Sao Tome & Principe

The Republic of Sao Tome and Principe is a lower middle income, small island state with a surface area of 1,001km2 located in the Gulf of Guinea, 350km off the west coast of Africa. This Portuguese-speaking country has a population of approximately 215,000, a GDP of US$547m and a GDP per capita of US$2,544.\r\n\r\nGrowth is expected to increase to 2.5% in 2024 and reach nearly 3.6% by 2026, supported by higher tourism arrivals, a strong agricultural sector, and the expansion of infrastructure development projects and energy reforms.\r\n\r\nSao Tome and Principe has been a multiparty, semi-presidential, democratic system since its independence, and it has been a model for the democratic transition of power in Central Africa. The Independent Democratic Action (ADI) party, which holds 30 out of 55 parliamentary seats, has been mandated to govern from 2022 to 2026.\r\n\r\nSão Tomé and Principe’s medium-term economic outlook is uncertain due to the combined impact of external shocks and structural weaknesses. The economy is projected to grow slowly, at 1.2% in 2024 and 2.1% in 2025. Meanwhile, inflation is projected to continue its downward trend, reaching an average of 16.1% in 2024. The fiscal deficit is expected to decline to 3.3% of GDP in 2024 and 2.9% in 2025. The current account is also expected to continue its downward trend and should stand at 11.4% of GDP in 2024 and 9% in 2025. The government is discussing a program with the International Monetary Fund to anchor the economic recovery. Medium-term risks to growth include the poor business environment, sometimes unstable energy supply, and lack of investment in key trade infrastructure.\r\n\r\nThe economy has historically relied on the production and exportation of cocoa, and to a lesser extent coconut, for foreign exchange earnings. Local agricultural production is unable to meet the nutritional requirements of the local population. Economic opportunities relating to island tourism and the development of the offshore oil industry in the Gulf of Guinea, are expected to help drive improvements in quality of life. While significant deposits have yet to be discovered, several companies are exploring, including a consortium of BP and Kosmos Energy.\r\n

Sources: Who Owns Whom sector reports, CIA Factbook, African Development Bank, World Bank, Trading Economics, African Statistical Yearbook and IMF.