, reduce poverty, and harness natural and human capital, with a strong emphasis on forest ecosystem services as a key pillar for sustainable growth.

While Equatorial Guinea has witnessed notable economic progress over the past few decades—largely due to revenues from oil and gas discoveries—the waning hydrocarbon sector now poses serious risks to long-term stability. The World Bank’s analysis signals a pivotal moment for Equatorial Guinea to recalibrate its development model, focusing on inclusive growth and natural capital preservation.

Growth Slows, Poverty Rises Amid Fiscal Pressure

According to the report, real GDP growth declined to an estimated 0.9% in 2024, down from 5.1% in 2023, reflecting slower momentum in the hydrocarbon sector and limited economic diversification. The industrial and services sectors contributed more to growth, but this was not sufficient to offset broader vulnerabilities.

Inflation rose from 2.4% to 3.4% over the same period, driven by rising food prices and global market volatility. These economic pressures have translated into a deteriorating poverty situation, with 57% of Equatorial Guinea’s population now estimated to live below the international poverty line of $6.85/day (2017 PPP).

Additionally, fiscal and external balances worsened in 2024, due in part to declining export revenues from hydrocarbons. However, the report notes that debt-to-GDP levels fell, thanks to government efforts to clear payment arrears and strengthen fiscal discipline.

The Oil Boom's Afterglow: Capital Gains with Gaps

Equatorial Guinea’s produced capital—infrastructure, machinery, and other man-made assets—grew 100-fold between 1995 and 2020, reflecting massive state-led investments during the oil boom. However, capital accumulation has slowed considerably since oil production peaked.

The country has made modest progress in education and health, but the report warns that human capital outcomes remain below expectations for a country of its income level. High youth unemployment and skill mismatches continue to limit the economy’s productivity potential.

Meanwhile, nonrenewable natural capital, primarily hydrocarbons, declined by 30% between 2005 and 2020, underscoring the urgent need for economic diversification and renewable resource management.

“Equatorial Guinea has achieved notable advancements... But given the decline in the hydrocarbon sector, it is imperative to implement comprehensive reforms to diversify the economy,” said Juan Diego Alonso, the World Bank’s new Resident Representative in Equatorial Guinea.

Forests as a New Economic Frontier

A central theme of this year’s report is the role of forest ecosystem services in supporting sustainable development. Equatorial Guinea’s forests, part of the broader Congo Basin, play a critical role in carbon sequestration, climate regulation, and biodiversity conservation.

Although forest cover declined slightly from 97% in 2000 to 94.5% in 2020, the country still retains one of the highest forest coverage rates in Africa. Forests remain vital for rural livelihoods, supplying wood, fuelwood, wild foods, and income through informal markets.

However, regulating ecosystem services—such as sediment control, water purification, and climate resilience—are increasingly under threat from forest degradation, unsustainable agriculture, and infrastructure development.

“Equatorial Guinea can boost growth and job creation by leveraging forest ecosystem services in wood processing, ecotourism, and agriculture sectors,” said Djeneba Doumbia, lead author of the report.

Toward a Holistic Land Use and Environmental Strategy

To fully realize the potential of forests as a development asset, the report calls for an integrated national strategy encompassing:

• Sustainable land use planning

• Climate-smart agriculture

• Access to clean energy alternatives to reduce deforestation

• Promotion of nature-based tourism

Such a framework would help balance ecological protection with economic exploitation, enabling the country to monetize its carbon storage potential, while supporting rural development.

The report also highlights the importance of international climate finance, urging global partners to compensate Congo Basin countries—including Equatorial Guinea—for their role in safeguarding carbon sinks vital to global climate stability.

A Call for Reforms and Global Partnerships

The Economic Update urges the government to create a pro-growth policy environment, including:

• Improved regulatory frameworks

• Incentives for green investment

• Capacity-building for environmental governance

• Enhancement of rural infrastructure and public services

It further emphasizes that cross-sector coordination, particularly between ministries responsible for environment, agriculture, energy, and economic planning, is essential for success.

“This is a pivotal time for Equatorial Guinea. With the right reforms and international support, the country can harness its natural wealth to build a more inclusive, resilient, and sustainable future,” the report concludes.

Looking Ahead

The 2025 Economic Update paints a mixed picture: economic progress built on a single resource, now fading, and a wealth of untapped natural capital that could chart a new course. If harnessed effectively, Equatorial Guinea’s forests could anchor a new era of low-carbon, high-impact development—creating jobs, fighting poverty, and preserving a globally significant ecosystem.