Guyana has the distinction of being one of the few countries in the Caribbean Region with a positive trade balance, as the Inter-American Development Bank (IDB) noted the shifting trade trends in Latin America and the Caribbean (LAC).
A positive trade balance occurs when a country exports more than it imports. In its recent report “Headwinds Facing Post-Pandemic Recovery in the Caribbean”, the IDB noted that not only is Guyana one of the few countries with a positive trade balance, its 31.3 per cent of trade in agriculture and fuel, as a percentage of the Gross Domestic Product (GDP), far outstrips other countries.
“Guyana switched from a negative balance to a large positive balance between 2019 and 2021 as oil production came onstream. Other countries have fairly substantial negative balances, although the price effects did not produce large increases in these deficits in 2021, based on preliminary national data,” the IDB said.
It was explained that Trinidad, the only other country in the Caribbean with a positive trade balance, was able to achieve this by leveraging oil production in much the same way as Guyana. The increase in their positive net trade position in commodities also coincided with oil and gas price increases last year.
According to the IDB, specific commodities such as oil, are expected to have relatively high prices through 2024. Oil, in particular, is expected to remain over US$80 through 2024, before dropping to US$71 by 2027.
“Similarly, aluminium prices were 50 per cent higher in 2020 relative to pre-pandemic levels and are expected to remain around 40 per cent higher through 2027. While soybean prices are also expected to remain around 40 per cent higher than the pre-pandemic level in the medium term, international rice prices have remained relatively stable.”
“Gold prices are currently about 30 per cent higher than in 2019. These price trends, and, more importantly, Guyana’s higher levels of oil production, have significantly affected the profile of the country’s net trade in agricultural products and mineral fuels with the rest of the world,” IDB further explained.
According to the bank, Guyana has also rapidly moved from being a net importer of agricultural products and mineral fuels, representing 8 per cent of GDP in 2018 and 2019, to being a net exporter of the same commodities, with a trade surplus of 16 per cent of GDP in 2020 and 31 per cent in 2021.
With this change, Guyana’s export trends have also changed. Prior to oil production, Guyana’s main suppliers driving the trade deficit in these products were countries in the Caribbean Community (Caricom) from whom it was importing these products.
“After the start of oil production, the main destinations of Guyana’s trade surplus were North America and other countries outside of North and South America. The share of net exports to these countries increased through 2021, reaching 17 per cent of GDP for net exports to North America and 14 per cent of GDP to other countries. As oil production continues ramping up, these trade surpluses are likely to continue growing,” IDB said.
It was only in September that United States (US) Ambassador to Guyana Sarah-Ann Lynch, had spoken of her country’s high interest in Guyanese commodities. With trade between the two countries exceeding US$1.4 billion in the first half of 2022, the Ambassador had urged businesses to capitalise on this interest.
Speaking at a forum themed “Exporting to the US”, she also spoke of the need for Guyana to increase its export competitiveness. When it comes to bilateral trade between Guyana and the US, the Ambassador was optimistic that this number will grow as Guyana’s economy grows.
Meanwhile, Canada and Guyana also share a strong trade relationship. The North American nation imported CA$199.6 million in merchandise from Guyana last year alone and earlier this year, a Memorandum of Understanding (MoU) was signed between Guyana and the Canadian Commercial Corporation (CCC).
The MoU in question was signed to facilitate the transfer of Canadian technology and expertise to Guyana as the country invests in the infrastructure, information and communication technologies, aerospace, clean tech, and security sectors.
The MoU further establishes a framework under which the two countries can strengthen their economic and commercial relations that will see more Canadians doing business in Guyana and Guyanese businesses investing in Canada.
