By
Godfrey Benjamin
April 23rd, 2024
Guyana was the world’s fastest growing economy for 2022 and is expected to retain the title until 2025 as oil production increases.
According to a recent GDP forecast from the International Monetary Fund, Guyana is expected to grow at impressive rates over the next few years. Currently the world’s fastest-growing economy, the South American country is likely to record more than 100% growth by 2028.
Most of Guyana’s income comes from oil production and export. Among other factors, this forms the basis of the IMF’s projection as recorded in a recent IMF Concluding Statement. The IMF posits that oil production in the country will expand, especially as three new fields are expected to come onstream between 2024 and 2028. A sixth one is also expected sometime in the first half of 2028. For this year, the IMF expects Guyana’s real GDP to rise 38%, after a record 62.3% last year.
In addition to oil, the Concluding Statement reports expected growth in the non-oil sector. This stems from public investments in housing, human capital, transportation, and growth investment. In addition, spillovers from construction and oil are encouraging growth in the mining and quarrying, supplies, and agriculture sectors.
BMI Research also shares the IMF’s bullishness on the world’s fastest-growing economy. The company’s head of Latin America country risk Andrew Trahan left specifics open even though he expects Guyana’s real GDP to climb 115% over the next five years. Trahan said:
“Guyana will see explosive growth this year. The exact magnitude of the increase [is] dependent on how quickly additional oil production is brought online.”
Fastest-Growing Economy’s Trajectory Is Not Without A Few Risks
BMI sees an impressive 156% jump in oil production, from this year’s 390,000 barrels per day to more than a million barrels by 2027. American multinational oil and gas company ExxonMobil is leading a group currently opening new offshore fields in Guyana’s Stabroek Block. ExxonMobil estimates that the 6.6 million acre block holds 11 billion barrels of oil.
Trahan is bullish about 2023 and believes the country will also be the world’s fastest-growing economy. According to the BMI Research exec, Guyana will maintain this title for the next two years.
However, certain risks to the bullish predictions call for some caution. The country is still plagued by a bad economy and is one of the Caribbean’s poorest. According to Chatham House associate fellow Valerie Marcel, Guyana has quite the potential to continue its growth trajectory. However, oil prices could considerably hamper the country’s chances.
“Over time, oil prices will be quite volatile and eventually stay low. That’s why it’s extremely important for Guyana to diversify its economy.”
Marcel also noted that there is a risk of Dutch disease, which refers to the negative effects of rapid development, especially caused by abundant resources. In many cases, the development of one sector can considerably harm others.
Trahan has also sounded a note of warning similar to Marcel. Trahan points out that the country still suffers problems caused by organized crime and corruption. He also adds that a history of division between the Indo- and Afro-populations could be detrimental.