Equatorial Guinea's economy is expected to shrink by a massive 10 percent in 2016 -- after having already contracted by 7.4 percent last year -- as low oil prices batter the economy's dominant oil and gas sector, the International Monetary Fund (IMF) said on Thursday.
Since the oil price crash started in 2014, the economy of this tiny central African country has been deteriorating fast, and oil and gas activity dropped 8.9 percent last year, as low crude prices made producers cut costs, hence, output dropped, the IMF said.
The outlook for the near term is "very challenging" in view of the depressed prices and prolonged decline of oil and gas output. Equatorial Guinea's weak oil revenues, on which it heavily relies, will lead to more public spending cuts, and vital sectors such as construction will further shrink, according to the IMF.
In the medium term, the economy is not expected to grow because of the hefty share of hydrocarbons that make up the gross domestic product (GDP).
According to the U.S. Energy Information Administration (EIA), Equatorial Guinea held 1.1 billion barrels of proved crude oil reserves as of January 2015, which made it the eighth-largest crude oil reserve holder in Sub-Saharan Africa. The country's proved natural gas reserves of 1.3 trillion cubic feet as of January 2015 were the tenth-largest in the region.
Most of Equatorial Guinea's reserves and operating fields are offshore near the Bioko Island. Total oil production averaged almost 270,000 barrels per day in 2014, compared to the peak production of 369,000 bpd in 2007.
It was in 2014 when Equatorial Guinea embarked on a PR mission to improve how it is viewed by the outside world. The kleptocratic and reclusive government, often synonymous with the "resource curse," hired Richard Attias & Associates, a Madison Avenue-based public relations firm, to clean up the country's image. The Manhattan PR company specializes in helping African leaders "build their global influence."
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More