As the world’s fastest-growing economy, the small South American nation of Guyana is projected to double in size over the next five years, driven primarily by its burgeoning oil industry.
A recent report by CNBC indicates that Guyana, a country with close to 800,000 inhabitants, is expected to expand by a remarkable 38% by the end of the year. This rapid growth trajectory is echoed in the International Monetary Fund’s (IMF) latest GDP predictions.
However, the IMF is not alone in its optimism. BMI, Fitch Solutions’ research unit, also foresees “explosive growth” in Guyana’s economy. Andrew Trahan, BMI’s Latin America country risk head, predicts a surge of about 115% in Guyana’s real GDP over the coming five years.
The significant growth is contingent on the rate at which oil production increases. Guyana’s oil production is predicted to jump from 390,000 barrels per day this year to over a million by 2027, following the inception of new offshore fields in Guyana’s Stabroek Block by a consortium led by Exxon Mobil Corporation (NYSE:XOM).
While the country’s economic growth is primarily driven by oil production, the non-oil sector’s growth has also been enhanced by investments in transportation, housing, and human capital development.
However, the bullish forecast has its share of risks. Political stability and high oil prices will be crucial to maintaining this positive growth trend. As a country heavily dependent on oil revenues, Guyana is also exposed to corruption risks and the Dutch disease, which refers to the potential negative impacts of rapid development due to newfound resources.
Despite a tough economic outlook for 2023, with major economies like the U.S., EU, and China experiencing simultaneous slowdowns as mentioned earlier by IMF Chief Kristalina Georgieva, countries such as Guyana are still on a growth trajectory. This is largely due to their resources and investments in sectors beyond oil.
Furthermore, in the context of the “persistent inflation problem” anticipated for the U.S., as highlighted by the IMF, Guyana’s economic growth could provide a promising investment opportunity.
Moreover, compared to other fast-growing economies like India, which the IMF predicts will slow down to 6.1% in the next fiscal year, Guyana’s projected growth of 38% by year’s end presents a stark contrast.
Produced in association with Benzinga
(Additional reporting provided by Benzinga Neuro)
