Equatorial Guinea Faces Fiscal Strain and Forest Loss Amid Oil Decline

A World Bank economic update reports Equatorial Guinea grew just 0.9% in 2024 and projects a 1.2% GDP contraction across 2025-2027 as hydrocarbon revenues fall and forest cover erodes. The case reinforces a global pattern Indian ESG analysts track: resource-dependent economies face mounting pressure to value natural capital and diversify before fiscal and ecological buffers run out.

Equatorial Guinea's economy expanded 0.9% in 2024 on manufacturing and services, while the hydrocarbon sector kept declining and unemployment reached 14%. The 2023 fiscal surplus turned into a 0.6% of GDP deficit in 2024 as government revenues dropped 15% and exports fell to 23% of GDP. Forest cover declined from 97% to 94.5% between 2000 and 2020, with the report valuing carbon retention services at $3.9 billion annually. Real GDP is projected to contract 1.2% across 2025-2027.

The findings affect oil-dependent sovereigns, sovereign wealth managers, and development financiers exposed to commodity-revenue volatility and natural-capital depletion. Produced capital rose over 100 times between 1995 and 2020 but stagnated after the 2014 oil boom ended, while social spending fell to 1.9% of GDP in 2024, below regional averages. Agriculture and services sectors, expected to drive labor-intensive growth, are projected to ease poverty marginally from 57% to 55.8%. Education outcomes, with average schooling at eight years by 2022, lag upper-middle-income peers.

The report urges revenue diversification, fiscal discipline, improved public financial management, and stronger human capital investment, alongside environmental measures including informed land use, local wood processing, and ecotourism. ESG stakeholders and investors should monitor emerging policy reforms and carbon-financing mechanisms as the country recalibrates its development model. Without a coordinated strategy blending economic diversification with forest and climate protection, the report warns, long-term wealth is at risk. Tracking deforestation rates and social-spending recovery will indicate whether the recommended reforms take hold.

Key figure — Annual carbon retention value: $3.9 billion