- The world’s fastest-growing economy is on track for growth of more than 100%, driven largely by gains from oil production and the export sector.
- Guyana, a country in South America with a population of about 800,000 people, is expected to grow by 38% by the end of the year, according to current GDP forecasts from the International Monetary Fund.
- BMI, a research unit of Fitch Solutions, also believes that “Guyana will experience explosive growth this year” – and is expected to rise by around 115% over the next five years.
The Demerara River in Guyana, South America.
Arterra | Universal Images Group | Getty Images
The world’s fastest-growing economy could be on track to expand more than 100% by 2028, largely driven by gains from oil production and the export sector, according to an analysis.
Guyana, a country in South America with a population of about 800,000 people, is expected to grow by 38% by the end of the year – an “extremely rapid” pace, according to the International Monetary Fund’s latest GDP forecasts.
The IMF is not alone in its optimism.
BMI, a research unit of Fitch Solutions, also believes that “Guyana will experience explosive growth this year,” said Andrew Trahan, head of country risk in Latin America.
He expects Guyana’s real GDP to increase by about 115% over the next five years.
“The exact extent of the increase [is] depends on how quickly additional oil production comes online,” he added.
BMI expects Guyana’s oil production to rise from around 390,000 barrels per day this year to over a million barrels per day in 2027 as an ExxonMobil-led consortium opens new offshore fields in the country’s Stabroek block.
Guyana’s Stabroek Block is a 6.6 million hectare offshore oil reservoir off the country’s Atlantic coast and holds an estimated 11 billion barrels of oil, according to ExxonMobil.
Over time, oil prices will be quite volatile and eventually remain low. Therefore, it is extremely important for Guyana to diversify its economy.
Associate Fellow, Chatham House
“Guyana’s robust growth has been and will continue to be driven by a rapid expansion of oil production following a series of discoveries in recent years,” Trahan said, adding that higher oil production will bolster Guyana’s net exports.
According to the IMF, Guyana recorded GDP growth of 62.3% in 2022, the highest in the world.
In addition to expanding oil production through the commissioning of a third oil field, growth in Guyana’s non-oil sector has also been boosted by investments in transportation, housing and human capital recruitment. The IMF report highlighted that Guyana’s agricultural, mining and quarrying sectors are also performing well.
Trahan predicts the country will continue to be the world’s fastest-growing economy in 2023 and expects it to retain that title for at least the next two years.
“We expect this strong growth to continue in the coming years as oil production continues to rise and real GDP rises by around 115% between 2022 and 2028,” he said.
Guyana’s stronger energy exports will boost the country’s growth trajectory, as will the side effects of strong investment, new employment opportunities and increasing government revenues.
However, the optimistic outlook is not without risks.
Guyana has rapidly evolved from one of the poorest Caribbean countries to an economy that is “showing exceptional growth,” Valerie Marcel, associate fellow at think tank Chatham House, told CNBC by email.
The positive growth trajectory will continue, but this depends on the country’s political stability and high oil prices.
“Over time, oil prices will be very volatile and will eventually remain low. Therefore, it is extremely important for Guyana to diversify its economy,” said Marcel.
Like any country dependent on oil revenues, Guyana poses risks – particularly when it comes to corruption and Dutch disease, she warned. Dutch disease is an economic term that refers to the negative effects resulting from rapid development due to newly mined resources, paradoxically harming the overall economy.
The BMI also sees significant political risks.
“Guyana is a country with a history of deep divisions between its Indo- and Afro-Guyanese populations and it struggles with corruption and organized crime,” Trahan said. The influx of oil profits could exacerbate divisions, he said.