The world's fastest growing economy, could reach 115%

"Guyana's economic growth will reach 38% by the end of this year" – CNBC quoted the GDP (gross domestic product) forecast of the International Monetary Fund (IMF).

The IMF is not the only agency to offer such optimistic forecasts for Guyana.

A report from BMI, a research unit of Fitch Solutions, also said that “Guyana will see explosive growth this year and is expected to grow by around 115% over the next five years.”

“The exact pace of Guyana’s growth depends on how quickly additional oil production is brought on board,” said Andrew Trahan, BMI’s head of risk for Latin America.

The reason why Guyana's economy has been able to grow at such an incredible rate is largely due to the profits from the oil production and export sector.

BMI forecasts Guyana’s oil production will increase from about 390,000 barrels per day in 2023 to more than 1 million barrels by 2027, as new fields offshore Stabroek are opened by a consortium led by US giant ExxonMobil, which ExxonMobil says has about 11 billion barrels of oil reserves.

“Guyana’s strong growth has been and will continue to be driven by rapid growth in oil production following a series of discoveries in recent years,” Trahan stressed. Higher oil production, he said, would boost Guyana’s trade balance.

The Demerara River in Guyana, a country in South America. Photo: CNBC

Guyana recorded a GDP growth of 62.3% in 2022, the highest in the world .

In addition to increasing oil production, thanks to the third field coming online, Guyana is also boosting the non-oil sector by investing in transportation, housing and human capital mobilization.

The IMF report highlighted that the agriculture , mining and quarrying sectors are also performing well, contributing to Guyana's rapid economic growth.

"Guyana will again be the world's fastest growing economy in 2023 and is likely to retain this title for at least the next two years," Trahan predicted.

While Guyana's growth prospects are impressive, experts say they are not without risks.

Guyana has rapidly evolved from one of the poorest countries in the Caribbean to an economy that is "excellent in growth," expert Valerie Marcel told CNBC.

The positive growth trajectory will continue but that depends on the country's political stability and oil prices.

“Over time, oil prices will be quite volatile and will eventually stay low. That is why diversifying Guyana’s economy is extremely important,” Marcel warned. “Like any other country that depends on oil revenues, Guyana is also facing risks – especially corruption.”

Another concern Ms. Marcel mentioned is “Dutch Disease,” an economic term for the negative impacts that arise from rapid development due to newly found resources, paradoxically harming the broader economy.

“Guyana is a country with a history of deep divisions between Indian and African Guyanese, and struggles with corruption and organized crime. The influx of oil profits could exacerbate these divisions,” Trahan, the BMI expert, worries.

Source: https://nld.com.vn/thoi-su-quoc-te/nen-kinh-te-tang-truong-bung-no-nhat-the-gioi-co-the-dat-115-20230927170101995.htm