Country Report Guinea June 2009

Outlook for 2009-10

The long-anticipated death of the former president, Lansana Conte, in Dec-ember 2008, has raised serious questions about what will replace the political system that existed under him. The Economist Intelligence Unit expects that the military junta, Conseil national pour la democratie et le developpement (CNDD), headed by Captain Moussa Dadis Camara, will eventually bend to domestic and international pressure and organise both legislative and presidential polls before the end of 2009. However, there is a risk that internal squabbles within the CNDD could derail the democratic transition. In addition, it remains unclear whether Captain Camara will keep his promise of not standing in the forthcoming presidential poll. Real GDP growth is expected to slow in 2009 to 1% as activity in the mining sector contracts and the reduction in donor inflows affects the construction sector. However, real GDP growth is forecast to accelerate to 3% in 2010 as mining output recovers some ground and higher donor inflows boost private demand. Lower international oil and food prices will help inflation to fall to an average of 10% in 2009 and 9% in 2010.

The political scene

The CNDD has finally announced an electoral calendar: legislative elections are scheduled to take place on October 11th, to be followed by the presidential poll on December 13th. Captain Camara has declared that neither he nor any CNDD member will stand in the elections. However, he has expressed his displeasure at having had to bend to both domestic and international pressure, as he had intended to oversee the transition to democracy until late 2010. Reports that soldiers are running extortion rackets against local businesses are increasing.

Economic policy

The government has warned that domestic revenues have fallen owing to the freeze in donor aid and a significant fall in the collection of import duties.

The domestic economy

The IMF has projected that real GDP will grow by 2.6% in 2009, but this forecast seems optimistic, as global demand for bauxite has fallen sharply. The CNDD has increased its threats to international companies that it will revise existing contracts. It has claimed that the sale of an alumina refinery to Russia's Rusal was illegal and has threatened to review the concession rights of the US's Global Alumina unless progress is made in building a new refinery.

Foreign trade and payments

The Guinean franc has depreciated moderately since the beginning of the year and there is evidence that, owing to foreign-exchange shortages, the parallel foreign-exchange market is starting to pay a premium.

This report covers the following industry codes:
SIC Code: 10
NAICS Code: 212