Guinea-Bissau growth to rebound to 3.5 pct in 2013: IMF

BISSAU (Reuters) - Guinea-Bissau's economy is forecast to expand 3.5 percent this year, higher than in 2012 but below a previous projection of 4.2 percent, the International Monetary Fund said on Thursday.

The West African nation was on track to record growth of 5.3 percent last year, before a military coup and lagging demand for cashew nuts - its primary export - slashed that to 2.6 percent, according to the government.

Wedged between Guinea and Senegal on West Africa's coast, Guinea Bissau is among the world's poorest countries. It has endured years of instability and has become a major hub for trafficking South American cocaine to Europe.

"A rebound in cashew nut exports and the renewal of budget support from regional partners should contribute to an increase in gross domestic product growth to a rate of 3.5 percent in 2013," said Mauricio Villafuerte, who headed the IMF mission to the country of 1.6 million people.

Cashew production, most of which is shipped to India, accounts for around 90 percent of Guinea Bissau's export revenues and employs some 80 percent of its population.

In April last year, the military arrested then Prime Minister Carlos Gomes Junior and acting President Raimundo Pereira during an election that Gomes Junior was poised to win.

The coup led to sanctions and a suspension of aid by donors, though regional powers have since re-established ties with a transitional civilian authority meant to lead the country to elections now due by the end of the year.

Villafuerte said mid-term growth prospects hinged on improvements in the political and security situation and the renewal of support from traditional partners.

Donors including the European Union, once a source of hundreds of millions of dollars in aid to the state, refuse to recognise the transitional administration.

Source: http://news.yahoo.com/guinea-bissau-growth-rebound-3-5-pct-2013-064500497.html

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