Guyana, which started producing oil in 2019, was the sole Caribbean country with positive Gross Domestic Product (GDP) growth in 2020. This is according to a recent World Bank report that shed light on how Latin America and the Caribbean economies fared in 2020.
According to the World Bank report “2021. Renewing with Growth. LAC Semiannual Report”, Guyana was able to do what 27 other countries in the region could not – record GDP growth, notwithstanding the global COVID-19 pandemic.
“Despite the COVID-19 crisis, Guyana’s GDP grew by more than 20 per cent in 2020, as the exploitation of very large oil discoveries started. More modestly, Paraguay’s GDP emerged almost unscathed from the crisis, although this sturdy economic performance was not sufficient to prevent a new wave of social unrest,” the report said.
“For all other countries in the region, GDP growth rates were negative in 2020, in some cases dramatically so. The worst-affected countries were those in the Caribbean, a subregion whose economic activity crucially depends on tourism. Together with hospitality and personal services, tourism has been the sector most adversely affected by the COVID-19 crisis.”
In an accompanying chart, the report notes that Guyana recorded approximately 43.5 per cent GDP growth. The remaining countries, including Brazil, Chile, Costa Rica and Argentina, recorded negative growth.
According to the report, Guyana’s GDP growth will remain in the double figures. But while Guyana’s growth was good, the report notes that the country will be challenged to translate this into investments in human capital among other things.
“While oil production is boosting growth, significant risks related to the management of this new wealth remain. Guyana will be challenged to transform its burgeoning oil wealth into human capital, physical capital, and financial assets for broad-based welfare increases,” the report states.
2020 economy
For 2020, Guyana has seen mixed performances from the agriculture sector. While sugar production fell, rice production increased. During his February reading of Budget 2021, Finance Minister Dr Ashni Singh had reported that the country’s non-oil economy contracted by 7.3 per cent with sectors such as fishing, mining, manufacturing, forestry, and services recording declines.
While the agriculture, fishing, and forestry sector expanded by 4.1 per cent, the sugar-growing one contracted by 3.7 per cent, with production falling to a low 88,868 tonnes. The rice-growing sector grew by 4.8 per cent, with paddy production reaching 1,057,580 tonnes in 2020.
With respect to the production of other crops, despite excessive rainfall in November and December, this sector is estimated to have grown by 6.6 per cent in 2020. The Finance Minister explained that the COVID-19 pandemic would have resulted in increased demand for many fruits, particularly citrus.
Meanwhile, the livestock sector is estimated to have grown in 2020, recording an increase of 5 per cent. This was driven by poultry, egg and beef production, which are estimated to have grown by 10.4 per cent, 34.1 per cent, and 3.4 per cent, respectively.
The fishing industry contracted by 17.1 per cent while the forestry sector contracted by 8.1 per cent. Regarding fishery, he said the decline was largely a result of fewer vessels going out to fish due to lower domestic and external demand stemming from the pandemic.
With respect to forestry, the Finance Minister explained that the poor performance is primarily driven by an 11.8 per cent decline in sawn wood production, reflecting the slowdown in construction activities.
Manufacturing contracted by 8.6 per cent, construction by 6.3 per cent, and services by 9.4 per cent. Meanwhile, the overall balance of payments recorded a surplus of US$60.6 million in 2020, compared to a deficit of US$48.9 million recorded in 2019.
With the measures announced in the 2021 budget, the Finance Minister had said Guyana’s real Gross Domestic Product (GDP) is projected to grow by 20.9 per cent, with the non-oil economy growing by 6.1 per cent.
However, he explained that the projection is premised on the assumption that a reopening of the economy takes place with COVID-19 restrictions being gradually lifted and is, therefore, subject to significant downside risks. Similarly, the agriculture, fishing and forestry sector is expected to expand by 5.6 per cent while the mining and quarrying sector is projected to grow by 39.1 per cent.
